The final version of US Senate Committee chairman Max Baucus’ long-awaited health reform bill, unveiled yesterday, maintains his earlier proposal for an annual $2.3 billion flat fee on the drug industry and would set up a medicines effectiveness comparison board.

However, the “Chairman’s Mark” of the bill – America’s Healthy Future Act of 2009 – contains no plans to empower the federal government to negotiate prices for the Medicare prescription drug programme, or require drugmakers to pay rebates to “dual-eligibles” – people who are eligible to enroll in both Medicare (the programme for US seniors and some disabled people) and Medicaid (the programme for America’s poorest).

The Mark pledge to invest in research “on what treatments work best for which patients and ensure that information is available and accessible to patients and doctors, through the establishment of an independent institute to research the effectiveness of different health care treatments and strategies.” However, it adds: “these provisions are carefully crafted so that patients would never be denied treatment based on age, disability status or other related factors as a result of the research findings.”

Senator Baucus’s bill would also provide patients with information about physician-industry relationships and close loopholes in physician self-referral laws that allow conflicts of interest. Drug, device, biologic and medical supply manufacturers would be required to report all payments of more than $10 which they make to physicians and medical institutions, and the Mark would also require drug manufacturers and distributors to report information they already collect on numbers and types of drug samples given to physicians. Payments could be delayed where product development issues are involved, in order to protect commercial confidentiality.

The annual fee on the drug industry would be allocated across the industry according to market share and would not apply to companies whose sales of branded pharmaceuticals are $5 billion or less. Annual fees would also be levied on the medical device, clinical laboratory and health insurance provider sectors.

Launching his Mark yesterday, Senator Baucus said: “this is a unique moment in history where we can
finally reach an objective so many of us have sought for so long. The Finance Committee has carefully worked through the details of health care reform to ensure this package works for patients, for health care providers and for our economy. We worked to build a balanced, common-sense package that ensures quality, affordable coverage and doesn’t add a dime to the deficit. Now we can finally pass legislation that will rein in health care costs and deliver quality, affordable care to the American people.”

The Pharmaceutical Research and Manufacturers of America (PhRMA) has so far made no explicit response to the Baucus proposals. “What’s critical now is that we remain focused on the important goal of helping pass a comprehensive health care reform bill that can get to the President’s desk this year. We will continue to be a constructive partner to help meet this goal,” said group’s senior vice president, Ken Johnson, yesterday.

However, free-market commentators have said the proposed industry fees will simply be passed on to patients, and generic drugmakers have expressed disappointment at the Mark’s plans to increase the Medicaid rebate for generic drugs from 11% of the drug’s quarterly Average Manufacturer Price (AMP) to 13%.

“While we understand that the Finance Committee negotiated in good faith to find costs savings in their health care reform bill, we are concerned that the proposals to increase generic drug Medicaid rebates will actually have just the opposite intent,” and could have the unintended consequence of weakening competition, thus raising the costs of generics for consumers and the government, said Kathleen Jaeger, chief executive of the Generic Pharmaceutical Association (GPhA).

Instead, she called on Congress to work to increase generic utilization. “At current costs for brand and generic prescriptions within the Medicaid program, even a 2% increase in Medicaid generic utilization would save almost $1 billion annually,” she said.

The bill would also increase Medicaid‘s basic rebate for outpatient brand name prescription drugs from 15.1% to 23.1% of AMP, except for clotting factors and drug approved exclusively for pediatric indications, for which the basic rebate would increase to 17.1%. it also contains the 50% discount on prescription drug costs pledged by industry for Medicare recipients once they hit the programme’s “doughnut hole” coverage gap.

Meantime, a preliminary analysis of Sen Baucus’s proposals by the Congressional Budget Office (CBO) says that they would result in a net reduction in federal budget deficits of $49 billion over 2010-29.

- The Senate Finance Committee is due to meet to begin voting on the legislation on September 22.