February 3, 2023

But the plan will now go ahead without a provision that would have penalized drug makers for raising costs faster than inflation in private insurance plans and Medicare.

The exclusion of private insurance price caps means there is little left that will reduce costs for the vast majority of Americans who receive health insurance through their private sector employer. Democrats are still waiting for a separate parliamentary ruling on their policies to limit the cost of insulin both within and outside of Medicare.

The decision also means tens of billions less in federal bill savings overall, a potential threat to Democrats’ hopes of offsetting the cost of supporting Obamacare’s subsidies.

Still, Democrats claim the bill will make progress in the coming weeks with its key provision intact: a repeal of the federal government’s long-standing ban on negotiating drug prices directly with drug companies.

Senate Majority Leader Chuck Schumer called the MP’s statement “good news” in a statement Saturday.

“Medicare will finally be allowed to negotiate prescription drug prices, seniors will receive free vaccines and their costs will be limited, and much more,” he said.

Rep. Peter Welch (D-Vt.), a key negotiator on the House version of the bill, said the provision “would break the iron curtain that Big Pharma has maintained against negotiating drug prices, and that changes the game. If it succeeds, Pharma won’t be able to keep it with consumers all the time as it sees fit. And that’s especially important with inflation hammers at the pump and supermarket. ”

But Welch, who is running to replace the outgoing senator. Patrick Leahy (D-Vt.), acknowledged that the MP’s ruling is still a major victory for the drug industry.

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“It would essentially mean drug companies could push price increases well above inflation,” he said in an interview in the days leading up to the vote.

Drug companies and Republicans in the Senate had planned for months to tackle the determination of inflation limits — through a process known on Capitol Hill as a “Byrd bath.” sen. Mike Crapo (R-Idaho), the top Republican on the Senate Finance Committee, told reporters that they were going through the bill line by line in an effort to meet every challenge they could find.

Democrats who pushed the policy for years were confident it would succeed under the Senate’s strict appeasement rules, which limit what kinds of bills can be passed with a simple majority. Only proposals primarily related to federal spending or revenue can fly, but not those that make major policy changes and have only an “incidental” impact on the federal budget.

Democrats argued that the bill needs inflation caps on drug prices across the board to function, warning that if they don’t, drug companies could raise prices even higher for those with private insurance to make up for what they lose. to the cost controls the bill still imposes on Medicare.

sen. Chris Murphy (D-Conn.) said such points are “normally the kind of argument that is convincing to the MP.”

“You can’t separate the private sector from the public sector — one cannot exist without the other,” he said.

Proponents of the provision also pointed to the Congressional Budget Office finding last year that the inflation cap provision would save the government about $80 billion. about ten years to argue that it should remain in the bill.

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But reconciliation experts and industry insiders were equally confident that the provision would be knocked out of the package.

“A lot of people think that if something gets a significant CBO score it can’t be considered incidental, but it’s more about whether the policy implications outweigh the budgetary ones,” said Stephen Northrup, a lobbyist who previously served as health policy director for the Senate Committee on Health, Education, Labor and Pensions. “If the inflation ceiling were limited to Medicare, you could make a very direct link between the policy and the score. But if you extend it to the commercial market, the relationship gets weaker. It’s less like trying to save money than trying to expand a policy that has an impact beyond the federal budget.”

Democrats currently don’t have a backup plan for the policy, although some proponents are now trying to apply inflation caps to other federal insurance programs such as Medicaid and federal employee insurance.

Even if they can do that, progressives who originally pushed for much tougher drug price controls are disappointed that their already watered-down plan has gotten even weaker in the past year.

Senate Finance President Ron Wyden (D-Ore.), who spent months drafting the language for drug pricing and wrangling votes to approve it, blamed the pharmaceutical industry’s influence on Capitol Hill for the decline of the drug industry. provision on the inflation ceiling.

“The special interests always work against us wanting to provide aid to hard-hit Americans, especially seniors,” he told POLITICO ahead of the lawmaker’s ruling. “So what a surprise that the special interests — and you’ve seen the numbers on how many lobbyists they have — are trying to protect their profits.”

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