Drug makers try to sidetrack demands for discounts


WASHINGTON — As the president and congressional leaders look for savings as part of a major debt deal, the pharmaceutical industry has stepped up its behind-the-scenes lobbying to kill proposals that it contribute to any compromise.

President Obama this spring said drug makers should offer discounts to low-income seniors who receive government subsidized health coverage through both the Medicare and Medicaid programs.

And with pressure growing to cut federal support for state Medicaid programs and to force seniors on Medicare to pay more for their care, many liberal lawmakers are demanding that pharmaceutical companies chip in more, as well.


“To let pharmaceutical companies get away with paying nothing while poor and disabled people lose health coverage is unconscionable,” said Rep. Henry Waxman (D-Calif.), who has sponsored legislation to force the industry to provide greater discounts.

The nonpartisan Congressional Budget Office has estimated that could save $112 billion over the next decade.

The additional discounts were also endorsed last year by the bipartisan fiscal commission, led by former Sen. Alan Simpson (R-Wyo.) and former White House chief of staff Erskine Bowles.

The Pharmaceutical Research and Manufacturers of America, the industry’s powerful Washington-based lobbying arm, has thus far avoided a public debate over the proposal.

PhRMA vice president Karl Uhlendorf provided a written statement setting out the industry’s opposition to providing more rebates. “Such policies would fundamentally alter the competitive nature of the (Medicare Part D) program and undermine its success,” he said, citing the program’s success in bringing down prices on its own.

But behind the scenes, industry lobbyists have been rallying its allies on Capitol Hill and elsewhere to resist the new demands.


“House Democrats seem to have less sway with the White House than the pharmaceutical industry,” complained one senior congressional aide, who asked not to be identified discussing intra-party tensions.

Drug makers, who are among the capital’s biggest political spenders, beat back similar proposals in 2009 and 2010, after PhRMA struck a deal with Senate Finance Committee chairman Max Baucus (D-Mont.) and the White House to limit how much the industry would contribute to Democrats’ heath overhaul.

Under that deal, the industry agreed to provide $80 billion to help close the so-called Medicare Part D “doughnut hole” in exchange for restrictions on Medicare’s ability to use its bargaining power to negotiate lower drug prices.

Drug makers have long had to provide drug discounts to Americans on Medicaid.

But when Congress created the Medicare Part D drug program in 2003, industry lobbyists succeeded in eliminating the discounts for a subset of Americans who qualify for both Medicare and Medicaid.

Today, there are about nine million of these so-called dual-eligibles, whose government subsidized healthcare bills are among the highest in country.