New reform plan wants $10bn from drug makers

President Barack Obama's plans for healthcare reform have been reignited today with the unveiling of a newly revised proposal that would cost $950 billion over the next decade. It would also secure a further $10 billion for the pharmaceutical industry, which comes on top of the $80 billion the have already pledged for the 10 years beginning next year.

The unveiling of Obama's new plan, which comes ahead of the bipartisan healthcare summit that will be held on Thursday (25 February), is of particular significance to drug makers because it would require them to pay $10 billion in the form of fees on brand-name drugs. Though this would not begin until 2011, the fees would be used to help pay for the Medicare prescription drug benefit, completely closing the programme’s “donut hole” coverage gap which occurs when an enrollee’s annual drugs bill reaches $2830, after which they have to pay their costs out-of-pocket until their annual spending hits $4550.

The proposal

The renewed proposal, which tracks closely with the Senate's already-passed bill, "builds off the legislation that passed the Senate and improves on it by bridging key differences between the House and the Senate as well as by incorporating Republican provisions that strengthen the proposal," said the White House in a statement.

The President's Proposal would end the "collusion" of brand-name drug makers paying generics producers to keep their cheaper copycat versions off the market. This is because these so-called "pay for delay" deals which "limit or forgo research, development, marketing, manufacturing or sales of the generic drug" would be prohibited, except in cases where the companies were able to prove that their settlement could "outweigh the anti-competitive effects of the agreement."

However, Kathleen Jaeger, chief executive of the Generic Pharmaceutical Association (GPhA) said the industry group was "deeply disappointed" at the proposed ban on settlements of generic patent challenges.

The President's plan would also extend discounts on drugs to hospitals and communities that serve low-income patients, and establish a new pathway to create generic versions of biological products "so that Americans have access to effective, lower-cost alternatives."

Matthew Buttell

Matt Buttell graduated from Bath Spa University in 2006. Since then he has written for several publications, before moving to the web. He now writes solely for the internet, continuing to cover key business issues while managing his own personal blog.

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