Obama's Medicare drug rebate plan could save the government money, but also hit drug industry's bottom line

Feb 16 2013

During his State of the Union address, President Barack Obama renewed a proposal to use drug rebates to save Medicare money -- a step that would trigger strong opposition from pharmaceutical companies.

The New York Times: Uphill Road For Plan To Cut Government's Drug Costs
In just a handful of words in his State of the Union address, President Obama renewed a proposal to lower the amount that the federal government pays for drugs taken by low-income seniors -; a measure that supporters say would save the government more than $150 billion over the next decade. But it faces formidable opposition from Republicans, some Democrats and the powerful pharmaceutical industry, making passage unlikely (Thomas and Pear, 2/14).

Reuters: Obama Medicare Rebate Plan Could Hurt Drug Companies
President Barack Obama's decision to spotlight drug rebates as a way to save money on Medicare is likely to be opposed by the pharmaceutical industry, which could potentially lose billions of dollars in profits. In his annual State of the Union speech on Tuesday, Obama said he would "reduce taxpayer subsidies to prescription drug companies" to rein in the rising cost of Medicare, the $600 billion healthcare program for the elderly and disabled (Berkrot and Morgan, 2/13).

In the background --

The Associated Press/Washington Post: A Look At How Administration Says Automatic Budget Cuts Would Diminish Government Services
The sequester law exempts Social Security, Medicaid, food stamps and Medicare recipients' benefits from cuts, but most programs are vulnerable. … The National Institutes of Health would lose $1.6 billion, trimming research on cancer, drying up money for hundreds of other research projects and eliminating up 20,000 private research positions nationwide. Health departments would give 424,000 fewer tests for the AIDS virus this year. More than 373,000 seriously ill people may not receive needed mental health services (2/15).