However, the plan will now move forward without a provision penalizing drug makers for high spending faster than inflation in private insurance plans as well as Medicare.
The removal of price caps on private insurance means there is little left that will lower 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 to cap the cost of insulin both inside and outside of Medicare.
The decision also means cutting federal savings in the bill by tens of billions of dollars overall, posing a potential threat to Democrats’ hopes of offsetting the costs of increased Obamacare subsidies.
However, Democrats say the bill will be passed in the coming weeks while retaining its most important provision: lifting a longstanding ban on the federal government from directly negotiating drug prices with pharmaceutical companies.
Senate Majority Leader Chuck Schumer called the MP’s decision “good news” in a statement on Saturday.
“Finally, Medicare will be allowed to negotiate the price of prescription drugs, seniors will get free vaccines and their spending 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 “tear down the iron curtain that Big Pharma has maintained against drug price negotiations and is a game-changer. If it passes, Pharma will not be able to constantly impose it on the consumer according to his desire and whim. And this is especially important when inflation hits people at gas stations and grocery stores.”
But Welch, who is running to replace the outgoing senator. Patrick Leahy (D-Vt.), acknowledged that the MP’s decision is still a big win for the pharmaceutical industry.
“Essentially, this would mean that pharmaceutical companies would be able to raise prices well above the rate of inflation,” he said in an interview a few days before the vote.
Pharmaceutical companies and Republicans in the Senate planned for months aim at curbing inflation – through a process known on Capitol Hill as “Byrd’s bath”. Sen. Mike Crapo (R-Idaho), the top Republican on the Senate Finance Committee, told reporters they went through the bill “line by line” trying to fix every problem they could find.
The Democrats, who have pushed the policy for years, were confident it could pass under the Senate’s strict conciliation rules, which limit what bills can be passed by simple majority. Only proposals that are primarily related to federal spending or revenue can be accepted, but not those that make major policy changes and have only an “accidental” impact on the federal budget.
Democrats argued that inflationary ceilings on drug prices across the board were necessary for the bill to function, warning that failure to meet this requirement would mean drug companies could raise prices even higher for people with private insurance to make up for what they lose value. oversees the bill, which is still assigned to Medicare.
Sen. Chris Murphy (D-Conn.) said such clauses “are usually a persuasive argument for an MP.”
“The private sector cannot be separated from the public sector – one does not work without the other,” he said.
Proponents of the provision also pointed to the Congressional Budget Office’s finding last year that the cap-in-inflation provision would save the government about $80 billion. about a decade to argue that he should be allowed to remain on the bill.
However, conciliation experts and industry insiders alike were confident that this provision would be dropped from the package.
“A lot of people think that if something gets a significant CBO score, it can’t be considered random — it’s more about whether the policy implications outweigh the budgetary implications,” said Stephen Northrup, a lobbyist formerly in health care. director of the Senate Committee on Health, Education, Labor, and Pensions. “If the inflation cap were capped by Medicare, you could make a very direct link between policy and valuation. But when you expand it to the commercial market, the relationship becomes more subtle. It sounds like you’re not so much trying to save money as you are trying to expand policies whose impact goes beyond the federal budget.”
Democrats do not currently have a back-up plan for this policy, although some supporters are currently pushing to try and apply inflationary caps to other federal insurance programs such as Medicaid and insurance for federal employees.
Even if they are able to do so, the progressives, who initially pushed for much broader drug price controls, are frustrated that their already relaxed plan has gotten even weaker over the past year.
President of the Senate for Finance Ron Wyden (D-Ore.), who spent months working on drug pricing formulation and gathering votes to pass it, blamed the drug industry’s influence on Capitol Hill for the decline of the inflation cap provision.
“Special interests always work against us getting help for hard-hit Americans, especially the elderly,” he told POLITICO ahead of the MP’s decision. “So it’s amazing that special interests – and you’ve seen the numbers on how many lobbyists they have – are trying to protect their profits.”