WASHINGTON — The pharmaceutical industry agreed yesterday to spend $80 billion over the next decade improving drug benefits for seniors on Medicare and defraying the cost of President Obama's health care legislation, capping secretive negotiations involving key lawmakers and the White House.

"This new coverage means affordable prices on prescription drugs when Medicare benefits don't cover the cost of prescriptions," Sen. Max Baucus, chairman of the Senate Finance Committee, said in a statement announcing the accord.

The deal marked a major triumph for Baucus as well as the administration. Obama praised the deal.

"The agreement by pharmaceutical companies to contribute to the health-reform effort comes on the heels of the landmark pledge many health industry leaders made to me last month, when they offered to do their part to reduce health spending $2 trillion over the next decade," Obama said. "We are at a turning point in America's journey toward health care reform."

Baucus, a Montana Democrat, has been negotiating with industry groups for weeks as he tries to draft legislation that meets Obama's goal of vastly expanding health coverage, has bipartisan support and does not add to the deficit.

Baucus' announcement said drug companies will pay half the cost of brand-name drugs for seniors in the so-called doughnut hole — a gap in coverage in many plans providing prescription coverage under Medicare. Other officials said wealthier Medicare beneficiaries will not receive the same break, but there was no mention of that in the statement.

In addition, the entire cost of the drug will count toward a patient's out-of-pocket costs, meaning their insurance would cover more of their expenses than otherwise.

Billy Tauzin, president and CEO of the Pharmaceutical Research and Manufacturers of America, said, "Millions of uninsured and financially struggling Americans are depending on us to accomplish comprehensive health care reform this year. Today, America's pharmaceutical research and biotechnology companies are signaling their strong support for these critically important efforts."

While none of the changes in the prescription drug program would directly lower government costs, several officials said the industry also agreed to measures that would give the Treasury more money under federal health programs. In particular, officials said, drug companies would likely wind up paying higher rebates for certain drugs under Medicaid, the health care program for the poor. Those funds would help pay for expanding health insurance to millions who now lack it.

One official said the deal was agreed to Friday night when Tauzin called Baucus. The senator's statement said the White House was involved in the agreement.

It was not clear what leverage the agreement would give Baucus with other health care providers with whom he is in negotiations.

But the agreement helps counter an impression that the drive to enact health care legislation was sputtering.

This past week, Congressional Budget Office estimates concluded that early versions of two Senate bills would be either too costly or fail to make a large dent in the ranks of the uninsured. Republicans seized on the reports as evidence that Democrats were losing traction.

They leapt again when it was disclosed that House Democrats are considering a wide array of taxes to finance their legislation, including an income tax surcharge, a tax on employers and a national sales tax.