However, the plan will now move forward without a provision that would have penalized drugmakers for costs rising faster than inflation in private insurance plans as well as in Medicare.
Eliminating private insurance price caps means there is little left to reduce costs for the vast majority of Americans who get health insurance through their private sector employer. Democrats are still waiting for a separate congressional decision on their policy to cap the cost of insulin inside and outside Medicare.
The decision also means tens of billions less in federal savings in the bill overall, a potential threat to Democrats’ hopes to offset the cost of supporting Obamacare subsidies.
However, Democrats argue that the bill will move forward in the coming weeks with its most important provision intact: a repeal of the long-standing ban on the federal government directly negotiating drug prices with pharmaceutical companies.
Senate Majority Leader Chuck Schumer called the parliament’s decision “good news” in a statement on Saturday.
“Medicare will finally be allowed to negotiate prescription drug prices, seniors will have free vaccines and their costs capped, 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 kept against negotiating drug prices, and that’s a game changer. If it passes, Pharma will not be able to consistently push it to the consumer as per their whims and fancies. And that’s especially important with inflation hitting people at the pump and grocery store.”
But Welch, who is running to replace the retiring senate. Patrick Leahy (D-Vt.), acknowledged that the House decision is still a big win for the drug industry.
“This basically means that pharmaceutical companies can increase price increases well beyond inflation,” he said in an interview in the days before the vote.
Drug companies and Senate Republicans had planned for months to aim to keep inflation in check — through a process known on Capitol Hill as the “Byrd bath.” Sen. Mike Crapo (R-Idaho), the top Republican on the Senate Finance Committee, told reporters they went through the bill “line by line” in an effort to mount any challenge they could find.
Democrats who have pushed the policy for years were confident it could pass under the Senate’s strict reconciliation rules, which limit what kinds of bills can pass with one vote. majority. Only proposals that are 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 in order to work, warning that not doing so would mean drug companies could raise prices even higher for people with insurance. private to compensate what they lose in cost. controls the bill that still imposes on Medicare.
Sen. Chris Murphy (D-Conn.) said such points are “normally the kind of argument that is persuasive with the parliamentarian.”
“You can’t separate the private sector from the public sector – one doesn’t work without the other,” he said.
Supporters of the provision also pointed to the Congressional Budget Office’s finding last year that the inflation cap provision would save the government about $80 billion tall a decade to argue that it should be allowed to remain in the bill.
However, compliance experts and industry insiders were equally confident that the provision would be eliminated from the package.
“A lot of people think that if something gets a significant CBO score, it can’t be considered a fluke — but it’s more about whether the policy implications outweigh the budgetary ones,” said Stephen Northrup, a lobbyist who previously worked as a health policy . director of the Senate Committee on Health, Education, Labor and Pensions. “If the inflation cap were limited to Medicare, you could draw a very direct relationship between the policy and the outcome. But when you extend it to the commercial market, the relationship becomes weaker. It looks less like you’re trying to save money than you’re trying to expand a policy that has an impact beyond the federal budget.”
Democrats currently do not have a backup plan for the policy, although some advocates are now trying to apply inflation caps to other federal insurance programs like Medicaid and insurance for federal employees.
Even if they are able to do that, progressives who originally pushed for much more comprehensive drug price controls are disappointed that their already watered-down plan has grown even weaker over the past year.
Senate Finance Chairman Ron Wyden (D-Ore.), who worked for months drafting the drug price language and wrangling votes to pass it, blamed the pharmaceutical industry’s influence on Capitol Hill for the collapse of the inflation cap provision.
“Special interests always work against us getting relief for hard-hit Americans, especially seniors,” he told POLITICO before the House decision. “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.”
