Today the three committees in the House of Representatives working on healthcare reform(Ways and Means, Energy and Commerce, and Education and Labor) jointly released an 852-page discussion draft for a healthcare reform bill. The main components of the bill are familiar, including insurance exchanges and individual and employer mandates for health insurance. It also includes a public plan, but requires that the public plan compete on a level playing field with private plans, and it is to be financed entirely through premiums.

There are several provisions that, while not entirely unexpected, will not be welcomed by the pharmaceutical industry. For example, starting in 2011, pharmaceutical companies will have to pay rebates on drug purchases by any dual-eligible beneficiaries and any other beneficiaries whose Medicare premiums are fully subsidized. Prior to the introduction of Part D, beneficiaries who were dually eligible for Medicaid and Medicare got their prescription drugs through their Medicaid benefit, under which pharmaceutical companies are required to pay rebates. When these beneficiaries were switched into the Medicare Part D drug benefit, pharmaceutical companies essentially reaped a windfall by no longer having to pay rebates on the drugs used by these beneficiaries. The provision in the House draft bill would eliminate that windfall. In addition, starting next year, the way the Medicaid rebate is calculated for reformulations of existing drugs would change, treating the reformulation the same is the original drug for purposes of calculating the required rebate, if that calculation results in a higher rebate. This provision may have the unintended consequence of discouraging development of value-added reformulations that would benefit patients. The draft bill also includes a sunshine provision on payments to physicians.

The Senate Finance Committee was also supposed to release its bill this week, but it apparently has been delayed by efforts to reduce the total cost of the bill.