Yet the plan will now go ahead without a provision that would have penalized drugmakers for raising costs faster than inflation in private insurance plans as well as Medicare.
The exclusion of private insurance price limits means there is little left that will lower costs for the vast majority of Americans who receive health insurance through their private sector employers. Democrats are still awaiting a separate House decision on their policy to cap the cost of insulin both inside and outside of Medicare.
The decision also means tens of billions less federal savings on the overall bill, a potential threat to Democrats’ hopes of offsetting the cost of boosting Obamacare grants.
Still, Democrats argue the bill will move forward in the coming weeks with its most important provision intact: a repeal of the longstanding ban on the federal government from directly negotiating drug prices with drug companies.
Senate Majority Leader chuck schumer called the parliamentarian’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 will be capped, and much more,” he said.
representing Pierre 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 held against negotiating drug prices, and that is a game-changer. If it passes, Pharma will not be able to continually stick it to the consumer according to their will and whim. And that’s especially important with inflation hammering people at the pumps and the grocery store.
But Welch, who is running to replace the outgoing senator. Patrick Leahy (D-Vt.), acknowledged that the parliamentarian’s decision is still a big win for the pharmaceutical industry.
“It would essentially mean that pharmaceutical companies could raise price increases well beyond inflation,” he said in an interview in the days before the vote.
Pharmaceutical companies and Senate Republicans had planned for months to target the provision on inflation caps – 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 address any challenges 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 the types of bills that can be passed with a simple majority. Only proposals that are primarily tied to federal spending or revenue can fly, but not those that make major policy changes and have only “incidental” impact on the federal budget.
Democrats argued the bill needed inflation caps on drug prices across the board in order to work, warning that failure to do so would mean drug companies could raise prices even further for people benefiting from private insurance to make up for what they lose in cost. controls the bill 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 disentangle the private sector from the public sector – one doesn’t go without the other,” he said.
Proponents 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. more a decade to argue that he should be allowed to stay in the bill.
Still, reconciliation experts and industry insiders were equally sure the provision would be dropped from the package.
“A lot of people think that if something gets a significant CBO score, it can’t be seen as incidental – it’s more about whether the political implications outweigh the budgetary implications,” said Stephen Northrup, a lobbyist who previously worked as a health policy official. Chairman of the Senate Committee on Health, Education, Labor and Pensions. “If the inflation cap was limited to Medicare, you could draw a very direct relationship between policy and score. But when you extend it to the commercial market, the relationship becomes more tenuous. It seems less like you’re trying to save money than trying to expand a policy that has an impact beyond the federal budget.
Democrats currently don’t have a back-up plan for the policy, though some supporters are now pushing to try to apply inflation caps to other federal insurance programs such as Medicaid and federal employees insurance. .
Even if they can, progressives who originally called for far more extensive drug price controls are disappointed that their already watered-down plan has weakened further over the past year.
Senate Finance Chair Ron Wyden (D-Ore.), who worked for months crafting drug pricing language and arguing for votes to pass it, blamed pharmaceutical industry influence on Capitol Hill for the demise. of the inflation ceiling provision.
“Special interests are always working against us to bring relief to hard-hit Americans, especially the elderly,” he told POLITICO ahead of the parliamentarian’s decision. “So what a surprise that special interests – and you’ve seen the numbers on how many lobbyists they have – are trying to protect their profits.”