U.S. Senate Democrats advance deal to lower drug prices

[July 07, 2022]  By Ahmed Aboulenein and Richard Cowan

WASHINGTON (Reuters) - Democrats in the U.S. Senate are advancing a deal that would allow the government's Medicare health plan for older and disabled Americans to negotiate lower prescription drug prices, Senate sources said on Wednesday.

The plan, which could potentially lower government health costs by billions of dollars, has long been a goal of President Joe Biden's Democrats and is popular with voters.

Affected drugs could include Bristol-Myers Squibb Co's top-selling cancer drug Revlimid, AbbVie Inc's rheumatoid arthritis drug Humira, and Bayer AG's blood thinner pill Xarelto, according to the Kaiser Family Foundation (KFF).

The plan has been held up by contentious intra-party negotiations on taxes, climate change and other elements of a proposed domestic policy bill.

The sources said all 50 Senate Democrats support the drug plan, including Senator Joe Manchin, who is often at odds with other members of his party.

"His support for this proposal has never been in question," Manchin spokesperson Sam Runyon said in a statement.

A source familiar with the proposal said Senate Democrats were still working on the provisions to tackle climate change and raise taxes, which would be coupled with the Medicare proposal.

While negotiations continue, the Medicare portion was to be submitted to the Senate parliamentarian to ensure it complies with complex budget rules that would allow Democrats to bypass Republicans and pass it with a simple majority in the 100-seat chamber with Vice President Kamala Harris breaking the tie.

The Democrats' plan would allow the Medicare health program for the disabled and people aged 65 and older to negotiate discounts for some of the costliest drugs and penalize companies that raise prices faster than inflation.

It also introduces a $2,000 annual cap on out-of-pocket costs for Medicare beneficiaries.

Medicare could annually negotiate prices for 10 of the most expensive single-source drugs starting in 2026, with that number increasing to 20 drugs by 2029, according to Juliette Cubanski, a KFF analyst.

Newer drugs would not be eligible, she said.

REDUCING THE BUDGET DEFICIT

The plan would reduce the federal budget deficit by $297 billion over 10 years, according to a November report from the nonpartisan Congressional Budget Office.

Senator Joe Manchin (D-WV) speaks to journalists in the United States Capitol building in Washington, U.S., May 26, 2022. REUTERS/Evelyn Hockstein

AARP, an influential advocacy group for Americans over the age of 50, said it backed the plan.

But PhRMA, a lobbying group for the pharmaceutical industry, said the price controls would threaten future drug development.

The Biotechnology Innovation Organization, another industry group, also said it opposed the plan.

It was unclear when legislation bundling the three initiatives would be complete. Democrats hope to pass the legislation before the Nov. 8 midterm election, when Republicans could win control of one or both chambers of Congress.

The Senate's top Republican, Mitch McConnell, has threatened to hold other legislation hostage if the Democrats advance their package.

SCALED BACK

Biden and Democrats promised voters sweeping drug price reform but agreed in November to move ahead with a far less ambitious proposal after facing opposition in Congress.

It still allows Medicare to negotiate lower drug prices, but they would not apply to people with private health insurance, a provision included in an earlier, more ambitious, proposal.

It would allow the government to negotiate the price of up to 20 of the single-supplier drugs on which it spends the most, rather than the 250 drugs progressives had sought.

Other weakened provisions include an inflation cap that does not reverse previous price hikes, something the old framework would have done.

The Senate's proposed text does not include Medicare negotiation of insulin prices or a $35 monthly cap on out-of-pocket insulin costs, both present in the House version.

Democrats are proposing a separate insulin bill that would include the $35 cap.

(Reporting by Richard Cowan and Ahmed Aboulenein in Washington, Moira Warburton in Miami and Michael Erman in New Jersey; editing by Andy Sullivan, Chizu Nomiyama and Howard Goller)

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