Deal to Close Part D Coverage Gap

The pharmaceutical industry recently agreed to spend $80 billion over the next decade improving drug benefits for seniors on Medicare and defraying the cost of President Barack Obama's health care legislation, capping secretive negotiations involving key lawmakers and the White House.

"This new coverage means affordable prices on prescription drugs when Medicare benefits don't cover the cost of prescriptions," Sen. Max Baucus, chairman of the Senate Finance Committee, said in a statement announcing the accord.

The deal marked a major triumph for Baucus as well as the administration. Obama praised the deal.

"The agreement by pharmaceutical companies to contribute to the health reform effort comes on the heels of the landmark pledge many health industry leaders made to me last month, when they offered to do their part to reduce health spending $2 trillion over the next decade," Obama said. "We are at a turning point in America's journey toward health care reform."  To read the rest of the story.

Agreement in Brief

America’s biopharmaceutical research companies recognize the burden that the coverage gap places on some Medicare beneficiaries, and as part of our commitment to passing comprehensive health care reform legislation, we have voluntarily agreed to support legislation that will help close this gap in coverage.

Specifically, companies:

• Will provide a mandatory 50% discount on the negotiated price of all brand-name medicines when the medicines covered by a beneficiary’s Part D plan are purchased in the coverage gap.
• All Part D beneficiaries in the coverage gap – excluding those receiving low-income assistance (who have no gap in coverage) or those paying income-related Part B premiums (Medicare beneficiaries with incomes over $85,000/$170,000) – will receive this 50% discount when they purchase brand name drugs through their Part D plan.
• 100% of the negotiated price of the Part D-covered medicine purchased by the beneficiary in the coverage gap would count toward the beneficiary’s true out-of-pocket costs (TrOOP), which will help them reach the catastrophic threshold without spending as much out of pocket.
• This program will be seamless for Part D beneficiaries. No additional paperwork or application would be required. Eligibility will be determined by the federal government based on current beneficiary data. No asset test will be applied.

 To view President Obama's announcement on YouTube (uncaptioned)