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Obama, Drug Industry Announce Partial Funding of Medicare Doughnut Hole

Janice Simmons, for HealthLeaders Media, June 22, 2009

President Barack Obama was joined today by two of the chairmen of the Senate panels overseeing healthcare reform legislation—Max Baucus (D-MT) and Chris Dodd (D-CT)—plus an AARP representative to announce the agreement with pharmaceutical manufacturers to spend $80 billion over the next decade to assist Medicare beneficiaries in defraying 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 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 also have 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," Obama said in a statement on Saturday.

In response to the announcement, National Community Pharmacists Association (NCPA) Executive Vice President and CEO Bruce T. Roberts, RPh, said Monday that community pharmacists want to lower drug costs, but also need to learn more about the agreement so "to ensure community pharmacies are treated fairly and can continue serving patients."

The NCPA's questions include: when will the program start, how will they calculate the discounts and who will pass them along, and how will pharmacists receive the full reimbursement for prescriptions.

"Community pharmacies must play an important role if health care reform and cost savings proposals such as this are going to be successful," said Roberts.

The deal with the pharmaceutical industry marked a small victory for Sen. Max Baucus (D-MT), chairman 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.

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