Medicare and Health Care and Eli Lilly and Co. and Government Health Care and Health Care Costs and Health Care Reform and Health Care & Life Sciences and Health Care & Insurance

Q&A

October 31, 2011

As an Eli Lilly and Co. lobbyist in Washington, D.C., Jay Bonitt is hoping the Congressional “super committee” charged with trimming the federal budget doesn’t turn to the Medicare prescription drug program, known as Part D, to do so. Bonitt, Lilly's vice president of federal affairs, said the program is under budget and helps spur drugmakers to further innovation. While Lilly does not reveal how much revenue Lilly gets from the program, its biggest stars get the biggest boost from the program: Zyprexa, Cymbalta, Humalog and Evista.

IBJ: Cuts to Medicare are clearly one of the options as the super committee tries to find $1.2 trillion in savings over 10 years. Can you give your best sense for what’s on the table about Medicare Part D at this point in time?

A: I wish I could. As you can imagine, this town is just rife with rumors and speculation. Sen. [Max] Baucus (D-Montana) said he put $3 trillion out there: $1 trillion of that was in revenue raisers, another $500 billion was in Medicare [cuts]. But my understanding it was no more than a one-page plan. So we don’t know the details.

IBJ: President Obama released a plan in September that would require drugmakers to give Medicare the same generous rebates for low-income patients they give the Medicaid program. How would those price cuts—estimated at $135 billion over 10 years—impact Lilly?

A: That would be a substantial impact. We haven’t been able to determine the exact number. To impose these rebates would have a devastating impact on the industry and on innovation. If we incur a lot more cost, with the imposition of Medicaid-type rebates or a tax, then that’s less revenues that will be available for innovation.

IBJ: Medicare Part D is only six years old, and clearly Lilly and its peers did plenty of innovating before the program was created. How would scaling back its payments put innovation at risk?

A: When I first came to Lilly back in 1994, I think most of the studies showed that it cost you around $300 million to bring a drug to market. Today, the most recent Tufts University study that I’ve seen put it at about $1.2 billion now. It’s just a very, very expensive process, and it gets more expensive.

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