The boost in profits comes from a shift in the drug coverage of 6.4 million poor and elderly people from Medicaid to the new Medicare drug benefit. Unlike Medicaid, which requires drug companies to charge their lowest or "best price" for medications, the Medicare program relies on competition among private drug plans to keep prices low. By eliminating the need to discount drugs for the government, the industry can now pocket the savings. "The net effect over 10 years is probably closer to $40 billion in extra profit," said Stephen Schondelmeyer, a pharmaceutical economics professor at the University of Minnesota.
KRT Wire | 02/02/2006 | Windfall for drug industry raises questions
BioBOOM Op/ED: Just what some politicians needed. This will be interesting to see how the blame game plays out. Our guess is it will be a focal point of the midterm elections.
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