2nd UPDATE: Pharma Gets What It Lobbied For In Senate Health Bill
September 16 2009 - 7:32PM
Dow Jones News
The Senate Finance Committee's health proposal released on
Wednesday is missing key provisions that would have put the
pharmaceutical industry on the defense.
The proposal doesn't include giving the federal government the
authority to negotiate Medicare drug prices, one of President
Barack Obama's campaign promises, or force the drug companies to
pay billions of dollars in rebates for people who are eligible for
both Medicare and Medicaid.
The bill does include a proposal to create a government-run
board that would compare the effectiveness of medicines, but their
cost wouldn't be a factor. The pharmaceutical industry has long
said it would be unfair for the government to consider the costs of
medicines when determining which drugs it would subsidize.
The Pharmaceutical Research and Manufacturers of America, or
PhRMA, the main lobby for the brand-name drug makers, said it is
reviewing the proposal and couldn't provide its thoughts on the
proposal at this time.
Ken Johnson, a senior vice president at PhRMA, noted that the
pharmaceutical industry has committed to helping the federal
government save $80 billion over 10 years. The commitment will be
met in several ways, including by giving certain Medicare patients
their drugs at half cost.
He said the industry's commitment is "unprecedented" and
anything more would force companies to cut jobs and end up "driving
critically-important research and development overseas."
Pharmaceutical companies, including Wyeth (WYE), referred
questions to PhRMA, while others declined to comment.
Many expected these provisions to be missing from the Senate
proposal as Sen. Max Baucus, D-Mont., chair of the Senate Finance
Committee, had supported a deal the industry struck with the White
House in June. Under that deal, the pharmaceutical industry agreed
to concessions of $80 billion over 10 years. The White House
reportedly agreed that it wouldn't support giving the government
the power to negotiate Medicare drug prices and collect additional
Medicare rebates.
Proposals in the House, however, include many of these
provisions.
"They fare better under the Senate" proposal, said Bonnie
Washington, a vice president at Avalere Health LLC, a health-care
advisory company, and a former official in the Center for Medicare
and Medicaid Services in the Clinton administration. She says
ensuring the government doesn't get the power to negotiate drug
prices under Medicare is extremely important to the industry.
Still, not everything in the proposed bill favors industry. The
draft includes imposing annual excise taxes of several billion
dollars on drug makers.
The proposal also includes boosting the amount of rebates the
industry has to pay the government for prescription and generic
drugs offered to Medicaid patients.
Kathleen Jaeger, president of the Generic Pharmaceutical
Association, the main lobby for generic-drug makers, said in a
statement that rebates on generic drugs would also increase drug
costs for patients. Instead of raising rebate rates, Congress
should work to increase generic drug utilization, she said. The
bill would increase rebate rates, the amount companies have to pay
in rebates for drugs, to 13% from 11% for generic drugs. The rate
for brand-name drugs would be boosted to 23.1% from 15.1%.
The bill would also require companies to report annually all
payments larger than $10 to physicians and hospitals as part of a
broader effort in Congress to ensure pharmaceutical money isn't
influencing doctors' prescribing habits. Any company that doesn't
report the payments could face fines of up to $1 million a
year.
-By Jared A. Favole, Dow Jones Newswires; 202.862.9207;
jared.favole@dowjones.com
(Alicia Mundy contributed to this article.)