Although the US Congress is technically in recess – the House of Representatives until January 12th and the Senate until January 19th – key lawmakers got down to work the week commencing January 4th, trying to hammer out the differences between the versions of health reform legislation passed by the two bodies. Only when the two vote in support of identical language can the measure move to President Barack Obama to be signed into law. The goal is to get that done by the end of this month, but it is not a firm deadline and the final votes may slip into February.

While until now President Obama has left it up to the legislators to decide on the details of the law, giving only a broad outline of what he wants accomplished; at this stage he is taking an active role in trying to bring the two chambers together. On January 5th, he met the top Democratic leadership in the House and then had a second session with them on January 6th, joined by the chairmen of the four committees that share jurisdiction over the legislation. On January 7th, President Obama met the key authors of the Senate version of the measure. On January 10th, he was scheduled to meet labour union leaders who are wary of provisions in the Senate bill that tax the most generous employer-provided health coverage.

Speaker of the House Nancy Pelosi emerged from one of the January 6th sessions saying: "I think we are very close to reconciliation." The next day, she invited all the Democrats in the House to take part in a telephone conference call about the health reform bill, and around 175 took part. They are slated to meet in person in Washington, DC, on January 12th for further discussions on melding the two versions of the bill, and will probably meet President Obama a couple of days after that.

Many who spoke on the conference call represented the more liberal wing of the party, and voiced opposition to both the Senate tax provision that worries the labour unions and to the structure of a central market from which individuals could select their healthcare coverage from a variety of plans. But the leadership kept insisting that a compromise is not only possible but that negotiators are well on the way to achieving it. Beyond the tax on the most expensive health insurance plans – the House version instead raises money to pay for expanded healthcare coverage by imposing a new tax of 5.4% on all Americans making more than $500,000 a year – other differences that must be settled involve the structure of the drug benefit in the federal programme covering the elderly, the roles of the states, and just how broad the expansion of coverage should be. Neither bill would achieve universal coverage, but the estimates from the Congressional Budget Office peg the number of newly covered Americans under the Senate bill at 31 million and the number included by the House bill at 36 million. (Currently an estimated 54 million residents of the US have no health coverage.) The difference should have less impact on pharmaceutical sales than the raw numbers suggest, because a big chunk of those remaining uninsured would be people in their 20s who are seldom sick.

The hard political fact is that it is Ms Pelosi's side which is going to have to give in most often on issues on which the versions passed by the House and Senate diverge. That is because the Senate version is a fragile compromise put together by her Senate counterpart, majority leader Harry Reid, to garner the vote of every Democrat – and Democrat-leaning independent – in the chamber. That provided exactly the 60 votes necessary to move the measure to a vote under Senate procedures (scripnews.com, December 24th, 2009). Reid cannot lose even one supporter. In the House, Ms Pelosi needs only a bare majority to get the legislation through, and she enjoys a 78-seat majority, so individual members – or even small clusters of members – who do not like aspects of the Senate bill do not have the same clout as do individual Senators who threaten to withhold their votes on health reform unless it includes specific provisions to their liking.

On one aspect of the sweeping reform of particular importance to pharma, however, the House approach will most likely prevail: structuring the drug benefit for seniors and disabled persons who get coverage though the federal Medicare programme. In that programme's current peculiar structure, the federal government picks up 75% of the cost of medications until a patient has spent a set amount during the calendar year ($2,700 in 2010), after which the patient must pay the entire cost. Only when the patient has spent a total of $3,576 of his or her own money does the federal programme begin again, at that point picking up 95%of all remaining outlays. Both the Senate and House versions of the legislation addressed the problems raised by that pay-all gap, but in the House version it would be eliminated by 2019 and in the Senate version it would merely be cut in half. Mr Reid had publicly announced, however, that he would back the more sweeping House version in the final compromise bill.

The restructuring of the Medicare drug benefit has a double-edged impact on pharma. Many beneficiaries on maintenance drugs stop taking them – or switch to half doses – when their drug outlays reach the point at which they must pick up the entire cost of medication. So reducing or eliminating that gap, even if the change comes in small increments over a number of years, should give a jolt to sales. But those sales will be less profitable for the drug makers. That is because the industry early on, in order to get assurances that the final bill would not be crippling for pharma, promised the White House to provide savings totalling $80 billion. Much of that would come from giving substantial discounts on brand name drugs bought by Medicare beneficiaries who are at the point of having to pay the full cost – and then giving such payments to the government once the gap is closed. However, some House Democrats, led by Henry Waxman, chairman of one of the four committees with jurisdiction over the bill, say they are not bound by that agreement and may demand more than $80 billion in givebacks.

The process for reaching reconciliation is not going to be the usual conference committee, in which selected members of each party from each house meet together and hash out a unified version of a bill. That process gives the Republicans a number of opportunities to use parliamentary manoeuvrings to stall the proceedings. Instead, a small group of Democratic leaders have been meeting informally to settle differences between the two versions. That may lead to the unusual process of the House passing a revised bill that would then go to the Senate, where it might pass with amendments, to be returned to the House to pass yet another version, which Senate could then amend – back and forth a number of times until both end up approving the same language.