Dems’ Drug Pricing Reforms Not Dead Yet

House Speaker Nancy Pelosi (D-CA) speaks during her weekly news conference on Capitol Hill
ALEXANDER DRAGO
By Yuval Rosenberg

Happy Friday! Democrats headed into the
weekend hopeful that they'll be able to pass a bipartisan
infrastructure bill as soon as next week. Progressives, who handed
President Joe Biden and House Speaker Nancy Pelosi a setback
Thursday by again forcing a delay on the bill, sounded
optimistic about both the infrastructure bill and
the broader Build Back Better social spending and climate
framework. We'll see ...

Democrats’ Drug Pricing Reform Plans Not Dead Yet: Reports

The Build Back Better plan that the White House issued Thursday
doesn’t include a proposal to allow Medicare to negotiate
prescription drug prices, an idea with
broad public support that President Joe Biden
backs, as do many other Democrats and patient advocates. But
Democrats haven’t completely abandoned pricing reforms even as
intraparty differences have made it difficult to reach consensus on
a plan that can garner enough votes to pass given the party’s
narrow majority in the House and an evenly divided Senate.

House Speaker Nancy Pelosi’s office is working to drum up
support for a version of the plan that would allow Medicare to
negotiate prices for a narrower group of drugs, STAT News
reports.

The latest proposal is being developed by House Energy and
Commerce Committee Chair Frank Pallone (D-NJ) and Rep. Scott Peters
(D-CA), who had objected to a broader reform plan included in a
House version of the Build Back Better plan due to concerns that it
would hurt drug development and innovation. "We're going to get a
bill that has negotiated prices, and that's going to make a
difference in terms of people being able to afford their drugs,"
Pallone said Thursday evening, according to
The Hill.

The new proposal would allow negotiations on medications
administered by doctors (Medicare Part B) and at the pharmacy
counter (Part D) — but only after the drugs were past the
“exclusivity period” granted by the Food and Drug Administration to
protect them from competition. “The tentative deal would also
penalize drug makers for raising prices faster than inflation in
both the employer-sponsored insurance market and Medicare,” STAT’s
Rachel Cohrs writes. “Seniors would have their out-of-pocket drug
costs capped each year.”

Peters’s office told reporters that he will require the support
of 50 senators before committing to a deal.

That will likely put the focus back on Sen. Kyrsten Sinema
(D-AZ), who supports the idea of lowering drug prices but opposes
the broad reforms and negotiating power included in past Democratic
legislation. Sinema reportedly reached a deal with Biden on a plan
that would limit the medications subject to Medicare negotiations
in line with a proposal from Peters, but the idea was nevertheless
left out of the framework announced by the White House Thursday.
“Many progressives view the Peters proposal as insufficient, and a
senior administration official said that drug pricing reform lacks
the votes in Congress at the moment to advance,” Politico
reported.

A long history of failure: If Democrats fail to reach an
agreement on drug pricing changes, Biden would join the roster of
recent presidents who have seen their reform efforts thwarted
thanks in large part to the fierce lobbying efforts of thousands of
pharmaceutical industry representatives, The Washington Post’s Dan
Diamond and Amy Goldstein
write:

“For nearly 30 years, U.S. presidents have tried and failed to
contain the price of drugs like insulin. Now Biden appears likely
to join a list which includes former presidents Bill Clinton,
Barack Obama and Donald Trump. All of them pledged to tackle high
drug costs, and all of them failed at the hands of the
deep-pocketed industry, which has spent more than $1 billion on
lobbying and advertising over two decades to torpedo initiatives
that could rein in its profits, according to data tracked by
OpenSecrets, a government transparency group. Which is why, experts
say, Americans pay roughly twice as much for their prescriptions as
consumers in comparable countries.”

Both
Sinema and
Peters have received hundreds of thousands of dollars in

campaign contributions from the pharmaceutical
industry, but a spokesman for PhRMA, the powerful drug industry
trade group, downplayed the role of donations. “I can’t speak to
why a member of Congress may take a certain position on a certain
issue,” PhRMA’s Brian Newell told the Post. “Our focus has been
educating policymakers about the solutions we are for to lower
costs for patients and the concerns we have with proposals like
direct government negotiations.”

The bottom line: “Barring a last-minute reversal on
Capitol Hill, the United States will continue to be an outlier
among wealthy, Western nations with such a scant government role in
determining the prices consumers pay for the medicines they need
and, as a result, drug costs far out of line with those in other
countries,” the Post’s Diamond and Goldstein write. And such
continued failure comes at a high cost: The Post cites one estimate
by researchers that said that the government could have saved
between $1 billion and $4.4 billion in just one year had Medicare
been allowed to negotiate the price of just one drug, insulin.

