Drug company subsidies

State of the Union proposal

"We'll reduce taxpayer subsidies to prescription drug companies and ask more from the wealthiest seniors."

Background
President Obama and House Speaker John Boehner, R-Ohio, failed to achieve a "grand bargain" on deficit reduction during negotiations over raising the debt ceiling in summer 2011, an agreement that would've included significant changes to entitlement programs such as Medicare. Reuters reported that Obama's State of the Union proposal to cut subsidies to pharmaceutical companies would mean mandating that companies offer drug rebates to the approximately 10 million Americans who qualify for Medicare and Medicaid while receiving Medicare prescription drug benefits, a group known as "dual eligibles." The Congressional Budget Office projected this proposal would reduce Medicare costs by $137 billion, Reuters says, but it has in the past sparked criticism from the pharmaceutical industry.
Additionally, Obama called for Medicare recipients in higher income brackets to pay a larger share of their Medicare premiums.