House Votes to Terminate Trump’s Border Emergency

Plus, pharma execs' blame game

Democrat-Led House Rebukes Trump on National Emergency, Wall Money

By a vote of 245-182, the Democratic-led House just approved a resolution terminating President Trump’s national emergency at the border with Mexico and blocking his reprogramming of federal funds for wall construction. Thirteen Republicans joined Democrats in voting for the resolution.

You can find the vote tally here.

The resolution will now head to the Senate, where it must be voted on within 18 days — though Senate Republican leaders are in no rush. As of now, three GOP senators — Susan Collins of Maine, Lisa Murkowski of Alaska and Thom Tillis of North Carolina — have said they would vote for it, but others are reportedly giving it serious consideration.

The Trump administration, though, is pushing hard to prevent defections. “It’s being framed as no longer about ideological or constitutional concerns, or fears of setting a precedent for a future Democratic president,” CNN’s Phil Mattingly reports. “It’s about partisan concerns and not giving Democrats ammunition. Trump remains extremely popular in most GOP held states.”

On Tuesday, the White House also issued an official threat to veto the resolution if it passes the Senate.

Rep. Joaquin Castro (D-TX), the lead House sponsor of the resolution, acknowledged that it’s unlikely lawmakers will have enough votes to override a Trump veto. “Look, the president is probably going to veto this bill, and it’s an uphill climb to override any veto, not just this one,” he told reporters, according to The Washington Post. “But we’re not going to give up. We’re going to keep fighting. And I’m hopeful.”

Pharma Execs to Congress: Don’t Blame Us for High Drug Prices

There were few fireworks, and even fewer solutions, as executives from seven major pharmaceutical companies appeared Tuesday before the Senate Finance Committee to address high drug prices.

Sen. Chuck Grassley, the committee chair, warned in his opening remarks that he and most members of Congress “are sick and tired of the blame game” around drug prices. But the executives played a few more rounds anyway. STAT’s Lev Facher said that the hearing “served mostly as a retreading of arguments that lawmakers and the drug industry have spent years fine-tuning.”

One recurrent theme in the hearing was the complexity of the drug pricing system and the pharma executives’ self-proclaimed helplessness to change it on their own. The executives blamed middlemen such as pharmacy-benefit managers for high list prices, which they said were necessary to maintain sales.

The rebate system currently in place was cited as a particularly vexing problem that the executives would like to see eliminated. Under the system, drug companies raise their list prices so they can offer larger refund payments to the middlemen who control access to drugs for millions of Americans. “The government has to step up and change the rules. Rebates have to go,” AstraZeneca CEO Pascal Soriot said. Several of the executives said they would lower their list prices if the rebate system were eliminated.

Sanofi CEO Olivier Brandicourt provided what Business Insider’s Emma Court called “a rare look behind the curtain of drug prices,” as it broke down the value of the rebates it paid last year. Sanofi’s gross U.S. sales in 2018 were $21.6 billion, but its net sales were $8.4 billion — due in large part to the $7.3 billion in “discretionary rebates” the company paid to groups including commercial insurers and Medicare, and $4.5 billion in “mandatory rebates” paid to groups including Medicaid and the VA.

The executives expressed support for a Trump administration proposal to pass rebates paid to pharmacy benefit managers on to consumers. In the end, though, none of the representatives from AbbVie, AstraZeneca, Bristol-Myers Squibb, Johnson & Johnson, Merck, Pfizer and Sanofi committed to a concrete plan to lower the list prices for their drugs.

The bottom line: It will take much more than high-profile hearings to actually bring down drug prices or broader health care costs. But pharmacy benefit managers reportedly could be called to testify at a similar hearing before long.

Tweet of the Day

As pharma executives prepared to testify before Congress, Larry Levitt of the Kaiser Family Foundation highlighted an important concept for understanding how drug companies set their prices.

How Much Will the US Save by Withdrawing from Syria and Afghanistan?

President Trump’s proposed troop drawdown in Syria and Afghanistan won’t save much money, and it could end up costing the U.S. more, says Rick Berger of the American Enterprise Institute, writing at Defense One on Tuesday.

