Pharma, insurers see bigger hit with House bill

By Susan Heavey and Lisa Richwine - Analysis

WASHINGTON (Reuters) - Drugmakers would take a bigger hit under healthcare legislation unveiled in the U.S. House of Representatives on Thursday, while insurers would face mandatory rebates and the loss of their antitrust exemption.

Despite a carefully crafted deal with the White House and senators earlier this year, House lawmakers want pharmaceutical companies to pay more through rebates for Medicare patients also enrolled in the government's Medicaid program for the poor.

And while they also want to close the gap in drug coverage for elderly and disabled Medicare patients -- a move that could get more people to take their medications -- House leaders would require the nation's health secretary to negotiate lower drug prices under the program.

Insurers, already expected to take the biggest whack under any health reform measure, saw most of their worries realized with the House bill eliminating the industry's exemption to antitrust laws and targeting their profits.

The measure forces insurance companies to give customers rebates if less than 85 percent of enrollees' fees is spent on actual health care.

The much-anticipated public option also could give insurers stiff competition by keeping prices down with reimbursements potentially as low as Medicare rates as well as requiring providers to opt out against accepting patients with the public plan coverage. The bill also allows for a cooperative insurance exchange for consumers to compare plans.

While the drug and insurance sectors would take a hit, most healthcare companies also would see their income dented, especially when it comes to government reimbursement.

"Pretty much for every industry, provisions are worse in the House bill than in the Senate," said Ipsita Smolinski, an analyst for investors at Capitol Street.