Quote of the Day

“Do I think we were hurt? No, I think we were disappointed. I
think 90% of the caucus was disappointed. I think we’re going to
pass the bipartisan infrastructure bill at some point in time. Soon
is in the eye of the beholder.”

— House Majority Leader Steny Hoyer (D-MD), talking to
Punchbowl News about the failed effort to vote Thursday on the
infrastructure bill that has been on hold since August. Despite
efforts by House Speaker Nancy Pelosi (D-CA) to hold a vote, it was
delayed once again as progressives pushed for reassurances about
the substance and fate of the larger Build Back Better bill, which
they want to advance at the same time as the infrastructure bill.
“It never helps you not to get what you want when you want it,”
Hoyer said. “But people forget pretty soon. You get by
this.”

Democrats’ Tax Plan Focuses on Corporations and the
Wealthy

The framework released Thursday for President Joe Biden’s Build
Back Better plan contains nearly $2 trillion in tax increases, most
of them targeting businesses and high-income households. Alan
Rappeport of The New York Times has a
rundown on some of the central provisions:

Taxing the rich: Democrats have proposed a new surtax on
high-income households. Those with annual incomes over $10 million
would pay an additional 5% tax, and those over $25 million would
another 3%. The plan would “effectively raise the top tax rate on
ordinary income to 45 percent for the highest earners,” Rappeport
says. The Biden administration estimates that the taxes would bring
in $230 billion over 10 years.

Democrats also want to close loopholes some high-income
households use to avoid paying a 3.8% Medicare surtax. The proposed
rule change is projected to bring in $250 billion over a
decade.

Taxing corporations: The White House proposes to create a
15% minimum tax for large businesses, so no company can avoid
paying taxes altogether. Administration officials estimate that the
tax, which would affect about 200 companies, would bring in $325
billion over 10 years.

A separate proposal would apply a 1% surcharge to stock
buybacks, a move that would produce an estimated $125 billion over
a decade.

And Democrats want corporations to pay more on their
international earnings, which sometimes disappear into tax shelters
overseas. A minimum tax rate of 15% on foreign earnings is
projected to produce $350 billion over the next 10 years.

Reducing the tax gap: With the goal of bringing in
billions of dollars in taxes that are owed but go uncollected, the
Democratic plan calls for increasing IRS funding by $80 billion
over 10 years. That investment is projected to produce $400 billion
in additional revenue.

Reducing the deficit: With nearly $2 trillion in
projected revenues and $1.85 trillion in spending, the Democratic
proposal would shrink the federal budget deficit. The overall
proposal is still a work in progress, though, and one provision
that could end up in the final bill — a temporary repeal of the
limit on state and local tax deductions — could push the plan into
the red. And even without any additional spending, it’s not clear
that the Congressional Budget Office will agree with the
administration’s revenue projections, raising the distinct
possibility that the official score for the bill will fail to show
deficit reduction.

Debt Default Could Occur Between Mid-December and Mid-February:
Analysis

You probably haven’t heard much about the debt ceiling lately,
but get ready to start hearing about it on a regular basis over the
next few weeks.

According to the Bipartisan Policy Center, the day on which the
U.S. Treasury will no longer be able to pay all its bills due to
restrictions imposed by the debt ceiling will arrive sometime
between the middle of December and the middle of February.

The so-called X Date was pushed back from mid-October when
Congress approved a $480 billion increase in the debt ceiling
earlier this month, with the expectation that the funds would hold
the Treasury over until at least December 3.

But that “was only a temporary fix,” BPC’s Shai Akabas said in a
statement. The Treasury has already hit the new debt limit, BPC
reports, and is once again resorting to “extraordinary measures” to
keep payments flowing.

The two-month range for the potential debt default reflects in
part the high degree of uncertainty over the status of the
bipartisan infrastructure bill. If that bill passes, the X Date
could move up, since the legislation calls for a $118 billion
transfer from the Treasury Department to the Highway Trust Fund.
Just how that transfer will play out is unclear, though, leading to
more uncertainty than usual around the Treasury’s short-term
payment requirements.

An even bigger uncertainty is how Congress plans to go about
raising or suspending the debt ceiling for more than just a few
weeks. Republicans want Democrats to raise the limit on their own,
via the budget reconciliation process they plan to use to pass
President Biden’s Build Back Better bill. But not all Democrats
agree, meaning there may be another showdown over the issue in just
a few weeks.

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