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Nelson gets ammo for drug fight

12/3/2009 © Health News Florida

Displaying documents that show drugmakers are recouping most of the $80 billion they promised for health reform, Sen. Bill Nelson introduced an amendment to the Senate health package today that would require them to give up $106 billion in "extra profits" over 10 years.

That money would be used to plug the "doughnut hole," the gap in Medicare drug coverage, and would leave more than $50 billion to reduce the U.S. budget deficit, Nelson said.

The documents -- an analysis from a Morgan Stanley researcher and a report from AARP -- showed the drug industry will spend only about $22 billion of the $80 billion it promised to the White House earlier this year as its contribution toward covering the uninsured. Most of the recouped money comes from increased sales, but the industry has also jacked up prices far beyond inflation, the AARP report says.

“In other words,” Nelson said, “it seems the drug industry will pay next to nothing for health care reform.” 

Response from the Pharmaceutical Research and Manufacturers of America (PhRMA) was swift. Senior Vice President Ken Johnson released a statement said the industry will "vigorously" oppose Nelson's amendment.

“We not only have been big supporters of health care reform from the beginning, we also have been very flexible in working with Congress to achieve meaningful cost-cutting measures," Johnson said. "But this proposed amendment is one of those ‘line-in-the-sand’ issues for us, and we will oppose it vigorously." 

Meanwhile, Florida's other senator condemned the proposed Medicare spending cuts to home health agencies, nursing homes, and Medicare Advantage programs. He supported Sen. John McCain's amendment, which did not pass. (The LeMieux video is on YouTube.)

“Every American understands that if we pay less money to healthcare providers they’re going to offer fewer benefits or they are not going to participate in Medicare,” Sen. George LeMieux, a Republican, said. “This is of grave concern to the 3 million Floridians who are on Medicare. If a doctor won’t see them what kind of healthcare plan is this?"

Nelson, a Democrat, told party leaders at a closed-door meeting Tuesday that he intended to offer his amendment. It would force the pharmaceutical industry to surrender a financial windfall it gets on drugs sold to a group of Medicare patients who also qualify for Medicaid, the poorest seniors labeled as “dual eligibles.” 

When Congress enacted a partial Medicare drug benefit in 2003, 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 higher prices for drugs.

Nelson first introduced hisamendment to break the PhRMA deal during Senate Finance Committee negotiations two months ago. The amendment was targeted for defeat by the drugmakers’ lobby and failed 13-10.

Now, under the Senate rules, it likely would take 60 votes out of the 100 members to bring it up for a full Senate vote or adopt it. A similar provision is in a health care bill passed by the House.

In his press release, PhRMA's Johnson said that cutting prices back for the dual eligibles' drugs "would likely lead to higher prices on medicines for other beneficiaries in the program." He cited a CBO calculation that it could raise premiums by 20 percent.

“Secondly, this provision could also kill more than 100,000 American jobs at a time when our economy continues to struggle. And, finally, it would undermine the incentives needed to discover and develop new life-saving medicines which allow patients everywhere to live longer, healthier and more productive lives...

“Ultimately, health care reform will be judged a failure if it doesn’t place a premium on innovation and medical progress in America. Saving money is important but so is saving lives.”