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 The plan could still fail as hurdles remain to approving the broader
spending package, known as "Build Back Better." Should it survive,
the plan would authorize the federal government to negotiate drug
prices for the first time.
WHAT WAS AGREED?
The drug pricing agreement allows the federal government's Medicare
health insurance program for the elderly to start in 2023
negotiating the prices on 10 of the costliest drugs for diseases
such as cancer and diabetes that have only one supplier, with the
new prices taking effect in 2025. The number of drugs that will be
subject to Medicare negotiations will increase annually until it
reaches 20 in 2028.
The government will select from a list of drugs it spends the most
on in Medicare Part B, which covers physician-administered drugs
such as infusions and most injectables, and Part D, which covers
most prescription drugs sold at pharmacies.
Conventional prescription drugs are protected from negotiation for
the first nine years after they are launched. More complex biologic
drugs, which are made from living cells, are protected for 12 years.
Drugmakers that refuse to negotiate will owe an excise tax.
The agreement introduces a $2,000 annual cap on out-of-pocket costs
for people 65 or older, sets a $35 monthly cap on insulin prices,
and penalizes companies that raise prices faster than inflation for
Part B and D drugs as of Oct. 1, 2021. The inflation cap also
applies to private insurance markets.
WHAT HAD BEEN PROMISED?
The agreement leaves out significant provisions from the drug price
reform framework Democrats adopted, a law known as The Lower Drug
Costs Now Act introduced by Representative Frank Pallone of New
Jersey.
That bill would have empowered the government to negotiate the price
of insulin and the 250 single source brand-name drugs that Americans
spend the most on. Crucially, it extended the negotiated prices to
those covered by private insurance.
It would have also capped prices at 120% of the average price in
other wealthy countries and allow the government to fine drugmakers
who refuse to negotiate, fail to agree on a price, or overcharge
after agreeing on a price.
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 Unlike the current agreement,
its inflation cap would have also reversed
previous price increases by on drugmakers
through a one-time retroactive rebate to the
government.
WHY DID IT FAIL?
Republicans oppose allowing the government to
negotiate drug prices, echoing the
pharmaceutical industry's main argument that
federal pressure on prices would lead companies
to curb investment in research and kill
innovation. They have supported efforts to bring
more competing drugs into the market, including
cheaper generic versions, as a way to bring down
prices. They were joined in
their opposition to The Lower Drug Costs Now Act by dissenting
Democrats, some of whom advocated alternative scaled-back reforms.
Several of those Democratic lawmakers are among the largest
recipients of industry campaign donations.
Four centrist House Democrats - Scott Peters of California, Kathleen
Rice of New York, Kurt Schrader of Oregon, and Stephanie Murphy of
Florida - voted against the bill.
It also faced opposition from Senators Kyrsten Sinema of Arizona and
Robert Menendez of New Jersey. Democrats have razor-thin majorities
in both chambers of Congress; one senator or three representatives
are enough to kill a bill.
Peters and Schrader introduced their own drug price reform bill, The
Reduced Costs and Continued Cures Act, which covered Medicare Part B
drugs only and would have generated lower savings. Rice and Murphy
backed it.
The final agreement between the White House and congressional
Democrats is largely based on it, but expands it to make Medicare
Part D drug prices negotiable and add other provisions like the
insulin and inflation caps. Peters, Rice, Schrader, Murphy, Menendez
and Sinema all back it.
(Reporting by Ahmed Aboulenein; Editing by Michele Gershberg and
Howard Goller)
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