Drugmaker fights Medicare pricing changes

Taxpayers spend less on a Medicaid prescription for the poor and disabled than they do on the same Medicare prescription for the elderly. So why not save money by having the government pay the same lower Medicaid price for drugs for both programs? That idea was the biggest spending cut proposed in President Barack Obama's deficit-reduction plan. But drug makers such as Eli Lilly and Co. argue that the cut would be a "pretty big body blow," potentially causing job losses and hurting the development of new drugs. Now, when the government buys Lilly's Zyprexa for a Medicare patient, for example, the cost is negotiated between the company and the private insurance provider of the Medicare drug benefit. When the government buys the same anti-psychotic medication for a Medicaid patient, Lilly has to give the government a set rebate.