Pharmaceutical companies commit $80 billion to Medicare Part D drug program

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AARP: Generic drug prices fell significantly in 2007
AARP: Generic drug prices fell significantly in 2007
The country's leading pharmaceutical industry group has agreed to cut Medicare prescription drug prices by $80 billion over 10 years. President Obama announced it Monday at the White House.

The funding will help to narrow the so-called "doughnut hole," according to the Pharmaceutical Research and Manufacturers of America (PhRMA). The doughnut hole is the gap in Medicare Part D coverage when seniors are responsible for the total cost of drugs. As part of their investment, drug companies will cover up to 50% of the cost of brand-name drugs that fall within the doughnut hole. The new deal would largely benefit lower-income Medicare recipients-one industry official noted. Sen. Max Baucus (D-MT) in a statement released Saturday said that the entirety of prescription costs would also count towards out-of-pocket expenses, meaning insurers would pick up more of the tab.

Standing with Obama at the event, AARP's chief executive Barry Rand told reporters the $80 billion contribution to healthcare cost reductions was "an early win for reform." Still PhRMA's $80 billion represents only a small fraction of the total cost of healthcare reform. The National Center for Assisted Living has been lobbying aggressively for elimination of Medicare Part D co-pays for assisted living residents.