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Pharma agrees to fund part of Medicare doughnut hole

The Pharmaceutical Research and Manufacturers of America, following negotiations with lawmakers, said in an agreement that it would spend $80 billion over the next decade to assist Medicare beneficiaries and defray drug costs.

Under the deal, drug companies would pay as much as half of the cost of brand‑name drugs for lower- and middle‑income seniors in the so‑called Medicare doughnut hole, which is a gap in prescription coverage in which the beneficiary pays the full price for medication without help from Medicare.

The pharmaceutical companies have also agreed to pick up some of the costs of the president’s health reform plan.

“The agreement by pharmaceutical companies to contribute to the health reform effort comes on the heels of the landmark pledge many health industry leaders made to me last month, when they offered to do their part to reduce health spending $2 trillion over the next decade,” President Barack Obama said in a statement.

The deal marked a small victory for Sen. Max Baucus (D-MT), chair of the Senate Finance Committee, who has been negotiating with health industry groups as he was working on drafting health reform legislation with his committee.

Initially, a draft bill was expected from the committee. However, Congressional Budget Office (CBO) questions over costs may have slowed that down; the CBO had estimated that the costs of reform legislation may be closer to $1.6 trillion.

Baucus was pushing for the final price tag to be around $1 trillion. A draft summary that surfaced recently showed that the committee was still examining whether to create consumer‑governed nonprofit medical cooperatives.

The committee was also reviewing how to limit the ability of workers to leave employer‑sponsored health plans in favor of subsidized insurance that would be offered through state exchanges.

Meanwhile, hearings continued in the Senate Health, Education, Labor and Pension Committee.

Republicans seemed to be stepping up their resistance to the bill—criticizing Democrats for providing inadequate time for reviewing the proposals related to creating insurance programs and restructuring the way providers are paid.