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Chris Good

Chris Good - Chris Good is a political reporter for ABC News. He was previously an associate editor at The Atlantic and a reporter for The Hill.

Details Of The $80 Billlion Prescripton Drug Deal?

By Chris Good
Aug 13 2009, 1:10 PM ET Comment

The Huffington Post's Ryan Grim reports that he's obtained a memo outlining a deal between the White House and PhRMA (the drug industry's lobbying/trade group), passed on by an unnamed lobbyist. Both PhRMA and the White House deny that it reflects what the two sides have agreed on, but here it is, as published by The Huffington Post:
Commitment of up to $80 billion, but not more than $80 billion.
1. Agree to increase of Medicaid rebate from 15.1 - 23.1% ($34 billion)
2. Agree to get FOBs done (but no agreement on details -- express disagreement on data exclusivity which both sides say does not affect the score of the legislation.) ($9 billion)
3. Sell drugs to patients in the donut hole at 50% discount ($25 billion)
This totals $68 billion
4. Companies will be assessed a tax or fee that will score at $12 billion. There was no agreement as to how or on what this tax/fee will be based.
Total: $80 billion

In exchange for these items, the White House agreed to:
1. Oppose importation
2. Oppose rebates in Medicare Part D
3. Oppose repeal of non-interference
4. Oppose opening Medicare Part B


An understanding between the White House and PhRMA has been the topic of some debate. The $80 billion figure has been out there, and The New York Times reported August 5 that an agreement had been reached.

But earlier this week, President Obama suggested that "now, we may be able to get even more than that," referring to the promised $80 billion in savings pledged by the drug industry. Was there a binding agreement, or just a savings pledge?

The memo purports to detail (and again, this has been denied) what the White House gave up, basically that it promised to: not give the government power to negotiate for lower drug prices, with the scale and bargaining power it enjoys; not move some drugs from Medicare Part B to Part D, which would result in drug companies getting paid less for them; not import drugs from Canada; and not require drug companies to pay back some money in rebates to negate the rates they've enjoyed.
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