The fight between policymakers intent on lowering prescription drug prices and the drugmakers who keep raising them intensified Thursday, as a slew of Republican senators threatened to side with manufacturers against legislation supported by their own committee chairman and president.
After months of closed-door meetings and high-profile hearings, the Senate Finance Committee voted 19-9 to advance 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 may not back the sweeping package of proposals in a full Senate vote. They object in particular to a provision that would cap drug prices paid by Medicare based on the rate of inflation.
Other obstacles have piled up. Wyden announced that Democrats, who provided most of the bill’s support in committee, would not allow a Senate vote without the Republicans agreeing to hold votes on cementing insurance protections for people with preexisting conditions. Democrats have complained for months that GOP efforts to kill the Affordable Care Act will leave people with these medical problems without any recourse to get affordable health care. Democrats also want to empower federal health officials to negotiate drug prices.
Here are the three major problems revealed in Thursday’s hearing.
Many Senate Republicans disagree with President Donald Trump about how to lower drug prices.
Some of Trump’s efforts to reduce Americans’ drug costs took a beating Thursday. They were criticized — by members of his own party — for putting too much power in the hands of government.
Despite urging from White House and federal health officials to support the legislation, 13 of the committee’s 15 Republicans voted to remove its controversial proposal to prevent drug prices from rising faster than inflation under Medicare. Their attempt failed, barely.
Medicaid already uses this strategy, requiring drugmakers to pay the government a rebate if the prices it pays outpace inflation, and Medicaid tends to pay lower prices on drugs than Medicare. The HHS inspector general has said Medicare could collect billions of dollars from the drug industry if it did the same. But 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 from paying too much by another proposal in the bill to cap out-of-pocket expenses.
“It’s my view that we should not use this sledgehammer of a universal price control, imported from Medicaid, to deal with that relatively narrow problem and to disrupt a program that’s working very well,” Toomey said, mentioning Medicare’s popularity.
Grassley said the inflation caps would help relieve taxpayers from covering Medicare’s skyrocketing drug costs.
And having played a key role in 2003 creating Medicare’s prescription drug program, called Medicare Part D, he took issue with the idea that his latest bill would harm the 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 block a proposal being considered by the Trump administration to tie drug prices here to those 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 hold up his own bill and so voted against the amendment.
Grassley also said he is not comfortable with empowering federal health officials to negotiate drug prices, as Wyden said he would like to see considered. But Grassley noted that the issue isn’t going away: Trump campaigned on the idea, which White House officials have been discussing with House Democratic leaders as part of a plan expected to be released 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 using some of the same misleading arguments as drugmakers.
Smelling trouble, pharmaceutical executives met with Trump at the White House on Wednesday evening to voice their opposition to the Grassley-Wyden bill.
In a statement after their meeting, PhRMA, the industry’s lobbying group, called it “the wrong approach to 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 will only benefit 2% of Medicare patients starting in 2022.” (A Bloomberg Law reporter said a commission official told her it had not analyzed the bill.) The lobbying group asserted the bill would “result in money going to the federal treasury instead of seniors.” (The money collected by the new rebates would go into the Supplemental Medical 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 is home to several drugmakers, said the bill’s savings should go to patients and not into “some fund” where patients would not see it. (He nonetheless voted to advance the bill.)
And Republicans decried the bill’s “price controls” — even as Grassley and Wyden explained that the inflation caps would do nothing to the list prices set by drugmakers, only slow price increases once they were on the market.
In one exchange, Sen. John Cornyn (R-Texas) questioned Phillip Swagel, the director of the Congressional Budget Office, about who would pay more under the legislation’s inflation caps. “If you cut the subsidy,” he said, referring to what the government pays drugmakers, “doesn’t somebody else’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 might have seen without this provision.”
“So they would have to eat that cost?” Cornyn asked.
“We would see them, as you put it, eating some of that cost, and they might change their overall pricing as well,” Swagel said.
Saying there was “sufficient uncertainty” about how the caps would work, Cornyn then asked to be added as a co-sponsor of the amendment opposing that change.
Democrats, who unanimously voted to advance the bill, may still kill it.
Wyden opened with an unusual declaration as he discussed the legislation he and Grassley had spent months crafting: If Republican leaders do not allow votes on amendments that would protect preexisting conditions and empower federal health officials to negotiate drug prices, Democrats will oppose moving forward on it.
In short, he threatened his own bill.
“We’re certainly not going to sit quietly by while protections for preexisting conditions are wiped out,” Wyden said. “We’re not going to sit by while opportunities for seniors to use their bargaining power in Medicare are frittered away.”
Democrats slammed Republicans during the 2018 midterm election for not doing enough to protect those 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 2020.
During one tense exchange Thursday, Sen. Bob Casey (D-Pa.) fired back at Cornyn for claiming Republicans have a plan to protect patients should the ACA be thrown out.
“How the hell can you say that you support protections when you have all the power and a bill did not pass that would support the Affordable Care Act?” Casey said. “You’ve had eight years of bellyaching about it, and you haven’t done a damn thing about it.”
As the hearing went on, Democrats praised the bipartisan legislation at hand but listed other proposals they would like to see, including the revival of 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 those discounts to customers. (Grassley, for his part, asked Wyden to work with him on incorporating the proposal into their legislation.)
Still, Grassley referred to 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 out the inflation caps would leave them with “a big, bipartisan margin on this bill coming out of here,” Grassley didn’t miss a beat.
“It could get us a unanimous vote in this committee, but it would also leave the taxpayers with $50 billion more cost,” he said before calling on the next senator.