WASHINGTON — Drug manufacturers have tentatively agreed to provide up to $80 billion worth of discounts on medicines purchased for government programs such as Medicare, providing a bit of cash for President Barack Obama’s expensive and ambitious attempt to give health coverage to every American.
The accord, approved Friday by the board of the Pharmaceutical Research and Manufacturers of America, is a voluntary pledge by the industry to reduce what it charges the federal government over the next 10 years, according to a source close to the negotiations who requested anonymity because of White House sensitivity about the talks.
“We applaud the president’s efforts on health care reform and are pleased to participate to expand access to medicines to seniors and disabled persons,” said Kevin Sharer, a former chairman of PhRMA and president and chief executive of Amgen, a major biotech drug manufacturer.
If health-reform legislation is enacted, the agreement would bring financial relief to about 3.4 million elderly and disabled Americans who currently fall into a coverage gap known as the “doughnut hole.”
Presently, Medicare recipients must pay the full price of brand medications after they have incurred a total of $2,200 in drug expenses until reaching an outer limit of $5,100.
Under the proposal, American drug companies would provide half-price discounts to Medicare recipients in the “doughnut hole” and provide other unspecified discounts and rebates to reach the full $80 billion in savings to the government.
The agreement comes at a critical juncture in the health-reform debate as lawmakers this week received a series of sobering reports indicating it will not be easy to find the money to pay for an overhaul of the nation’s health care system.
The concessions by drug manufacturers essentially lower the cost of reform by a fraction of the total $1 trillion needed. The move by drugmakers may have been intended to forestall more severe cuts.
