Today, the President announced
a landmark agreement with pharmaceutical companies, who pledged $80 billion in prescription drug discounts over the next 10 years. This compromise is the latest step towards a new consensus amongst health care stakeholders to help reduce costs and provide quality care for all Americans – last month a coalition of health care industry leaders agreed to $2 trillion
in savings over 10 years.
The President was joined by Senators Max Baucus and Chris Dodd, and introduced by AARP President Barry Rand, who called the plan a "new opportunity" for those who have been burdened by the costs of prescription drugs.
(President Barack Obama speaks about the agreement to lower drug costs for seniors, Monday, June 22, 2009, in the Diplomatic Reception Room of the White House. With the President are, from left, CEO of AARP Barry Rand, Senator Max Bachaus (D-MT) and Senator Chris Dodd (D-CT). Official White House Photo by Chuck Kennedy)
The agreement, which was reached between Sen. Baucus, Administration officials, and the nation’s pharmaceutical companies, will ultimately reduce the price of prescription drugs by half for millions of America’s seniors. As part of the upcoming health care reform legislation, drug manufacturers that participate in Medicare Part D will either pay a rebate to Medicare or offer a substantial discount of at least 50 percent on prescription drugs to seniors who fall within the infamous "doughnut hole"— payments between $2700 and $6153.75 not covered by Medicare. The deal will help close this unfair gap in coverage, providing relief for millions of seniors who have been burdened by these out-of-pocket expenses, making it easier for them to get the prescriptions that they need.
In addition to providing half-price discounts, the pharmaceutical companies will offer other discounts and savings to total an $80 billion reduction in costs. The President said this historic compromise marks a turning point in the journey towards health care reform that will lower costs for all Americans:
So as part of the health care reform I expect Congress to enact this year, Medicare beneficiaries whose spending falls within this gap will now receive a discount on prescription drugs of at least 50 percent from the negotiated price their plan pays. It's a reform that will make prescription drugs more affordable for millions of seniors, and restore a measure of fairness to Medicare Part D. It's a reflection of the importance of this single step for America's seniors that it has earned the support of AARP, which has been fighting for years to address this anomaly in the system on behalf of older Americans. AARP is committed, as I am, to achieving health care reform by the end of this year. And I'm committed to continuing to work with AARP to ensure that any reforms we pursue are carried out in a way that protects America's seniors, who know as well as anyone what's wrong with our health care system and why it's badly in need of reform.
Our goal – our imperative – is to reduce the punishing inflation in health care costs while improving patient care. And to do that we're going to have to work together to root out waste and inefficiencies that may pad the bottom line of the insurance industry, but add nothing to the health of our nation. To that end, the pharmaceutical industry has committed to reduce its draw on the health care system by $80 billion over the next 10 years as part of overall health care reform.