My ABC colleague Z. Byron Wolf reports:
It has been a largely partisan markup of the Finance Committee health reform bill this week. And that was the case when it came to the drug industry early this afternoon. Heretofore it has been Democrats protecting Sen. Max Baucus' delicately crafted centrist (but not yet bipartisan) health reform bill.Not this afternoon – Republicans and several Democrats sided with the drug industry, rejecting an amendment by Florida Democrat Bill Nelson that would have extracted an extra $100 billion from the industry. The amendment would have jeopardized a deal already hatched between drug manufacturers, the White House, and Senate Finance Committee Chairman Max Baucus. The drug industry pledged to cut costs to the government by more than $80 billion and has vocally supported Baucus' bill.
Heretofore, Democrats have defeated Republican amendments on medical malpractice reform, enshrining cost cutting in Medicare Advantage funding and more. But this afternoon the tables turned when Democrats proposed to charge the pharmaceutical industry extra money under its Medicare prescription drug benefit to close the "donut hole" that bedevils seniors with high drug costs.
The amendment, offered by Sen. Bill Nelson, D-FL, would have required the pharmaceutical industry to rebate the difference between what it gets from the government for people on Medicaid who are also eligible for Medicare. These people are called "dual eligibles" and currently the government pays drug companies at the Medicaid rate, which is often higher than the Medicare Part D rate.
All the Republicans and three Democrats on the Finance Committee – Baucus, Menendez of New Jersey, and Carper of Delaware – voted against the Nelson amendment.
By recouping the difference between the rates, the Congressional Budget Office projected the government would save more than $100 billion – more than enough to close the donut hole.
But Baucus and the White House had already secured a commitment from the drug industry to cut costs by $86 billion over ten years. And PHRMA, in return, has signed on to Baucus' bill.
And Republican Sen. Charles Grassley argued that the $100 billion would just be passed by the drug industry onto the backs of consumers who don't qualify for Medicare.