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Pharma agrees cost-saving deal with US government

Published on 24/06/09 at 07:56am

Drug makers have agreed with the US government to spend $80 billion over the next ten years in a bid to help older patients manage healthcare costs.

The money will be used to plug coverage gaps in the Medicare prescription drug programme, known as Part D.

Medicare currently covers up to $2,700 in yearly prescription costs and then stops until the costs exceed $6,100 per year.

In the deal to fill this so-called "doughnut hole", pharma firms will provide a 50% discount to most patients on branded medicines covered by their Part D plan.

The move comes as part of US president Barack Obama's much-vaunted changes to the country's healthcare system, which leans heavily on private insurance cover.

In a statement, Pharmaceutical Research and Manufacturers of America (PhRMA) president Billy Tauzin and AstraZeneca chief executive David Brennan said it "represents the first important step in healthcare reform".

Both added that there would be other benefits for patients.

"The entire negotiated price of the Part D covered medicine purchased in the coverage gap would count toward the beneficiary's out-of-pocket costs, thus lowering their total out-of-pocket spending," they said.

"Importantly, the proposal would not require any additional paperwork on the part of the beneficiary nor would an asset test be used for eligibility," the statement concluded.

Obama praised the pharma sector's commitment, saying: "This is a significant breakthrough on the road to health care reform, one that will make the difference in the lives of many older Americans."

"This gap in coverage has placing a crushing burden on many older Americans who live on fixed incomes and can't afford thousands of dollars in out-of-pocket expenses."

Senate finance committee chairman Max Baucus brokered the deal with pharma companies.

"This new coverage means affordable prices on prescription drugs when Medicare benefits don't cover the cost of prescriptions," he said.

The agreement gives the green light for a new Medicare prescription drug discount programme in July next year, to be administered by a third party.

New legislation on health is currently under consideration.

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