The US Senate Finance Committee has rejected a proposal to abandon the $80 billion cost-saving deal agreed in June between drugmakers and the panel’s chairman, Senator Max Baucus.

The amendment to the Finance panel’s health reform bill put forward by Democrat Bill Nelson, which was rejected in a 10-13 vote yesterday, would not only have nullified the deal but also require the industry to stump up a further $86 billion in cost savings over 10 years.

Sen Nelson’s proposal would have overturned the deal reached between Sen Baucus and the Pharmaceutical Research and Manufacturers of America (PhRMA), under which drugmakers have agreed to pay 50% of the costs of prescription drugs for Medicare enrollees once they reach the “doughnut hole” coverage gap in the federal programme’s prescription drug benefit, known as Part D, which kicks in when their annual drugs bill reaches $2,700 and ends once it hits $6.154. At that point the federal government starts to pay again, covering 95% of the enrollee’s drug costs.

Under Sen Nelson’s proposal, the doughnut hole would have been closed altogether on a gradual basis, by requiring drugmakers to supply prescription medications to Medicare beneficiaries at the same prices they charge for enrollees in Medicaid, the federal health programme for America’s poorest. This proposal would have cost the industry $56 billion of the $86 billion Sen Nelson wants drugmakers to provide over 10 years, and estimates issued by the Congressional Budget Office (CBO) earlier this week put savings to the government from the measure at $106 billion over 10 years, which would be enough to close the coverage gap with a further $50 billion left over, he said.

Wrangling over the chairman’s mark-up of the health reform bill has gone on for most of this week. Shortly before yesterday’s vote on the Nelson amendment, Sen Baucus warned the panel that it would be “inappropriate” for them to vote against the PhRMA deal which had, he pointed out, been agreed with the White House. The goal of closing the doughnut hole was good, but some other time and way would have to be found to achieve this, he said.

Also speaking before the vote, PhRMA president Billy Tauzin warned that the industry’s continued support for the Finance panel legislation would be “contingent on a good bill.”