Hoping to show progress on a 15-year-old campaign promise, Democrats are scrambling to find a way to allow Medicare to negotiate prices on a limited number of prescription drugs as part of their social spending and climate plan.
Medicare drug price negotiation is one of a handful of key remaining unresolved issues on the $1.85-trillion bill, which Democrats hope to finish writing as soon as Tuesday. Other policy issues still subject to negotiation include climate and immigration.
The drug-price proposal was left out of a framework released last week by the White House, and some Democrats have been fighting to find a way to include a modified version. Lawmakers are closing in on an agreement and some expect it could be reached Tuesday, according to several sources involved in the discussions.
But, like the social spending bill on the whole, the revised Medicare negotiation plan would be dramatically more limited in scope than what many progressive Democrats had hoped for.
The plan under discussion would allow Medicare to negotiate prescription drug prices in certain situations, including for drugs that are no longer under “exclusivity,” or protected from competition while they are still new to the market, according to lawmakers and aides.
Insulin would also be subject to negotiation, a move that is likely to be politically popular because of recent and dramatic increases in the price of the widely used drug. Seniors would also benefit from a new $2,000 cap on out-of-pocket drug costs.
If a drug’s price rises faster than inflation, according to the plan, the drugmaker would have to pay a rebate, a tool that policymakers say will serve as an incentive for the pharmaceutical industry to keep prices low. The rebate requirement would apply in Medicare and in commercial insurance plans, meaning the policy will apply to millions of Americans.
Negotiations have been underway since late last week between the White House and a handful of lawmakers who opposed the House’s original, expansive drug negotiation plan, including Sen. Kyrsten Sinema (D-Ariz.) and Rep. Scott Peters (D-San Diego). Those lawmakers and pharmaceutical companies say the policy would stifle drug innovation.
Medicare drug price negotiation has proven to be one of the most complex issues in the social spending bill. Its exclusion from the framework President Biden released last week sparked “white hot anger” among rank-and-file members and provided new momentum in the talks, according to Rep. Peter Welch (D-Vt.), a longtime advocate of negotiation.
Other Democrats said it would be embarrassing if the party wasn’t able to make minimal progress on allowing the federal government to use the massive purchasing power of Medicare to negotiate prices with drugmakers.
The ban on negotiation has been in place since 2003, when President George W. Bush and congressional Republicans enacted the Medicare prescription drug program. They had to prohibit negotiation to get the votes of Republicans who were worried about the fate of drugmakers.
Reversing the ban quickly became a Democratic campaign promise. It was the last unfinished piece of business from their “Six for ’06” promises in the 2006 election cycle, a point Speaker Nancy Pelosi (D-San Francisco) has repeatedly reminded her members of. Rising prescription drug costs and Democrats’ proposed solution of price negotiation proved to be particularly potent in the 2018 election, in which Democrats regained control of the House.
“We ran on upsetting the status quo and lowering out-of-pocket costs for healthcare and prescription drugs,” a group of those Democrats wrote in a letter over the weekend demanding that price negotiation get into the final bill. “If we fail, those on the other side of this issue will need to explain to Americans why they let Big Pharma win, why entrenched special interests take precedence over the American people.”
Sen. Chris Murphy (D-Conn.) said Democrats’ goals are to get savings for consumers and taxpayers, and to “begin to test the theory of negotiation.”
“That’s the sweet spot I’m trying to find: How do we do something substantial when it comes to negotiation that actually gets price reductions, while addressing some of the concerns that Sen. Sinema is bringing to the table,” he said last week.
Limiting negotiation to drugs outside the exclusivity period is a significant setback from what the House originally had hoped to do.
“Am I OK with it? No,” Welch said. “I want to have negotiation in the exclusivity period, but we don’t have the votes for that.”
Negotiation would happen in Medicare Part B, which includes drugs administered at the doctor’s office, and Part D, which includes drugs provided at the pharmacy counter.
The inclusion of Part D was a point of compromise for moderates, who wanted to limit negotiation to Part B. But Part D negotiation will be politically important because that covers the vast majority of drugs, and more seniors are likely to see a price drop at the pharmacy.
“It’s not going to be possible to walk into a senior citizen center in America and say the only thing we’re going to negotiate over are drugs that are administered in the doctor’s office,” said Senate Finance Committee Chairman Ron Wyden (D-Ore.). Seniors have “seen all these reports about how much more expensive drugs are here than they are around the world, and they are expecting results because they’ve heard pledges.”
It is uncertain how the negotiation requirements will be enforced. Earlier proposals of an excise tax of up to 95% of the drug’s sales appear to be out. While Welch said the policy doesn’t have the votes, a senior Democratic aide said an excise tax is “very much still part” of the talks.