President Barack Obama's proposed fiscal 2013 budget was released on Monday. It includes the provision that drug manufacturers would be obliged to offer discounts of $156 billion over the next ten years to underprivileged senior citizens on the sale of medicines.
The President's proposals, however, will become law only if they are included in legislation to raise the government's debt limit.
The gamut of changes to Medicare (health insurance program for the elderly and disabled) and Medicaid (health plan for the poor) that the administration's budget request contains, would help save $362 billion over a decade. This would eventually slow down spending on medicines.
Huge brands in the US that manufacturer drugs already provide rebates of about 15 percent on the price of medicines under Medicaid. The Obama administration is proposing that this benefit be extended to cover the 'dual eligibles', about 9 million elderly citizens who qualify for both Medicare and Medicaid.
Medicare and Medicaid are different payment programs, and hence people insured under Medicare get significantly lower discounts and pay higher prices for drugs than people insured under Medicaid.