11/23/2009 05:12 am ET Updated May 25, 2011

Erasing the Doughnut Hole for All Seniors -- A Senate Revolt Against Big Pharma Brewing!

A rebellion against the pharmaceutical mega-corporations, which charge Americans more for drugs than they charge the citizens of most other countries for the same medications, bubbled up 9/22/2009 in Senator Max Baucus' crucial Senate Finance Committee.

An amendment offered by Senator Bill Nelson [D-FL] would reportedly lower the health care reform bill's cost by an additional $86 billion without reducing services -- in the process allowing Congress to save all 44 million seniors from the dreaded "doughnut hole" (a huge gap in Medicare reimbursement into which 12% of them fall each year) and still have $30 billion left over. Yet Sen. Nelson's suggestion was simple: revert to the previous law that had reimbursed the pharmaceutical costs of low-income seniors at Medicaid rather than at the higher Medicare prices.

Because Medicare does not cover all medical costs, seniors must carry costly private supplemental insurance. Low-income seniors are however "dual eligible," receiving not only Medicare but Medicaid help with additional costs. Until five years ago, all low income seniors paid Medicaid rather than Medicare prices. In 2004, Bush's Part D Medicare Prescription Drug Plan raised the amounts paid for low-income seniors' medications to Medicare levels. The government reimburses a great deal of that, giving big pharmaceutical corporations a windfall and costing the taxpayers an estimated $43 billion arguably unnecessary dollars.

The Nelson amendment would restore the practice of paying the pharmaceutical corporations Medicaid prices for drug benefits to the poor -- automatically reducing taxpayer costs for Part D reimbursement by $86 billion dollars over ten years. Not only would the eight million low-income seniors still get the medications they need, but part of the money saved could be used to permanently close the "doughnut hole" for all seniors, with $30 billion left over to pay for other reforms.

It set off a firestorm in the committee. As several Democrats immediately signed on as co-sponsors, most committee Republicans glowered, one Democrat insisted that the Congressional Democrats support President Barack Obama's purportedly hands-off approach to the pharmaceutical corporations; and the crucial swing vote, Republican Olympia Snowe of Maine, sat quietly listening.

Senator Jay Rockefeller [WV-D], a scion of one of the nation's wealthiest families who represents one of the nation's poorest states, calling the amendment "a dream come true," saying that the proposal "should be astoundingly popular and deservedly so."

Equally enthusiastic, Senator Chuck Schumer [NY-D] agreed that the Nelson amendment ought to please everyone, since it would fill the doughnut hole, help pay for reform "AND does not reduce services in any way...How often do we side with an interest group and how often do we side with the average citizen?...It's hard to imagine an argument against it that could be made publicly."

Senator Chuck Grassley [IA-R] however immediately made one. He said the big pharmaceutical corporations would retrieve any lost profit by raising prices on the privately insured and, he said without explaining, "on children."

Tom Carper [D-DE] argued that "we made a deal" -- the Obama administration had negotiated with Big Pharma and the pharmaceuticals were therefore willing to lower their prices by $80 billion to help pay for reform. He argued that Congress had no right to override that by "doubling" the amount of discount it wanted from Big Pharma to $160 billion.

Making a strong distinction between the executive and congressional branches, mammoth corporations and people, Rockefeller said, "You are talking about a deal that somebody made with pharmaceuticals....nothing sacred about that deal.... I'm talking about a deal we failed to keep with seniors....they're paying premiums and receiving no service" when in the doughnut hole.

Carper insisted that hospitals accounted for 30-40% of healthcare costs, and were taking only $150 billion in reductions while the pharmaceuticals accounted for 10% of costs and were being asked for $180 billion in reductions.

Schumer of New York responded that in his state, 85% of the hospitals were operating in the red, burdened with last-minute saves of people without insurance -- who tend to be workers and desperately ill when they get to a hospital, an estimated 45,000 of them dying unnecessarily each year.

Senator John Kerry [D-MA] added that 50% of hospitals are nonprofit. "What percentage of the pharmaceuticals are non-profit? It's a stunning argument we're hearing here."

It will continue in committee into next week and soon hit the Senate floor.