Senate budget deal whacks pharma

The Senate budget deal includes provisions that would shift billions of dollars in costs from Medicare Part D plans to pharmaceutical companies. The bill seeks to increase the discounts drug companies pay to beneficiaries whose drug costs fall into the coverage gap, or donut hole, to 70% from the current 50% level. The change would save the federal government about $10 billion over a decade, according to a Congressional Budget Office estimate. It would cost drug companies close to $40 billion over that period, according to drug company lobbyists who are fighting furiously against the change.

The principal effect of the Senate budget deal on Medicare beneficiaries would be to accelerate the phase-in of larger discounts for the donut hole. The bill would increase the discount to 75% from the current 50% level in 2019 instead of 2020.

The biggest winners would be plan sponsors. Under existing law, drug companies are required to pay 50% of drug costs for beneficiaries who fall into the donut hole, while the amounts plans pay is gradually increased from 10% in 2017 to 25% in 2020. The Senate budget deal seeks to slash the amount plans pay to 5%, shifting the burden to pharma companies.