Moderates balk at Medicare drug price negotiation authority pursued by Dems in .5T package

House and Senate moderate Democrats are expressing major doubts over Democrats’ efforts to give Medicare the power to negotiate for lower drug prices and to apply those prices to commercial plans.

Fissures among Democrats came to the fore Wednesday when three moderate Democrats voted against advancing a provision that would give Medicare the power to negotiate for lower drug prices in Medicare Part B and apply those prices to commercial plans.

Democratic Reps. Scott Peters of California, Kurt Schrader of Oregon and Kathleen Rice of New York voted Wednesday against a drug price reform piece of a $3.5 trillion infrastructure package that was being debated in the House Energy and Commerce Committee. The three defections meant the vote on the drug price reform package, which included caps on out-of-pocket costs for Part D beneficiaries, failed due to a tie vote.

Peters and Schrader outlined their own legislation that creates a yearly out-of-pocket cap on drug costs for Medicare beneficiaries. It would include negotiation power for Medicare but would be much more limited. The legislation also includes a $50 a month out-of-pocket cap for insulin.

Under their legislation, Medicare would only be able to negotiate drug prices for certain products in Medicare Part B that don’t have exclusivity and have no market competition.

The Energy and Commerce legislation also would allow the Department of Health and Human Services to negotiate over high-cost drugs that don’t have competition, but it would require the negotiated price to be applied to individuals in group health plans, a provision Peters and Schrader’s bill does not do.

Technically, Democrats can still add drug price negotiation through a different committee before the full package hits the floor later this fall.

But the hesitancy among moderates could cause major headaches for Democratic leadership that have narrow majorities in the House and Senate. House leadership has only a three-seat majority, and Democrats hold a 50-50 majority with Vice President Kamala Harris as the tie-breaking vote.

Centrists in the House aren't the only lawmakers expressing reluctance at a widespread drug price negotiation authority.

Sen. Bob Menendez, D-New Jersey, also expressed skepticism with drug price negotiation proposals.

“My goal is to reduce the costs of prescription drugs to the consumer. Not just to the government,” he told reporters Tuesday. “How does that end up being better for the consumer? I haven’t seen how that negotiation actually does this.”

Sen. Ron Wyden, D-Oregon, the chairman of the Senate Finance Committee, told reporters Tuesday he is aware of the moderates’ concerns and that negotiations on the final package continue.

“We are working on it every day and I can tell you that the challenge in the Senate is different than the challenge in the House,” he said.

But Wyden was heartened by remarks President Joe Biden delivered last month that directed Congress to pass legislation that gives Medicare wide drug negotiation authority and applies those prices to private plans.

“I think that helps drive it along,” Wyden said.

Democrats are hoping to use savings from Medicare drug price negotiation to help lower the price tag of the $3.5 trillion package, which has come under scrutiny from moderate Sen. Joe Manchin, D-West Virginia, as too high.

Wyden told reporters the committee hasn’t announced it is looking at any other pay-fors yet. He also did not say when a deal would be reached on the package.

What else is in the package?

In addition to the drug price reforms, Energy and Commerce advanced several other healthcare priorities including:

• Creating a program resembling Medicaid to offer coverage to residents in states that have not expanded Medicaid under the Affordable Care Act (ACA). The program would offer the same benefits as Medicaid and would start in 2025.
• Extending enhanced subsidies for ACA coverage through 2024. The American Rescue Plan Act boosted subsidies but only through the 2022 coverage year.
• Creating a new fund that gives states $10 billion a year to set up a state reinsurance program to help lower ACA premiums.

The legislation will now head to the House Budget Committee, which will combine the provisions along with other parts of the $3.5 trillion package. The Senate is also working on its own version.