Democrats Promised To Slash Drug Prices. Now Internal Clashes Are Standing In The Way.

When House Democrats made their pitch for the majority ahead of the 2018 midterms, party leaders focused their message on “kitchen table” economic issues — and one in particular that, according to polls and focus groups, resonated broadly across America’s political divides.

“The American people deserve A Better Deal on the cost of prescription drugs,” the midterm platform read, promising an end to pharmaceutical industry price gouging and pledging negotiated prices for Medicare.

That plank became the centerpiece of dozens of congressional campaigns — helping Democrats build a robust House majority — and presaged President Biden’s 2020 platform, where he made similar pledges.

Now, with Democrats in control of Washington and in the position to deliver, the promises they made to voters are in serious jeopardy.

A small group of moderate holdouts kept a key House committee earlier this month from advancing drug pricing legislation that largely matched a bill that passed the House in 2019. Meanwhile in the Senate, party leaders have struggled to turn a skeleton framework of drug-pricing principles into a handshake agreement, let alone legislative text.

The internal fight over prescription drug prices has become a microcosm of the challenge the party faces on multiple fronts as Biden and congressional leaders seek to enact their massive domestic policy bill, known as the Build Back Better plan, with razor-thin majorities. Any one senator or any group of three House members can block provisions favored by the vast majority of their colleagues, and those dynamics are playing out on climate, tax policy, immigration and multiple other health-care debates.

But the difficulties on prescription drug prices have created a special level of exasperation — bordering on rage — for many on the party’s left who see the issue as a political no-brainer that is being blocked by intense pharmaceutical industry lobbying. The Democratic holdouts are among the largest recipients of industry campaign contributions, and several — though not all — have a significant pharma footprint in their districts.

Rep. Peter Welch (D-Vt.), a longtime critic of the industry and advocate for aggressive price controls, said his own frustrations at the impasse are “frankly immense.”

“This is one of the biggest ongoing scams that we tolerate at the expense of the American people,” he said, referring to the federal prohibition on negotiating prices for prescription drugs purchased through Medicare.

But Welch said he and the vast majority of Democrats had no choice but to play ball with the holdouts given the massive implications for the party’s agenda. “There is a practical reality that we face as a majority that is paper-thin,” he said. “That means that any three people can derail any element, and it means that there’s got to be enormous effort in building trust and finding the way forward because we don’t want the whole thing to come tumbling down.”

The clash is reminiscent of the difficulties Republicans faced in 2017 after winning the House, Senate and White House after years of promising to “repeal and replace” the Affordable Care Act. But the GOP never coalesced around a workable alternative, and members who voted for prior bills with no chance of becoming law balked when faced with the prospect of thousands of constituents losing health insurance.

The difference is that lowering prescription drug prices, unlike repealing the ACA, is overwhelmingly popular with the public. David Shor, a Democratic consultant whose data analysis is influential with party leaders, said cheaper drugs are overwhelmingly favored by the voting public.

“I think it would be a shame if, for a bunch of internal coalition politics reasons, we ended up not doing the thing that would do the most to help Democrats get elected next year,” he said.

The policy details, meanwhile, are both countless and arcane.

The crux of the Democratic plan is to allow Medicare to bargain prices with drug companies, and even the holdouts say they support some level of negotiation. But the number of drugs that could be subject to bargaining remains an issue, and so are the leverage points the federal government would have to drive prices down.

The 2019 House bill, for instance, gives the federal government the power to sharply penalize companies that refuse to negotiate an acceptable price and limits the costs of many drugs to 120 percent of its average price in six other industrialized countries. The Congressional Budget Office estimates that bill would save the federal government upward of $500 billion over the next decade — savings that Democrats are counting on to offset expensive new spending proposals elsewhere in the Build Back Better bill.

But those savings would come at the expense of pharmaceutical company revenue, and the holdouts — echoing the Republican arguments against the bill — argue that the cuts would not only harm the industry’s bottom line, but lead to inevitable cutbacks in research and development funding.

Rep. Scott Peters (Calif.), one of three Democrats on the House Energy and Commerce Committee who voted against adopting the 2019 approach last month, said the opposition was a matter of innovation and — for him, anyway — a matter of constituent service in a San Diego-based district with tens of thousands of life sciences jobs.

