The powerful drug industry is on the verge of a rare defeat in Congress, as Democrats say they have the votes to pass legislation targeting rising drug costs.
After winning the support of Senator Kirsten Senema (D-Arizona) late Thursday, Senate Democrats appear ready to pass sweeping legislation, among a raft of climate and tax measures, that would allow Medicare to negotiate the costs of some Prescription medicines. The first time ever.
Democrats have sought for decades to allow Medicare to negotiate directly with drug companies as a way to cut costs, starting with President Clinton’s ambitious health reform plan in 1993.
Although relatively modest, the negotiating clause remains a major victory for drug-pricing advocates, and could give Democrats a boost as the midterms approach.
The idea is widely supported by voters, but the industry has long battled any efforts to impose what they see as price controls, even amid growing bipartisan anger over rising drug costs.
The legislation would allow negotiations for up to 10 of the most expensive drugs to take place starting in 2026, with more allowed in subsequent years. The federal government is expected to provide more than $100 billion.
Another provision would put ancillary costs of Medicare prescription drug benefits at $2,000, saving seniors thousands of dollars. The legislation also aims to prevent companies from massive price increases by charging rebates to manufacturers that increase prices faster than inflation.
According to the Kaiser Family Foundation, half of all drugs covered by Medicare saw prices rise above the inflation rate from 2019 to 2020.
If the legislation is passed, “that’s a drastic change. It will change the trajectory of drug prices and drug price policy in the country,” said David Mitchell, president and founder of the advocacy group Patients for Affordable Medicines.
The legislation could pass the Senate as early as this weekend, assuming the upper house MP says drug pricing clauses can be included under budget compromise rules, which allow Democrats to bypass the 60-vote legislative stall.
The prescription drug plan contains the most common provisions in the reconciliation package, according to Morning Consult-Politico . Latest Poll. Nearly three out of four participants expressed support for drug pricing measures.
But the pharmaceutical industry is on pace to break lobbying records in its efforts to oppose the legislation. According to Open Secrets, the industry spent $187 million in the first half of 2022 alone.
The industry’s largest lobbying group, Research Pharmaceuticals and Manufacturers of America (PhRMA), sent a letter to every member of Congress on Thursday urging them to vote against the legislation.
The letter largely reiterated the industry group’s longstanding argument that the legislation would lead to government price controls and fewer treatments available to Americans.
This bill would not provide relief to families suffering from inflation or help the average American patient buy drugs. Stephen Opel, PhRMA’s president and CEO, wrote in the letter, which was also signed by the group’s 31 board members, that it will be remembered as a historic mistake that devastated patients who desperately need new treatments.
During a recent briefing, Opel said the group is evaluating its options, and noted that even if the legislation is passed, the industry won’t back down.
We will not take any option off the table. We will examine all legislative, regulatory and legal efforts to ensure that patients continue to have access to medicines and that our companies have the capacity to develop them.”
In recent years, Congress has tried to rein in drug prices without Medicare negotiations. In 2019, Senators Chuck Grassley (R-Iowa) and Ron Wyden (Raw Democrat) introduced a bipartisan drug pricing bill.
Similar to the reconciliation provisions, it would have included a cap on out-of-pocket drug costs for Medicare seniors, and would have limited Medicare drug price increases to inflation. But the bill was not brought to a vote.
Congress has also considered stopping what lawmakers denounce as anti-competitive industry practices, such as raising prices closely with competitors or manipulating patent laws to expand market exclusivity.
But even modest legislation has been opposed by drug companies.
Rachel Sacks, a law professor at Washington University in St. Louis, said she doesn’t think there would be a strong appetite for regulation if drug companies didn’t fight every effort.
Sachs said the “failure of the industry itself to rein in its worst impulses” was to blame.
“We are now in an unsustainable position for patients or payers and it is because of their own actions,” Sachs said.
If the legislation is passed, Mitchell said, it would penetrate the indomitable shell of the pharmaceutical lobby.
“I think this struggle has been about power, and drug companies have struggled to maintain their power to dictate prices,” Mitchell said. “The drug bite from this legislation isn’t that big. It’s meaningful, but it’s not that big. But the idea that we’re actually, actually limiting the ability of that industry to dictate this to the American people is a pretty big problem.”