FACTBOX: Winners, losers in U.S. Senate health bill

WASHINGTON Mon Dec 21, 2009 7:04pm EST

WASHINGTON (Reuters) - Makers of brand-name drugs, medical devices and cosmetic treatments as well as suppliers of home health care services are among the industry winners in the U.S. Senate's sweeping healthcare reform bill.

The Senate is expected to approve the $871 billion, 10-year legislation by Thursday.

Negotiators will then blend the Senate's language with a version approved by the U.S. House of Representatives on November 7. It is unclear how long negotiations will take given some substantial differences between the Senate and House versions.

Following are some of the health industry winners and losers based on the Senate bill.

WINNERS

DRUGMAKERS

* The pharmaceutical industry kept intact its $80 billion agreement with the Senate Finance Committee to provide savings and rebates, including a $2.3 billion annual industry fee to be parceled out among companies such as Pfizer Inc and Merck & Co Inc. Wider insurance coverage could help offset the costs by providing more potential customers.

* Drug companies overcame an attempt to allow consumers to import cheaper medicines from other countries such as Canada. Senators rejected two related amendments.

* Drugmakers also avoided House bill provisions calling for bigger rebates under the government's low-income Medicaid insurance program and price negotiations in the Medicare program for the elderly.

* However, top Senate Democrats aim to eliminate a gap in Medicare's prescription drug coverage known as the "doughnut hole." While the Senate bill calls for a 50 percent reduction in the gap, senators said they will seek more changes during negotiations with the House, which wants to eliminate the entire gap by 2019.

* The bill also creates a stronger Independent Medicare Advisory Board to recommend Medicare payments for private drug insurance plans, which could in turn impact prescription drug usage.

DEVICE MAKERS

* Medical device makers such as Boston Scientific and Medtronic Inc earlier won a big reduction in an industry tax to $20 billion, down from $40 billion, to conform with the House bill.

* Senate Majority Leader Harry Reid's amendment offered on Saturday also delayed the tax by a year until 2011. Device makers had sought to eliminate the tax and are now pushing for a delay until 2013.

HOSPITALS

* Hospitals, including companies such as Universal Health Services Inc and Tenet Healthcare Corp, retained a $155 billion, 10-year deal accepting lower government payments from Medicare and Medicaid in exchange for what the industry hopes will be a boost in insured customers.

* The industry also kept an exemption from the Independent Medicare Advisory Board, insulating it from recommended future payment cuts from the panel.

BRAND BIOLOGIC DRUGMAKERS

* Amgen Inc and Roche's Genentech unit and other biological drugmakers won a 12-year period of exclusive sales for brand-name drugs before facing competition from generic rivals.

* The bill calls for creating user fees that generic biologic drugmakers would pay to the FDA to review their products. This could put them on par with brand-name biologic drugmakers but keep some generic companies from pursuing rival products. Traditional generic drugmakers do not currently face such fees though they are under consideration.

* The bill would reimburse doctors 6 percent more for using generic biologic drugs over costly, branded ones. That could affect their use among the tens of millions of Medicare and Medicaid patients.

COSMETIC PRODUCT MAKERS

* Reid's amendment dropped a 5 percent tax on elective cosmetic procedures such as Botox injections to smooth wrinkles, breast enlargements and tummy tucks that could have cut sales for companies such as Allergan Inc and Johnson & Johnson's Mentor unit. The bill instead levies a 10 percent tax on consumers who use indoor tanning salons to raise $2.7 billion by 2019.

HOME HEALTH CARE

* Providers of home health care would see smaller payment cuts that are also imposed more gradually. That could be good news for companies such as Amedisys Inc, Addus HomeCare Corp and Gentiva Health Services Inc that provide services in patients' homes.

* The bill would delay by one year, until 2014, changes to reimbursement rates.

* Various analysts estimated the payment cuts at $39 billion over 10 years in the final bill, instead of original payment cuts of $42.1 billion.

LOSERS

HEALTH INSURERS

* Insurers such as WellPoint Inc, UnitedHealth Group Inc and Aetna Inc overall will face a host of tighter regulations, higher taxes and caps on profits.

* Insurance plans for large groups would have to spend at least 85 cents out of every dollar on medical costs -- leaving 15 cents toward overhead and salaries, among other things. Small groups or individual plans would have to spend at least 80 cents per dollar on care. That proportion of spending, known as a "medical loss ratio," has varied widely and is closely watched by Wall Street due to its impact on profits.

* Private Medicare plans called Medicare Advantage would see roughly $118 billion in cuts over 10 years, according to various analysts. Reimbursement rates for the plans, which can offer more benefits than traditional fee-for-service Medicare coverage at a higher cost, would be tied to a competitive bidding process.

* New consumer protection provisions will change the way companies do business. They include banning preexisting medical conditions and ending limits on how much coverage patients can get from their insurers over their lifetime.

* The new Medicare advisory panel could recommend lower payments to private prescription "Part D" plans operated by a number of insurers.

* There are some bright spots for the industry: A government-run health insurance option was dropped from the Senate bill amid heavy lobbying by insurers, although the House version still includes a such a plan -- often called a "public option."

* Costlier penalties for individuals who do not buy health insurance as mandated were included in the final Senate version, which could boost the number of people who opt for insurance. Penalties could now be as high as 2 percent of a household's income, compared to a previous plan to phase in the penalty to reach $750 by 2017.

GENERIC DRUGMAKERS

* Companies that make cheaper, generic versions of brand-name medicines see little direct help from the Senate bill, although increasing access to health insurance could help more people overall access to prescription medicines.

* While the bill sets up a regulatory path for generic versions of expensive biologic drugs, it also grants brand-name biologics exclusive sales for 12 years. That is a substantial shift from the 5-7 years proponents had sought.

* Efforts to close the Medicare "doughnut hole" could also impact generic drug use. Because Medicare patients now pay full price for a certain period under the coverage gap, a number of patients switch to available generics until coverage kicks back in and the industry says some customers then stay with a generic even when coverage returns.

PHARMACY BENEFIT MANAGERS

* Pharmacy benefit managers, which administer prescription drug benefits, face more disclosures. Under the bill, companies such as Medco Health Solutions Inc, Express Scripts Inc and CVS Caremark Corp must give the Department of Health and Human Services information about rebates they get from drugmakers for medications sold through retail and mail-order pharmacies compared to those through Medicare drug plans.

* The sector was not targeted with any new taxes under the Senate bill, but Wall Street analysts are still concerned given the uncertainty that a tax could be added during House-Senate negotiations.

NURSING HOMES

* Nursing homes, which care for patients who are not quite sick enough for a hospital, would see a 1-year delay of a new payment system that would affect how they classify patients and receive reimbursement to 2011 instead of 2010.

* However, provisions that limit how many patients a therapist can oversee at one time would start in 2010 and could affect costs and staffing at nursing homes. Such facilities are run both by nonprofit organizations as well as companies such as Skilled Healthcare Group Inc and Kindred Healthcare Inc.

(Reporting by Susan Heavey; editing by Andre Grenon)