No deal yet as Dems seek more health industry funds

WASHINGTON (Reuters) - Democratic leaders crafting a final health reform bill have asked drugmakers to pay at least $10 billion more to help fund the overhaul but no agreement has been reached, industry sources said on Thursday.

The pharmaceutical industry has already agreed to pay $80 billion over 10 years through taxes and price cuts as part of the legislation that largely expands access to health coverage.

"It''s not a done deal," said one industry lobbyist, who asked not to be named because negotiations are still underway.

Lawmakers want to see the $315 billion industry kick in more, especially to fix a gap in prescription drug coverage for some seniors in the government''s Medicare program. Such a move would help win over an important voting bloc as Democrats face an uphill fight ahead of the 2010 midterm election.

Congressional Democratic leaders are grappling with how to fund the bill and are seeking revisions to versions passed by the House and the Senate last year.

Sources said an extra $10 billion from drugmakers would be used to eliminate a gap in the program known as the "doughnut hole," which in some cases forces patients to pay thousands of dollars in out-of-pocket expenses.

Last June, the drug industry''s lobby -- Pharmaceutical Research and Manufacturers of America (PhRMA) -- struck a deal with the Obama administration and top Senate Democrats to halve the gap. It also agreed to pay $2.3 billion over 10 years in industry taxes.

Many House Democrats, whose bill seeks further drug industry concessions through additional rebates and other price changes, saw the move as a sweetheart deal.

House Rules Committee Chairwoman Louise Slaughter said she was not sure what the industry would wind up paying in the end, "but I know the $80 billion was too low."

Still, other lobbyists said it has long been expected that PhRMA''s members would end up paying more as lawmakers moved closer to final plan.

Another $10 billion was well within the industry''s "tolerance," said one lobbyist whose clients include top drugmakers.

Some Wall Street analysts said the additional funds could help pharmaceuticals by forcing lawmakers to drop other provisions that drugmakers dislike, such as an expansion of a prescription drug discount program known as 340B.