Still, the plan will now move forward without a provision that would have penalized drugmakers for increasing costs faster than inflation in private insurance plans as well as Medicare.
The elimination of the private insurance price caps means there is little left to reduce costs for the vast majority of Americans who receive health insurance through their private employer. Democrats are still waiting for a separate parliamentary decision on their policy to cap the cost of insulin both 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 of offsetting the costs of supporting Obamacare’s subsidies.
Still, Democrats say 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 directly negotiating drug prices with drug companies.
Leader of the Senate majority 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 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 maintained against negotiating drug prices, and that changes the game. If it passes, Pharma will not be able to continuously keep it to the consumer at their will and whim. And that’s especially important with inflation hammering people at the pump and the grocery store.”
But Welch, who is running to replace the retiring senator. Patrick Leahy (D-Vt.), acknowledged that the lawmaker’s decision is still a big win for the pharmaceutical industry.
“It would essentially mean that pharmaceutical companies could raise price increases well above inflation,” he said in an interview in the days leading up to the vote.
Drug companies and Senate Republicans had planned for months to target the inflation cap – through a process known on Capitol Hill as a “Byrd bath”. Late. Mike Crapo (R-Idaho), the top Republican on the Senate Finance Committee, told reporters they were going through the bill “line by line” in an effort to mount every challenge they could find.
Democrats, who have pushed the policy for years, had been confident it could pass under the Senate’s strict reconciliation rules, which limit what kinds of bills can pass 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 inflationary caps on drug prices across the board to work, and warned that failure to do so would mean drug companies could raise prices even higher for people with private insurance to make up for what they Loser of the cost controls the bill still imposes on Medicare.
Late. Chris Murphy (D-Conn.) said such points are “usually the kind of arguments that are persuasive with parliamentarians.”
“You can’t untangle 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 conclusion last year that the inflation cap provision would save the government about $80 billion. over a decade to argue that it should be allowed to remain in the bill.
Still, reconciliation experts and industry insiders were equally confident that the provision would be struck out of 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 political consequences 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 was 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 more tenuous. It looks less like you’re trying to save money than you 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 pushing to try to apply inflation caps to other federal insurance programs such as Medicaid and federal employee insurance.
Even if they are able to, progressives who originally pushed for much more sweeping drug price controls are disappointed that their already watered-down plan has grown even weaker over the past year.
Finance Chairman of the Senate Ron Wyden (D-Ore.), who worked for months to craft the drug pricing language and wrangle the votes to pass it, blamed drug industry influence on Capitol Hill for stalling the inflation cap.
“The special interests are always working against us getting relief 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 of how many lobbyists they have – are trying to protect their profits.”