He has proposed an alternative bill — co-sponsored by Reps. Kathleen Rice (D-N.Y.) and Kurt Schrader (D-Ore.), fellow holdouts — that would allow negotiations on a more limited set of prescription drugs while capping out-of-pocket expenses for Medicare. Peters argues that his approach would lower prices for seniors without harming pharmaceutical industry research — but it also is unlikely to deliver the massive savings of the 2019 bill.

“Most people around here understand: Iowa is for corn, Michigan’s for cars and I’m for biotechnology,” he said, citing the hundreds of millions of dollars in private investment his district sees every year. “I don’t want to lose that, because that means we’ll lose cures for patients. We’d certainly lose jobs.”

But those arguments have garnered little sympathy with many of Peters’s colleagues and liberal activists, who have swarmed social media and picketed offices in an attempt to pressure them to toe the Democratic Party line. Those on the left have been even more befuddled by the votes of Rice and Schrader, whose districts do not have a significant industry presence but who have accepted campaign donations from its players.

Adding to the liberal vexation is that all three House Democrats voted for the 2019 House bill. Now, with the party’s agenda on the line, they are opposing it.

Peters said he voted for the earlier bill “to start a conversation” about the best approach to drug pricing. “Of course, nothing happened,” he said.

While the divisions have been in plain view in the House, the clashes in the 50-50 Senate have been largely cloaked since Finance Committee Chairman Ron Wyden (D-Ore.) released a three-page set of drug-pricing principles in June. Despite reporting ongoing progress to reporters on a near-daily basis this month, Wyden has yet to release a consensus framework.

Sen. Robert Menendez (D-N.J.), a senior Finance Committee member who represents the industry’s epicenter and is considered a key player in the talks, said Wednesday that negotiators were “not anywhere near” a deal.

“We need to put some meat on the bones so that we can decide whether it’s acceptable or not or what needs to be changed,” he said. “Right now, what we’re talking about is saving the government a lot of money, which in and of itself isn’t a bad thing. But no one is showing me how we’re going to take that money and give rebates to the consumer at the counter. What we are using it for is a whole host of other things.”

Asked this week about the difficulty of building consensus on the issue, Wyden quipped that he is on the Senate Intelligence Committee and is not in the habit of sharing classified information.

“But it is not exactly an atomic secret that pharma has more lobbyists than anybody in town,” he said. “They’re everywhere. They spend a boatload of money.”

The industry is on track to record its largest annual lobbying expenditure since at least 2009, when Democrats last had unified control in Washington, according to data from the Center for Responsive Politics. Advocacy groups allied with the industry, meanwhile, have blanketed airwaves warning of disappearing cures if Democrats like Welch and Wyden get their way.

Brian Newell, a PhRMA spokesman, said Democratic leaders have run into problems not because of industry lobbying, but because they “ignored concerns within their own party and have persisted in taking a partisan approach” to cutting drug prices.

“We’re flattered that our advocacy team is held in such high esteem, but the real challenge facing lawmakers is an extreme proposal that will limit access to lifesaving treatments and destroy future innovation,” he said.

As Democrats argue among themselves, strategists and activists are warning that the political stakes could not be higher one year before the midterms. Numerous polls show high prescription drug prices as a matter of deep public concern.

Mary Small, the national advocacy director for the grass-roots activist group Indivisible, said Democratic candidates would be “absolutely screwed” in 2022 if the party fails to deliver on one of their central campaign promises.

“There’s just no mincing words about it,” she said. “A ton of volunteers and activists and everyday people all around the country worked their [posteriors] off during a pandemic to deliver a trifecta for Democrats, and for Democrats to take that trifecta and fail to deliver on a core consensus Democratic priority — and also, by the way, one that is wildly popular with the American people across party lines — would be such a catastrophic failure.”

Sen. Ben Ray Luján (D-N.M.), who chaired the Democratic Congressional Campaign Committee in the 2018 election cycle, was not quite so dire. But he said it was “very important” that Democrats deliver on the issue.

“It was part of a commitment that we made,” he said. “There should not be a question of the work that we must do and can do to lower prescription drug prices for the American people . . . I’m confident we’ll get it passed in this Congress.”



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