Withdrawing thousands of troops won’t cut the fixed costs of maintaining a presence in the two countries, Berger says, with the cost of “basing, security, communications facilities, and intelligence-surveillance-reconnaissance missions” claiming a substantial majority of the $69 billion warfighting budget. “No matter the number of airstrikes, the military needs wide-ranging infrastructure to conduct any airstrikes in Iraq, Syria, or Afghanistan,” Berger writes.

In addition, the modest savings created by troop withdrawals could be wiped out as military leaders turn to more expensive aerial reconnaissance to replace on-the-ground intelligence gathering and airstrikes to replace combat units. On top of the that, more than 1,000 Islamic State detainees may have to be moved to Guantanamo Bay. And the withdrawals could result in military reversals on the ground that require new U.S. interventions, at considerable expense.

“At day’s end,” Berger says, “the president will pull troops out based on a number of calculations—a supposedly war-weary public, lack of conclusive wins, and frustrations with partner nations. But the one thing he won’t be able to credibly say is that these minor withdrawals will save much money.”

The Debt Ceiling Is Back: Congress Will Face Fall Deadline to Raise It Again

Fresh off one fiscal showdown, Congress could soon face another, with the U.S. debt ceiling set to take effect again on March 2.

The debt ceiling is a statutory cap on federal borrowing. Raising it does not authorize new spending but allows the government to borrow more to pay for spending that Congress already approved. The limit was suspended through March 1 as part of a February 2018 congressional budget deal.

With the suspension now due to expire, the Congressional Budget Office said in a new report Tuesday that lawmakers will likely face a late summer or early fall deadline to raise the debt limit or risk defaulting on payments. Until then, the Treasury Department should be able to use “extraordinary measures,” or accounting maneuvers, to avoid default.

“With a large inflow of tax revenues in April, those extraordinary measures would enable the Treasury to continue financing the government’s activities for several months,” CBO estimated in its report. “However, if the debt limit remains unchanged, the ability to borrow using those measures will ultimately be exhausted, and the Treasury will probably run out of cash near the end of this fiscal year or early in the next one.”

Congressional discussions on how to address the debt limit are “at their very beginning phases right now," one Democratic aide told CNN this week. Lawmakers could decide to once again raise the borrowing limit as part of a broader deal addressing budget caps for fiscal 2020. “It is probably more apt to be part of the budget negotiations that go on around here, and it probably won’t be settled until the summer because of the ability of the government to transfer funds from retirement, for instance, to stop us from borrowing money,” Sen. Chuck Grassley (R-IA) said Monday.

In semiannual testimony before the Senate Finance Committee on Tuesday, Federal Reserve Chair Jerome Powell said “it would be a very big deal” for the U.S. to not pay its bills. “It’s beyond even consideration. The idea that the U.S. would not honor all of its obligations and pay them when due is something that can’t even be considered,” he said.

Fed Chair Says ‘We Need to Stabilize Debt to GDP’

The Fed chair also warned that the federal government is on an unsustainable fiscal path, with debt as a percentage of GDP growing quickly: “We need to stabilize debt to GDP,” he told lawmakers. “The timing of doing that, the ways of doing it — through revenue, through spending — all of those things are not for the Fed to decide.”

Powell warned that, over time, the country will wind up spending “more and more of our precious revenues” on interest payments on the debt “as opposed to investing in the things that we really need … so that we can compete in the global economy.”

Powell added that, as he sees it, the “single biggest thing” that drives the fiscal unsustainability is our health care system. “We deliver health care outcomes that are pretty average for a well-off country, but we spend 17 percent of GDP doing it, everyone else spends, on average, 10 percent of GDP,” he said. “It’s not that benefits themselves are too generous. It’s that we deliver them in highly inefficient ways.”

Number of the Day: $23 Billion

School districts where students are predominantly of color received $23 billion less in state and local K-12 funding in 2016 than predominantly white districts, despite serving roughly the same number of students, according to a new report from EdBuild, a nonprofit group focused on states’ school funding. The difference works out to an average $2,226 less funding per pupil, the group says. The analysis does not include federal funding.

“The funding gap is largely the result of the reliance on property taxes as a primary source of funding for schools,” The Washington Post’s Laura Meckler writes. “Communities in overwhelmingly white areas tend to be wealthier, and school districts’ ability to raise money depends on the value of local property and the ability of residents to pay higher taxes.” Read more about the report and its methods at The Washington Post or U.S. News.

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