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Health care issues: Proposed drug industry savings

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A look at key issues in the health care debate:

THE ISSUE: Is the pharmaceutical industry’s agreement to lower drug costs by $80 billion over the next decade fair?

THE POLITICS: The industry’s trade group, the Pharmaceutical Research and Manufacturers of America, agreed to contribute those savings to help pay for Democrats’ proposed $1 trillion health care overhaul. That deal was struck with the White House and the chairman of the Senate Finance Committee, Democrat Max Baucus of Montana. Top House Democrats, preferring a more aggressive revamping, say they weren’t a party to that pact and want deeper savings from drugmakers, who until recently tilted their campaign contributions heavily toward Republicans.

WHAT IT MEANS: The trade group says roughly $30 billion would be used to halve prescription drug prices for older people stuck in the “doughnut hole,” a gap in coverage in Medicare’s Part D drug program. The rest would be a mix between increasing rebates the industry gives for government drug purchases under the Medicaid program for low-income people, and fees drugmakers would pay to help finance the health overhaul. Critics suggest the agreement also promises protection for high-technology biological drugs from generic competitors, but the industry says that is not so. The House bill includes additional requirements on drugmakers, including making them pay to close the doughnut hole entirely by 2019, starting next year, and requiring the Health and Human Services secretary to negotiate Medicare drug prices with manufacturers. The overall cost to drug makers under the House bill is over $80 billion, but how much more is not clear.

_ Alan Fram

© 2009 Associated Press. Displayed by permission. All rights reserved.

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