Drug promise depends on health-bill enactment

WASHINGTON - Hailed by President Obama, a multibillion-dollar promise by drug companies to narrow a Medicare drug-coverage gap for seniors is valid only if Congress passes a comprehensive health-care overhaul.

The commitment was "made in the context of comprehensive health-care reform being enacted," said Ken Johnson, senior vice president of the Pharmaceutical Research and Manufacturers of America, or PhRMA. "We recognize that there has to be a shared commitment if this is going to happen, and this is our part of it."

The industry sealed a weekend deal with the White House and Senate Finance Committee Chairman Max Baucus (D., Mont.) to spend $80 billion over a decade defraying the cost of drugs for seniors and paying part of the cost of Obama's legislation.

Obama yesterday called the deal "a significant breakthrough" that would "make a difference in the lives of many older Americans."

The agreement marked a major triumph for Baucus, though the drive to enact a sweeping bill faces numerous obstacles, and some timetables set by Democrats have begun slipping.

Baucus has yet to produce a draft, even though he originally said it would be completed by last week. And officials said the Senate Health, Education, Labor and Pensions Committee would not be able to complete work on its version of the bill before Congress begins a one-week vacation at the end of this week.

While many details of the deal with drug companies remained unclear, so, too, was its impact on efforts by Baucus and the White House to gain similar concessions from insurance companies, hospitals, doctors, and others.

Baucus has been negotiating for weeks, hoping to win agreement on hundreds of billions of dollars' worth of savings for health-care legislation that is expected to cost $1 trillion or more over 10 years. He and Obama have both said the legislation will not add to the deficit.

At the same time, Obama's appearance and the deal that prompted it underscored the extraordinary complexity of the political environment as the administration and Democrats try to remake the nation's health-care system.

Obama appeared yesterday at the White House with A. Barry Rand, president of AARP, the seniors advocacy organization whose support for health-care legislation is coveted by the White House.

The top drug-industry official, PhRMA chief executive officer Billy Tauzin, was not invited, though he is due to be at the White House tomorrow for a town-hall meeting on health care.

The drug industry has long been aligned with Republicans in Congress, and its decision to strike a deal with the White House and Democrats in Congress appeared calculated at least in part to head off more costly demands as the legislation is drafted.

Many Democrats favor giving the government authority to negotiate directly for lower prices under Medicare with drug companies, a step they argue will hold down prices. The Congressional Budget Office has disputed that assertion.

The industry also has been fighting legislation that would permit the importing of prescription drugs from Canada and certain other countries where prices are lower than in the United States.

President Obama will hold his first Rose Garden news conference today.

The White House said he would take questions from reporters at

12:30 p.m. Press secretary Robert Gibbs said Obama would open the session with remarks on health care, energy legislation, and Iran's disputed elections.

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