Drugmaker Rebates Would Rise by $156 Billion Under Obama Budget - Businessweek

By Alex Wayne

Feb. 13 (Bloomberg) -- 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 health-care law. The rebates proposed in the budget documents today would come on top of those commitments.

via businessweek.com

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