Drugmakers will pay more for health bill

/ Source: The Associated Press

Democratic senators said Wednesday they've been told the pharmaceutical industry will contribute billions of dollars more than it has previously promised for President Barack Obama's health care overhaul, with the money being used to close a gap in Medicare drug coverage.

Several said that expectation was a factor Tuesday, when more than a dozen Democrats reversed their previous positions and voted to kill a Senate effort to allow low-cost drugs to be imported into the U.S. The extra money would be used to close the so-called doughnut hole, the temporary gap in prescription drug coverage for Medicare recipients.

Several health care lobbyists said they understood that drugmakers would contribute about $20 billion above the $80 billion over 10 years they agreed to provide in a June deal with the White House and the Senate Finance Committee Chairman Max Baucus, D-Mont. Some lobbyists and lawmakers used higher figures.

"Some assurances were made that the doughnut hole would be filled" with money from drug companies, Sen. Jon Tester, D-Mont., said Wednesday when asked why so many Democrats — including himself — had switched to oppose the importation proposal. He said he was told of the assurances by other Senate Democrats.

Tester's comments were echoed by other two other senators, who spoke on condition of anonymity to describe conversations with colleagues.

Quickly closing the drug coverage gap has become an important priority for Democrats, who would like their health care drive to produce something tangible for the nation's influential older voters in time for next year's elections. It is also a top goal of AARP, the powerful lobby for senior citizens.

Asked whether the drug industry will pay for closing the coverage gap, Sen. Kent Conrad, D-N.D., said, "That's my understanding. But I have not seen anything in writing."

Ken Johnson, senior vice president for the Pharmaceutical Research and Manufacturers of America, said the trade group has had no discussions with White House or Senate officials about closing the Medicare coverage gap. He said the deal limiting the industry's contributions to $80 billion was "ironclad," but he did not rule out a higher amount.

"No one has asked us to date to provide any additional funding," he said. "Will that change moving forward? Who knows?"

Tester, who said closing the drug coverage gap was a major priority for his constituents, said he did not believe the extra drug industry funds were a direct trade-off for the defeat of the importation amendment.

But he added, "If the pharmaceutical companies filled the doughnut hole, if they're going to do me a favor, I'll work with them."

Lawmakers' comments underscored the complex and interrelated decisions Senate Democrats face as they try to complete their huge health overhaul package before Christmas. The Senate is in its third week of debating the measure.

Drugmakers lobbied against the importation proposal. Backing them were the Obama administration and Senate Democratic leaders, who want to retain the industry's support for the drive to reshape the U.S. health care system.

The pharmaceutical industry, though, faces growing pressure from Democrats to provide extra money to close the gap in Medicare coverage that occurs after beneficiaries' drug costs exceed $2,830 for next year. Once those costs reach $6,440, Medicare picks up almost all of the remaining expenses.

According to some lobbyists, Democrats are considering getting the $20 billion from pharmaceutical benefit managers, firms that administer drug benefits for many companies. Mark Merritt, president of the Pharmaceutical Care Management Association, said he had heard that figure and other amounts being discussed and said his group was lobbying against the proposal.

"I believe this is a last-minute, back-of-the-envelope scramble for any offsets that can be contributed" to paying for closing the drug coverage gap, he said. He said the proposal would raise patients' costs for the drugs they use.

Senate Democratic leaders pledged this week to join the House in moving to completely close the doughnut hole by 2019.

Both chambers' bills would narrow next year's $3,610 coverage gap by $500 next year. Both would also offer a 50 percent discount on the cost of brand name drugs for people in the gap, money that comes from the $80 billion drugmakers promised in their June deal.

The House-passed bill goes much further than the Senate's, closing the gap over 10 years by squeezing rebates from pharmaceutical companies.