Health overhaul likely to raise drugmakers' costs

WASHINGTON --- The pharmaceutical industry might have to cough up more than the $80 billion it agreed to contribute to President Obama's health overhaul effort, reflecting pressure from Democrats and their supporters for more money to cover older and low-income people.

Mr. Obama and congressional Democrats want the drug industry to remain a crucial ally in the health care fight because of its deep pockets and influence in states where it is a large employer, including New York, New Jersey, Connecticut and Indiana.

So far, it remains an active backer of the Democrats' efforts and plans to expand a supportive TV ad campaign on which it has already spent tens of millions of dollars.

By many accounts, the health package the House approved last month would count on getting about $140 billion from drug companies to defray additional health care costs over the next decade.

Industry officials say the version the Senate is debating may already pluck close to $100 billion from drugmakers -- and an expected parade of amendments could boost that by billions more.

"The numbers are still in the same ballpark," said Ken Johnson, the senior vice president of the Pharmaceutical Research and Manufacturers of America. "And we're still committed to making health care reform a reality this year."

The proposals to dig deeper into drugmakers' wallets pose a test for one of Washington's richest lobbies as it works to limit the damage.

Many Democrats believe the industry will profit when roughly 30 million uninsured Americans gain coverage for prescriptions.

"There's enormous pressure on the part of Democrats to spend more money. Who's got deep pockets?" said Robert Laszewski, a health care consultant. "The drug companies are going to have to pay more."

About $320 billion in pharmaceuticals will be sold in the U.S. next year, according to IMS Health Inc., a data tracking firm. But that is expected to grow by less than 5 percent annually in the next few years, a relatively low figure caused by a paucity of new drugs and growing numbers of low-cost generic competitors, IMS said.

Pressures to boost the drug industry's contributions are widespread.

The AARP, representing older Americans, wants to close the "doughnut hole," a gap in Medicare's coverage of prescription drugs.

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