Facing immense pressure from congressional Democrats, the White House backed off its promise to drug companies to exclude negotiations for lower drug costs from health care reform. Democrats were upset that the White House's deal appeared to restrict them from negotiating lower costs, but the White House assured them it did not.

The White House announced details of its negotiations with drug companies. The industry's contribution will be capped at $80 billion over 10 years, and it will be protected from congressional efforts for further savings, including negotiations to lower the cost of drugs.

The Pharmaceutical Research and Manufacturers of America agreed to provide up to $80 billion in savings for Medicare drug purchases. If national health care reforms are enacted, this deal would provide discounted prescription drugs for 3.4 million patients currently in a coverage gap. Details on where the savings would apply still need to be finalized.  

In his weekly radio address, Obama said paying for health care reform would rely in part on $75 billion in reduced prescription drug spending through Medicare.

A Federal Trade Commission report, Follow-On Biologic Drug Competition, cautions that because of a variety of factors, generic biologic drugs would not show the same cost savings as generic pharmaceuticals. Follow-on biologic drugmakers "are unlikely to introduce their drugs at discounts any larger than between 10 and 30 percent of the pioneer product’s price," the report said.

In his FY 2010 budget outline, Obama announced a variety of plans for reducing drug costs, including the creation of a regulatory pathway for generic biotech drugs and a ban on minimal changes to brand-name drugs for purposes of extending patent life.

Daschle withdrew from consideration as Health and Human Services secretary today, saying he did not want his tax problems to distract from the Obama team’s work.

In his confirmation hearing Jan. 8, Health and Human Services nominee Tom Daschle advocated more funding and a bigger role for the Office of Generic Drugs, saying generic drugs will help bring down costs of prescription medications. He also said he intends to allow Medicare to negotiate with drug companies on lowering prices and called for giving the HHS secretary more latitude to come up with ways to make prescription drugs cheaper.