Tags: Drugmaker | Rebates | obama | Budget

Drugmaker Rebates Would Rise $156 Billion in Obama Budget

Monday, 13 February 2012 01:35 PM

Drugmakers led by Pfizer Inc. would have to provide $156 billion in discounts over the next decade for medicines sold to low-income senior citizens under President Barack Obama’s proposed fiscal 2013 budget.

The administration’s budget request, released today, contains a package of changes to Medicare, the U.S. health insurance program for the elderly and disabled, and Medicaid, the health plan for the poor. The policies combined would help save $362 billion over a decade to slow medical spending.

Brand-name drug manufacturers already provide rebates worth at least 15 percent the price of their medicines to Medicaid. The administration is proposing to extend that policy to cover so-called “dual eligibles,” about 9 million senior citizens who qualify for both Medicare and Medicaid.

Because Medicare and Medicaid have different payment programs, Medicare is “receiving significantly lower rebates and paying higher prices than Medicaid” for drugs, the administration said in budget documents.

The drug industry agreed to provide $80 billion in discounts and rebates to help cover the cost of expanded insurance coverage under the 2010 healthcare law. The rebates proposed in the budget documents today would come on top of those commitments.

Greg Lopes, a spokesman for the Pharmaceutical Research and Manufacturers of America, didn’t immediately comment. New York-based Pfizer, the world’s largest drug maker by market value, had no comment, said Peter O’Toole, a spokesman.

Legislative Prospects Dim

Obama’s proposals are unlikely to become law unless they’re included in legislation to raise the government’s debt limit, said Joe Antos, a health economist at the American Enterprise Institute, a nonprofit research group in Washington.

“Anything that has a policy significance is simply not going to go anywhere this year,” he said by phone. “All of these ideas and others will be on the table in early 2013 when the debt limit has to be raised again.”

A 2003 law written by congressional Republicans shifted drug coverage for dual eligibles from Medicaid to Medicare plans administered by private insurers.

The drug industry successfully fought efforts by House Democrats under then-Speaker Nancy Pelosi of California to require rebates for dual eligibles in the 2010 health-care overhaul.

Hospital Payment Cuts

Under Obama’s budget, Medicare spending would increase by $45 billion in fiscal 2013, to $523 billion. The administration proposed raising premiums on wealthier senior citizens beginning in 2017 to save $28 billion through 2022. The budget also would cut payments to post-acute care hospitals such as those run by Kindred Healthcare Inc. and to nursing homes, saving about $63 billion over a decade.

Payments to the facilities “in excess of the costs of providing high quality and efficient care place a drain on Medicare,” the administration said in budget documents.

Long-term care hospitals and nursing homes are trying to improve the quality of care and “remove costs out of the system” through such measures as reducing re-admissions, said Mark Parkinson, the president and chief executive officer of the America Health Care Association, a Washington trade group.

“We shouldn’t have an approach focused solely on cuts,” he said in a statement. Obama’s budget “reflects that singular direction,” he said, and “is tantamount to cutting Medicare benefits.”

Susan Moss, a spokeswoman for Louisville, Kentucky-based Kindred, didn’t immediately return a phone message.

There’s probably “room for some efficiencies” in payments to long-term care providers, said Antos, who advises the Congressional Budget Office on health issues. Cuts that are too deep could hurt access to care, he said.

“If they’re big enough and sustained long enough, they absolutely will have an impact that everyone’s mother will know,” he said.

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Monday, 13 February 2012 01:35 PM
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