(Bloomberg) — Drugmakers face $105 billion in costs over 10 years, $25 billion more than the industry first estimated, from discounting medicines sold through government health programs, according to Leerink Swann & Co.

The extra costs will come from expanding drug rebates through Medicaid, the U.S. insurance program for the poor, Leerink’s John L. Sullivan said today at a Bloomberg conference in Chicago. Last June, the drug industry’s Washington lobbying group, PhRMA, put its share of overhaul costs at about $80 billion over a decade.

The overhaul, approved by Congress last month, “leaves the biopharmaceutical industry probably a larger contributor to health reform than a lot of people understand,” said Sullivan, a managing director at the health-care focused investment bank. “Industry is being asked to shoulder a significant amount and it feels like that which industry will be shouldering is at risk of rising.”

The health-care law, championed by President Barack Obama and fellow Democrats, expands coverage to 32 million uninsured Americans over the next decade. The $1 trillion cost to subsidize their care will be paid through Medicare cuts for hospitals and increased taxes and fees on drug manufacturers, insurers and medical-device makers.

Drugmakers in June announced a deal with Senate negotiators to forgo about $80 billion in revenue to help finance the overhaul, partly to pay for discounting drugs to elderly Medicare recipients.

The $105 billion represents about 3 percent of drugmaker revenue over a decade, and the industry, through its deal, probably avoided deeper cuts or more regulations, said Les Funtleyder, author of “Health-Care Investing” and an analyst at Miller Tabak & Co. LLC, at the conference.

“It could have been worse,” Funtleyder said.

By Alex Nussbaum, April 27, 2010