A healthcare reform plan proposed by Senate Finance Committee Chairman Max Baucus, unveiled on 16 September 2009, would raise the rebates generic drugmakers must pay to the government on medicines used by patients in the Medicaid health programme for the poor. The changes are meant to help pay for an overhaul of the US healthcare system and wider insurance coverage.

“There is bigger money out there,” Mr William Marth, North American CEO for Teva Pharmaceutical Industries Ltd, said about the rebates.

“The bigger money is really increasing generic utilisation to at least the same levels that exist in nongovernmental use of medicines,” Mr Marth told reporters at a meeting of the Generic Pharmaceutical Association (GPhA).

Mr Marth said about 70% of prescriptions dispensed in the US are filled with generic drugs, which are cheaper copies of brand-name medicines. For the state-federal Medicaid programme, the rate is 64%.

For each 1% increase in generic use, Medicaid could save US$315 million (Euros 215.39 million) annually, Mr Marth said. By comparison, the increased rebates would save an estimated US$46 million (Euros 31.45 million) a year, Teva officials said.

The Senate Finance Committee will vote next week on the plan and how to pay for the estimated US$856 billion (Euros 585.30 billion) cost over 10 years. The committee's final product will be merged with a measure passed by the Senate health panel. Each chamber of Congress will take up a version of the healthcare bill in the coming weeks.

GPhA said in a statement that the higher rebates proposed by Mr Baucus “could have the unintended consequence of also increasing the costs of generics for consumers and the government” by weakening competition.

“Adding costs to generic drugs is simply not worth the risk of reducing competition in the markets that generate these tremendous savings,” the group said.

References:
Reuters 17 September 2009. Generic drugmakers criticize U.S. health plan rebates.