A donut hole filled with drug-industry pork.

I smelled a rat when Obama proudly announced in June that the drug industry had agreed to help Medicare patients fill the donut hole between the $2,700 ceiling that currently exists on the cost of drugs subsidized by Medicare and $6,153, which is now the threshold at which the subsidy kicks in again. The rat turned out to be that, in return for that concession, Obama had agreed not to have Medicare bargain for drug price reduction as the Veterans Administration has done at such great savings to the taxpayer.

Now it appears there is still another rat. According to a Congressional Budget Office study reported by Duff Wilson of the New York Times, the "concession" would end up costing Medicare an additional $17.4 billion over ten years. The reason is that plugging the donut hole will keep seniors on brand-name drugs instead of encouraging them to switch to generics when the $2,700 is reached. Now they'll still be buying the brand names when they reach the other side of the hole. And when they get there, the subsidy rises to 95 percent, which means more costs to Medicare and more profit for the drug industry.

Charles Peters is the founding editor of the Washington Monthly.