- The Washington Times - Sunday, June 21, 2009

Drug makers agreed Saturday to spend $80 billion over the next decade to improve drug benefits for Medicare patients, a promise from a key player in President Obama’s health care reform initiative.

The deal would reduce the cost of Mr. Obama’s plans to push a massive health care reform through Congress by August and caps a week in which it appeared reform plans could be derailed by the monumental cost.

“The Medicare prescription drug benefit we created helped address the problem of skyrocketing prescription drug prices for millions of seniors. Today, we helped fill the gap in coverage and finished the job,” said Sen. Max Baucus, chairman of the Senate Finance Committee that negotiated the deal with the Pharmaceutical Research and Manufacturers of America (PhRMA), the industry’s trade group.

The pharmaceutical companies agreed to a 50 percent discount for Medicare patients who face the “doughnut hole” - the gap in coverage after drug costs reach a certain level and before they meet the threshold for catastrophic coverage. The move would reduce the government’s payments under Medicare Part D, according to the committee.

“The existence of this gap in coverage has been a continuing injustice that has placed a great burden on many seniors,” Mr. Obama said in a statement. “The agreement reached today to lower prescription drug costs for seniors will be an important part of the legislation I expect to sign into law in October.”

Costs became the most divisive issue in the reform debate last week. The Congressional Budget Office determined that the price of a Senate Health, Education, Labor and Pensions Committee bill would top $1 trillion and still not cover about 36 million Americans.

Democrats said much of the savings couldn’t be measured by the CBO. Republicans balked at adding to the deficit. House Democrats released the draft of a bill Friday that would cover 95 percent of Americans but didn’t have a way to pay for it.

The prescription savings would go toward the cost of a reform plan, according to the committee, which is expected to debate a proposal after the Fourth of July recess.

The cost of Part D medicine purchased in the “doughnut hole” would count toward the patient’s out-of-pocket costs, in effect lowering his or her total out-of-pocket spending, according to PhRMA.

Last month, a group of health care industry trade associations pledged to slow the rising cost of health care by $2 trillion over the next 10 years. But the CBO later said the promise couldn’t be measured and it therefore could not determine if the pledge would actually lead to savings.

The secretary of health and human services would also create a new Medicare Prescription Drug Discount Program on July 1, 2010, to be administered by a third party, under terms of the deal.

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