Drug company deal may give Obama a boost

President Barack Obama on Monday hailed a deal with U.S. drug companies to cut prescription costs for the elderly, a move that could help him drive his ambitious healthcare reforms through Congress.

“This is a significant breakthrough on the road to healthcare reform, one that will make the difference in the lives of many older Americans,” Obama said at the White House of the agreement struck with the Pharmaceutical Research and Manufacturers of America industry association.

Obama’s healthcare overhaul is his top domestic priority, but it is proving a tough sell to both Democratic and Republican lawmakers in Congress worried about the $1 trillion price tag

The drug deal, which offers $80 billion in prescription discounts over 10 years to help elderly Americans afford drugs, comes ahead of a week of discussions in Congress on how to pay for Obama’s reforms and ensure coverage for the 46 million Americans who do not have health insurance.

The White House said Obama, who is due to hold a town hall-style meeting on Wednesday to discuss healthcare issues, would hold a news conference on Tuesday.

It did not say what he would talk about but he is expected to seek to focus on his proposed reforms.

The events underscore how the president is trying to take control of the debate and personally push the legislative process forward so that he can have a bill on his desk by October.

“EARLY WIN FOR REFORM”

Republicans oppose the changes, which include a public health insurance plan, arguing they will drive private health care companies out of business and add to America’s huge deficit, a growing worry for investors.

Obama, who insists the plan will not add to the country’s huge deficits, received a boost from a weekend poll showing that Americans strongly support fundamental healthcare changes and, more importantly, are willing to accept higher taxes to pay for it.

The U.S. healthcare system is the world’s costliest, but it still lags other nations on important health measures such as life expectancy and mortality. Healthcare is a huge drain on the Treasury and Obama has warned it threatens economic growth.

“Our goal and our imperative is to reduce the punishing inflation in health care costs while improving patient care,” Obama said.

Barry Rand, the chief executive of AARP, the largest organization in the United States representing senior citizens, was at the White House event with Obama. He welcomed the deal with drug companies, saying it was an “early win for reform.”

Medicines represent about 10 percent of the U.S. healthcare budget.

Analysts said while the deal would crimp profits for the companies, the $80 billion in discounts they were offering was less than initially feared. The government had opened negotiations asking for $130 billion.

By Ross Colvin

WASHINGTON (Reuters)