June 23rd, 2009

Reports the New York Times:

The White House on Monday hailed what it described as a “historic agreement to lower drugs costs” for older Americans, but it was not immediately clear how much the government would reap in savings that could be used to pay for coverage of the uninsured.

As part of the agreement, pharmaceutical companies promised to help narrow a gap in Medicare coverage of prescription drugs that is known as the doughnut hole.

As Mr. Obama described the gap, “Medicare covers up to $2,700 in yearly prescription costs and then stops, and the coverage starts back up when the costs exceed $6,100.”

Drug companies said they would give most beneficiaries a 50 percent discount on brand-name medicines bought when they hit the gap in coverage.

This could be a boon to Medicare beneficiaries, and AARP praised the deal. But drug company lobbyists and Senate aides said that none of these savings would accrue to the government, which has no liability for a patient’s drug costs in the coverage gap. Indeed, that is the problem for beneficiaries: they are responsible for the entire cost of drugs in the gap.

…

The lobby for drug companies, the Pharmaceutical Research and Manufacturers of America, or PhRMA, said it had pledged $80 billion over 10 years to help “reform our troubled health care system.” The commitment came in a deal with the White House and Senator Max Baucus, Democrat of Montana and chairman of the Finance Committee.

Get more details at the New York Times.