Drug Companies May Narrow Medicare Coverage Gap

Rep. Henry Waxman, D-Calif., chairman of the Energy and Commerce Committee, said during the day drug makers reaped a "windfall of billions of dollars" from the Medicare prescription benefit and Congress wants some of it back. He was referring to seniors who had been covered under Medicaid, which requires rebates from drugmakers. Many were switched to Medicare, which does not.

Obama has called for $75 billion worth of savings in government payments to drug companies from Medicare and Medicaid over the next decade to help pay for his health legislation, which he says must not add to the deficit.

Under the drug program for Medicare, which began in 2006, most plans included a gap in coverage. Under a standard plan in effect, the benefit covered costs until the beneficiary and government together had spent $2,250. At that point, beneficiaries had to pay all their drug costs until their out-of-pocket costs reached $5,100 for the year. Benefits then resumed, paying 95 percent of any additional expenses.

Republicans and the Bush administration, who designed the program, created the "doughnut hole" to hold down the government's cost.

Democrats attacked the bill, taking particular aim at the doughnut hole, and pledged to narrow or close it if they won a majority. Even so, they made no concerted effort to do so after winning majorities in the 2006 elections.