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Panel fails to overturn PhRMA-WH deal

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The Senate Finance Committee on Thursday voted down a proposal that would have reversed a controversial deal between the pharmaceutical industry and the White House on health care reform.

The proposal from Sen. Bill Nelson, Florida Democrat, would have required drug companies to provide government rebates on the drugs they supply to patients who are in both Medicare and Medicaid, called "dual-eligibles," saving the federal government $106 billion.

But it also would effectively invalidated the highly-touted deal between the White House and the Pharmaceutical Research and Manufacturers Association (PhRMA), in which the group pledged $80 billion over 10 years to help cover seniors' drug costs. It was later revealed that, in exchange, the White House would not support anything that required any additional costs from the drug makers.

The amendment failed on a 13-10 vote, with three Democrats — Committee Chairman Max Baucus of Montana and Sens. Thomas R. Carper of Delaware and Robert Menendez of New Jersey — joining Republicans in opposing the amendment. A loss would have been a significant blow to Mr. Obama's hopes of preserving political support among health care industry groups for his reform package.

Many lawmakers in both the House and Senate have attacked the White House-PhRMA deal, arguing that they were not bound by a White House handshake agreement with a major industry group. The deal exposed the White House to accusations that it was participating in closed-door negotiating sessions with industry groups that have a lot to lose or gain in health care reform.

Mr. Nelson said the Congressional Budget Office ruled that his amendment would fill the so-called Medicare "donut hole" — the gap in coverage that enrollees face — and add $50 billion in new savings that could be applied to other aspects of the reform bill.

Many lawmakers on the panel, including Democratic Sens. John F. Kerry of Massachusetts and Charles E. Schumer of New York and Republican Sen. Charles E. Grassley of Iowa, said on Tuesday they had no objection to overturning the deal because they weren't involved in the White House discussions.

Mr. Carper had been the sole Democrat to voice opposition to overturning the deal when it first was discussed on Tuesday, arguing that regardless of the content of the deal, they couldn't undo it. Mr. Baucus, who praised the PhRMA deal when it was announced, postponed the vote on the amendment until Thursday.

Republicans said they opposed the amendment largely out of concerns that it would drive up costs.

"The idea that dual-eligibles were hurt [by a 2003 law that set up the structure] is revisionist history," said Mr. Grassley, the top-ranking Republican on the panel.

Mr. Nelson expected the vote to be close but said he has an agreement from Senate Majority Leader Harry Reid, Nevada Democrat, to allow him to bring the amendment to the floor of the Senate.

"Everybody's asking me to withdraw it except the senior citizens," Mr. Nelson told reporters Wednesday evening.

The Senate Finance Committee is slogging through more than 500 amendments to Mr. Baucus' health care reform plan. It's the last of five congressional panels to consider the reform bill.

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