Friday, January 15, 2010

Donut Hole Closure by 2014?

Update January 18th ... Donut Hole Closure in Jeopardy

With the Dems' a probable loss of Ted Kennedy's seat in the Massachusetts to Republican Brown in today's special election Dems are strongly considering a political move which would send the Senate version of Healthcare Reform to Obama's pen to avoid another vote in the Senate.  According to very recent polls, Brown has surged past Coakley.  This would mean, at least in this round of the legislation, no real closure of the Donut Hole.  The Senate plan chips off $500 of the Donut Hole but "the buck" stops there.

Update...January 15th to the Blog below, Reuters reports that indeed Pharma has been asked to
chip in another $10 billion on top of the $80 billion widely reported in the deal cut last year with the Obama administration. The $10 billion would be used to further help close the Donut Hole.   Louse Slaughter, the House Rules Committee Chairwoman apparently said..."I know $80 billion was too low."

Perhaps the Donut Hole will be closed earlier than 2019?  The $80 billion figure (or at least part of it) was tied to Donut Hole closure in 2019.

On a side note... It also has been reported that the Medical Device Manufactures may also have to chip in an addition $10 billion to help pay for healthcare reform.

Stay tuned for further updates on this topic!

Original Blog

With Dem discussions underway to merge the Senate and House legislation, chatter about closure of the Donut Hole is finding it's way to the internet.
Senator Whitehouse from Rhode Island recently indicated that he has heard that there is talk to fully close the Donut Hole by 2014!  That would close the Donut Hole 5 years faster than House legislation which does not fully close the Donut Hole until 2019.

Revenue and earning ramifications might be substantial for Pharma has they have pledged the 50% discount for non low income Medicare Part D beneficiaries ending up in the Donut Hole.  It would appear the faster the Donut Hole is filled the lower the cost to Pharma.

But... don't get too excited yet.  There has been plenty of discussion of making Pharma honor more than their $80 billion dollar cost savings promise (of which about 50% is allocated to subsidizing Donut Hole more here).  Further some believe that the Senate bill is much more generous to Pharma.  If the Donut Hole is closed much faster than 2019 look for conference to find other ways to extract more from Pharma starting with adoption of the more costly House language.

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