The nation’s pharmaceutical companies appear ready to swallow up the so-called doughnut hole, the gap between Medicare Part D coverage and access to additional coverage options for prescription drugs.

Sen. Max Baucus (D-Mont.), chairman of the U.S. Senate Finance Committee, has talked the drug companies into extending discounts on prescription drugs to millions of seniors falling into the doughnut hole, according to a statement from President Barack Obama.

The drug manufacturers have said they will donate half the cost of their brand name and biologic products (but not generic drugs) to people in the gap, without a cost to the government. The drug companies’ pledge could cost them about $80 billion over the next decade, according to the Pharmaceutical Research and Manufacturers of America (PhRMA), a trade group representing drug makers.

Obama said the agreement, part of Baucus’ attempt to effect sweeping health care reform, will save millions of seniors “subjected to crushing out-of-pocket expenses when the yearly amounts they pay for medication fall within the doughnut hole.”

Seniors are responsible for payments on medications not covered by Medicare between $2,700 and $6,153.75 per year. That hole affects just over a quarter of the Medicare Part D enrollees.

“The existence of this gap in coverage has been a continuing injustice that has placed a great burden on many seniors,” Obama said.

Enrollees in the federal Part D plan will be able to obtain the discounts – half the price already negotiated through the federal program – directly from their pharmacies, meaning no additional forms to complete, according to reports.

Perhaps more importantly, the full cost of medicines bought by enrollees falling in the gap – even though they will only pay half the cost – will count toward their out-of-pocket limit. Patients who reach that limit ($4,350 this year) become eligible for low-cost catastrophic coverage, reports said.

Two groups, according to reports, will be excluded from the program. They include enrollees paying income-related Part B premium, meaning this year people with income greater than $85,000 for an individual or $170,000 for a married couple and low-income enrollees qualifying for Part D’s Extra Help benefit, as no gap exists for them.

The program had been big for those who fell into the doughnut hole. Half of enrollees who fell into the gap did so by August, according to a Kaiser Family Foundation study based on 2007 enrollees. Most remained in that gap, with just 4% reaching the level making them eligible for low-cost, catastrophic coverage, the analysis found.

By making the agreement, drug manufacturers – like health insurers last month – forestall or eliminate the likelihood of legislative mandates on coverage changes.

“Millions of uninsured and financially-struggling Americans are depending on us to accomplish comprehensive health care reform this year, said Billy Tauzin, president and CEO of PhRMA. “America’s pharmaceutical research and biotechnology companies are signaling their strong support for these critically important efforts.  This is a once-in-a-lifetime opportunity and, working together, we can make this hope for a better tomorrow a reality today.”

Last month, health insurers agreed to help Obama save up to $2 trillion on health care costs through changes in their operations.

“We are at a turning point in America’s journey toward health care reform. Key sectors of the health care industry acknowledge what American families and businesses already know – that the status quo is no longer sustainable,” Obama said.

The pharmaceutical companies’ pledge “will be an important part of the legislation I expect to sign into law in October,” Obama said. If passed, it would likely take effect in July 2010.