Democrats on Tuesday announced an agreement on drug pricing reform, coming out in favor of allowing Medicare Part D to negotiate directly with pharmaceutical companies for the first time since its creation, a move the drug industry has fought for nearly two decades.
While the latest proposal is far weaker than the version passed twice by the House, even staunch progressives in both chambers are preparing to accept that it’s likely the best they’re able to get in the narrowly divided Congress.
“It’s not everything we all want. Many of us would have wanted to go much further, but it’s a big step in helping the American people deal with the price of drugs,” Senate Majority Leader Chuck Schumer told reporters Tuesday. “We’ve heard from people across the country who have serious illnesses and can’t afford their medicine. Today, we’ve taken a massive step forward in helping alleviate that problem.”
Shortly after Schumer’s announcement, House Speaker Nancy Pelosi endorsed the deal and said committee leaders are “drafting the legislative text to reflect this important agreement.”
An outline of the most recent policyshared by the White House Tuesday night would empower Medicare to negotiate the cost for 10 of the most expensive drugs by 2025, and 20 drugs per year by 2028, while carving out exceptions for small biotech companies. Only drugs that have passed their initial exclusivity periods — 9 years on the market for some drugs and 12 for others — would be eligible for negotiation, and the government can use an excise tax to force pharmaceutical companies to the bargaining table.
But to the dismay of progressive lawmakers and outside advocates, the deal is likely to limit drug companies’ price hikes to the 2021 inflation rate, not the far lower 2016 rate they had initially supported. But those inflation caps would apply to people on private insurance plans as well as Medicare, and kick off at the beginning of next year. And seniors on Medicare would have a limit of $2,000 on what they pay out of pocket for medication.
Sen. Kyrsten Sinema (D-Ariz), a persistent critic of drug-pricing reforms, is supportive of the new version, her office announced Tuesday, calling it “historic” and “transformative” and arguing the industry-friendly changes to the policy will “ensure Arizonans and Americans continue to have access to life-saving medications, and new cures and therapeutics.”
The backing of all 50 Senate Democrats for the new drug pricing compromise allows them to settle one of the thorniest outstanding issues in the nearly $2 trillion spending package the party is racing to pass in the coming weeks.
Senate Majority Whip Dick Durbin told POLITICO Tuesday that, given the pharmaceutical industry’s power and Democrats’ tight margins, members should view the watered-down drug pricing deal as a win.
“I would prefer a much stronger version, but I don’t want to end up empty handed,” he said. “I want more than this, but I’ll take it because it’s a step in the right direction — a modest beginning.”
Still, some Democrats worry the narrower policy will fail to deliver on the party’s campaign trail promises to meaningfully lower drug prices and fail to generate the hundreds of billions of dollars in federal savings needed to pay for other health priorities, such as expanding Medicaid and adding benefits to Medicare. In particular, progressives fear that waiting until 2028 to negotiate the prices of a handful of drugs will do little to make a dent for Americans struggling with soaring drug costs.
Senate Budget Chair Bernie Sanders told POLITICO on Tuesday the current version goes “nowhere near far enough.”
“The Veterans Administration spends half as much on prescription drugs as does Medicare, and that is totally absurd,” he said.
In the House, the Progressive Caucus last week was ready to back the overall social spending bill without any drug pricing reforms included. But they have not endorsed the new language, saying they have yet to be briefed on the details.
Some members close to leadership, including Rep. Jan Schakowsky (D-Ill.), pointed to the success the pharmaceutical industry has had in bending the policy in its favor over the last few months with a ramped up effort of lobbying, advertising and campaign donations.
“They have a very powerful influence in this Congress,” she said.
The Pharmaceutical Research and Manufacturers of America, a trade organization for the industry, called the policy “disastrous” in a statement, claiming it “threatens innovation and makes a broken health care system even worse.”
Public Citizen, one of the main advocacy groups pushing for a more aggressive drug price negotiation scheme, called the compromise unveiled Tuesday “flawed, but not devastatingly so,” noting that once the negotiation mechanism is set up, more drugs can be added in the future.
“Even H.R. 3 was short of what we wanted, and this is a pale shadow in comparison,” Steve Knievel, who leads the group’s work on drug reforms, told POLITICO. “But it will still help millions of people.”
Several leaders of the talks, including Durbin and Finance Chair Ron Wyden (D-Ore.), insist that the policy is a major improvement over the status quo, because Medicare currently can’t negotiate the cost of any drugs and seniors have no limit on the amount they have to spend out of pocket on their medications.
Wyden said Tuesday the bill will still have “some real wins for patients and consumers,” particularly a new $35 monthly cap for insulin, the application of inflation caps to the commercial market as well as Medicare, and negotiations over some of the most expensive drugs in Medicare Parts B and D, like those for cancer and arthritis.
“For the first time, the government will no longer have its hand tied behind its back,” Wyden said Tuesday. “That’s a real sign of progress.”
Even centrist lawmakers who had previously hesitated to endorse the policy told POLITICO they feel good about where the drug pricing deal landed.
“No one is 100 percent happy, but it’s really good for seniors,” said Scott Peters (D-Calif.), who had pushed his own alternative that would have covered only drugs administered by physicians and drugs whose patents had expired.
Sen. Tom Carper (D-Del.) said he’s pleased the negotiations would “not include the whole universe of drugs.”
“It’s similar to what we do with the VA, where there’s a formulary — not every drug under the sun,” he told reporters.
Menendez, stressing that he hails from a state with “300,000 jobs in the pharmaceutical industry…that create life-saving drugs,” disputed that the policy now under discussion is too deferential to Big Pharma.
“They’re not supportive of price negotiations, but it will have price negotiation, and we will get a big chunk of money out of them,” he said. “We want to make sure seniors at the drug counter get the greatest relief possible, not just that the government saves money. I think there are provisions in the latest version that will do that.”
The House Rules Committee could take up the text of the new drug pricing deal as early as Wednesday.
Wyden noted that the policy has not yet been scored by the Congressional Budget Office, and members have not yet decided whether they will use whatever money it saves to enhance any of the other health policy pieces of the bill.