Baucus, White House In Deal With Drug Industry

Baucus' announcement said drug companies would pay half of the cost of brand-name drugs for seniors in the so-called doughnut hole — a gap in coverage that is a feature of many of the plans providing prescription coverage under Medicare. Other officials said wealthier Medicare beneficiaries would not receive the same break, but there was no mention of that in the statement.

In addition, the entire cost of the drug would count toward a patient's out-of-pocket costs, meaning their insurance coverage would cover more of their expenses than otherwise.

"The existence of this gap in coverage has been a continuing injustice that has placed a great burden on many seniors," Obama said. "This deal will provide significant relief from that burden for millions of American seniors.

"Key sectors of the health care industry acknowledge what American families and businesses already know — that the status quo is no longer sustainable," the president said.

Billy Tauzin, president and CEO of the Pharmaceutical Research and Manufacturers of America (PhRMA), said, "Millions of uninsured and financially struggling Americans are depending on us to accomplish comprehensive health care reform this year. Today, America's pharmaceutical research and biotechnology companies are signaling their strong support for these critically important efforts."