The first big fight over the Senate Finance Committee’s health care legislation erupted Tuesday night: a rollicking brawl over a deal that the Obama administration cut with the pharmaceutical industry to achieve $80 billion in savings on drug costs over 10 years, money that would help pay for the legislation.
Top House Democrats have hated the deal from the get-go. Senate Democrats are now bitterly divided. And Senate Republicans are eagerly jumping into the fray to needle the Democrats over their divisions.
The fight over the deal with PhRMA actually stems from the legislative battle over the Medicare prescription drug legislation that Republicans successfully pushed through Congress in 2003. As a result of that legislation, about 6 million elderly Americans who had been receiving drug benefits under Medicaid, the government insurance program for the poor, were instead shifted into the new Medicare drug program, resulting in the government paying far high prices for drugs.
Representative Henry Waxman, Democrat of California, and now the powerful chairman of the House Energy and Commerce Committee, has long complained about that switch. And the House health care legislation, of which Mr. Waxman is a main author, seeks to reverse the arrangement and to recoup the extra money that the government has been spending by restoring the old Medicaid drug discounts or “rebates” as they are known.
That would save the government at least $86 billion over 10 years, but would potentially cost the drug industry far more.
The White House has said that its deal with PhRMA would help narrow a gap in Medicare coverage of prescription drugs that is know as the doughnut hole, which forces people to pay some of their drug costs after a certain level. But there are also questions about the extent to which the drug industry also benefits, because the increased drug coverage for seniors means that the government will pay for more medication on their behalf, particularly brand-name drugs. In some cases, seniors now stop taking medication or switch to generics when they reach the doughnut hole.
Since the White House reached its deal with PhRMA in June there has been some disagreement between the industry and the administration over the precise terms of the arrangement. PhRMA has insisted that the White House agreed not to seek any additional concessions from drug manufacturers and to block Mr. Waxman’s plan in the House legislation. And the industry said that its support of the health overhaul was specifically aimed at Mr. Baucus’s proposal.
Mr. Baucus had previously announced that the first votes on amendments would not take place until Wednesday, so a final outcome of the fight was postponed.
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