The fight between policymakers set on lowering prescription drug prices and the drugmakers who keep raising them intensified Thursday, like a slew of Republican senators threatened to affiliate with manufacturers against legislation based on their very own committee chairman and president.
After months of closed-door meetings and high-profile hearings, the Senate Finance Committee voted 19-9 to succeed legislation introduced by Sens. Chuck Grassley (R-Iowa) and Ron Wyden (D-Ore.) to rein in drug costs in the Medicare and Medicaid programs.
But even some Republicans who supported it warned they might not back the sweeping package of proposals in a full Senate vote. They object particularly to a provision that would cap drug prices paid by Medicare in line with the rate of inflation.
Other obstacles have piled up. Wyden announced that Democrats, who provided the majority of the bill's support in committee, would not allow a Senate vote without the Republicans receiving hold votes on cementing insurance protections for people with preexisting conditions. Democrats have complained for months that GOP efforts to get rid of the Affordable Care Act will leave individuals with these medical conditions with no recourse to get affordable healthcare. Democrats also want to empower federal nutritionists to barter drug prices.
Here are the three major problems revealed in Thursday's hearing.
Many Senate Republicans disagree with President Donald Trump concerning how to lower drug prices.
Some of Trump's efforts to lessen Americans' drug costs took a beating Thursday. They were criticized – by people in his own party – for putting too much power in the hands of government.
Despite urging from White House and federal health officials to aid the legislation, 13 from the committee's 15 Republicans voted to remove its controversial proposal to avoid drug prices from rising faster than inflation under Medicare. Their attempt failed, barely.
Medicaid already uses this strategy, requiring drugmakers to pay the federal government a rebate if the prices its smart outpace inflation, and Medicaid has a tendency to pay affordable prices on drugs than Medicare. The HHS inspector general has said Medicare could collect billions of dollars in the drug industry whether it did the same. However, many Republicans strongly oppose any government interference in private markets or price setting.
Sen. Patrick Toomey (R-Pa.), who introduced the amendment to remove the proposal, said it wasn't necessary because seniors would be protected against paying an excessive amount of by another proposal in the bill to cap out-of-pocket expenses.
“It's my view that we should not use this sledgehammer of the universal price control, imported from Medicaid, to deal with that relatively narrow problem and also to disrupt a program that's working perfectly,” Toomey said, mentioning Medicare's popularity.
Grassley said the inflation caps is needed relieve taxpayers from covering Medicare's skyrocketing drug costs.
And having played a vital role in 2003 creating Medicare's prescription medication program, called Medicare Part D, he took problem with the concept that his latest bill would harm this program: “I wrote it, so you ought to know that I want to protect it,” Grassley said.
Most of the Republicans also backed an amendment to bar an offer being considered through the Trump administration to tie drug prices here to people paid in other developed nations, which narrowly failed. While Grassley said he, too, opposes the administration's proposal, he did not want the issue to carry up his own bill and thus voted against the amendment.
Grassley also said he isn't comfortable with empowering federal health officials to barter drug prices, as Wyden said he'd want to see considered. But Grassley noted the issue isn't disappearing: Trump campaigned around the idea, which White House officials have been discussing with House Democratic leaders as part of an agenda expected to launch in September.
But that may not be enough, Grassley suggested: “I don't think that you're going to get 60 votes in the United States Senate.”
Critics in Congress are utilizing a few of the same misleading arguments as drugmakers.
Smelling trouble, pharmaceutical executives met with Trump in the White House on Wednesday evening to voice their opposition towards the Grassley-Wyden bill.
In a statement after their meeting, PhRMA, the industry's lobbying group, called it “the wrong method of lowering drug prices” and said it “imposes harmful price controls in Medicare Part D.”
PhRMA claimed the bill would “siphon more than $150 billion from researching and developing new medicines.” (Experts say most innovation now happens at academic institutions, not pharmaceutical companies.) It said the Medicare Payment Advisory Commission, a panel that advises Congress, had found “it is only going to benefit 2% of Medicare patients starting in 2022.” (A Bloomberg Law reporter said a commission official informed her it hadn't analyzed the bill.) The lobbying group asserted the balance would “result in money going to the federal treasury rather than seniors.” (The cash collected by the new rebates would go into the Supplemental Health care insurance trust fund, which pays for health services for Medicare beneficiaries.)
The flaws in PhRMA's claims did not stop critics from echoing some of them. Sen. Robert Menendez (D-N.J.), whose state hosts several drugmakers, said the bill's savings is going to patients and not into “some fund” where patients wouldn't view it. (He nonetheless voted to advance the bill.)
And Republicans decried the bill's “price controls” – even while Grassley and Wyden explained that the inflation caps would do nothing towards the list prices set by drugmakers, only slow price increases once they were available on the market.
In one exchange, Sen. John Cornyn (R-Texas) questioned Phillip Swagel, the director of the Congressional Budget Office, about who'd pay more under the legislation's inflation caps. “If you narrow the subsidy,” he said, talking about what the government pays drugmakers, “doesn't another woman's cost have to go up?”
“In this case, the out-of-pocket spending would go down. The premiums would go down. The federal spending would go down,” Swagel replied. “The drug manufacturer, they would see lower price increases than they may have seen without this provision.”
“So they'd have to eat that cost?” Cornyn asked.
“We would discover their whereabouts, while you put it, eating some of that cost, plus they might change their overall pricing as well,” Swagel said.
Saying there is “sufficient uncertainty” about how exactly the caps works, Cornyn then asked to be added like a co-sponsor of the amendment opposing that change.
Democrats, who unanimously voted to advance the bill, can always kill it.
Wyden opened by having an unusual declaration because he discussed the legislation he and Grassley had spent months crafting: If Republican leaders do not let votes on amendments that would protect preexisting conditions and empower federal health officials to negotiate drug prices, Democrats will oppose continuing to move forward onto it.
In short, he threatened his own bill.
“We're definitely not likely to sit quietly by while protections for preexisting conditions are wiped out,” Wyden said. “We're not likely to sit by while opportunities for seniors to make use of their bargaining power in Medicare are frittered away.”
Democrats slammed Republicans during the 2021 midterm election because of not doing enough to safeguard individuals with preexisting conditions, especially since Republican attorneys general have sued to void the entire Affordable Care Act. It looks like Democrats are warming up that argument for 2021.
During one tense exchange Thursday, Sen. Bob Casey (D-Pa.) fired back at Cornyn for claiming Republicans have a plan to protect patients if the ACA be thrown out.
“How the hell are you able to say that you support protections if you have all of the power along with a bill didn't pass that would offer the Affordable Care Act?” Casey said. “You've had eight many years of bellyaching about it, and also you haven't done a damn aspect of it.”
As the hearing continued, Democrats praised the bipartisan legislation at hand but listed other proposals they would like to see, including the revival from the Trump administration's now-defunct rebate rule. That would have forced the pharmacy benefit managers who negotiate drug prices for government health plans to refund some of the people discounts to customers. (Grassley, for his part, asked Wyden to work with him on incorporating the proposal to their legislation.)
Still, Grassley known the opposition among his own Republican colleagues as his “most vexing problem.” At one point, when Sen. John Thune (R-S.D.) gently suggested that stripping the inflation caps could leave all of them with “a big, bipartisan margin on this bill appearing out of here,” Grassley didn't miss a beat.
“It could get us a unanimous vote within this committee, however it would also leave the taxpayers with $50 billion more cost,” he said before contacting the next senator.