Happy Wednesday! Here’s what’s happening.
Democrats Push Forward With Deal to Lower Drug Prices
Senate Democrats are pushing forward with a deal aimed at lowering prescription drug prices.
The Senate released the legislative text of the deal Wednesday, signaling some progress for Democrats as they try to finalize a scaled-back version of the sweeping Build Back Better domestic policy package that collapsed late last year. Democrats reportedly asked the Senate parliamentarian to begin reviewing the draft legislation to ensure it qualifies for the fast-track budget reconciliation process they want to use to pass it and avoid a Republican filibuster.
The plan would allow Medicare, the government health program for seniors, to negotiate prices for 10 of the most expensive drugs starting in 2026, with the number of drugs rising to 20 by 2029. Among its other provisions, it would also penalize companies that hike prices faster than inflation, place a $2,000 annual cap on out-of-pocket costs for Medicare beneficiaries and expand assistance to help seniors afford medications.
The plan would reduce the federal budget deficit by $297 billion over 10 years, according to a November report from the nonpartisan Congressional Budget Office cited by Reuters.
The deal was reportedly negotiated by Democratic leaders and Sen. Joe Manchin (D-WV) and has the backing of all 50 Democratic senators. “Senator Manchin has long advocated for proposals that would lower prescription drug costs for seniors, and his support for this proposal has never been in question,” Sam Runyon, a Manchin spokeswoman, told The New York Times. “He’s glad that all 50 Democrats agree.”
Negotiators are reportedly still working on their climate change and tax provisions, which would be packaged with the drug-pricing reforms.
Drug industry pans the plan: The pharmaceutical industry is pushing back against the drug-pricing legislation.
“The prescription drug bill released today went from bad to worse for patients,” Debra DeShong, a spokeswoman for PhRMA, an industry lobbying group, said in a statement. “Democrats weakened protections for patient costs included in previous versions, while doubling down on sweeping government price-setting policies that will threaten patient access and future innovations. In fact, they are proposing to repeal a policy that would have directly lowered costs at the pharmacy for millions of seniors in favor of a new price-setting scheme. The bill also ignores the role of middlemen and insurers in determining patient out-of-pocket costs. Unfortunately, PBMs and insurers will continue to benefit by shifting more of the cost burden to patients when it comes to coinsurance and premium increases. Patients deserve better.”
Why it matters: Democrats are pressing ahead with their plans in the face of a threat from Senate Minority Leader Mitch McConnell (R-KY), who last week warned that Republicans would walk away from bipartisan legislation to increase U.S. competitiveness with China if Democrats pursue their partisan budget reconciliation agenda. Wednesday’s release of the draft legislation “was the most substantial progress in months toward reviving parts of Mr. Biden’s multi-trillion-dollar plan,” the Times reports.
Quote of the Day: The Cost of the Fed’s Inflation Fight
“Participants recognized that policy firming could slow the pace of economic growth for a time, but they saw the return of inflation to 2 percent as critical to achieving maximum employment on a sustained basis.”
– From the minutes of the Federal Open Market Committee’s June meeting, which were released Wednesday.
Fed officials signaled they were intent on fighting inflation even if it meant slowing an economy that some fear is already in or headed toward a recession. “Participants concurred that the economic outlook warranted moving to a restrictive stance of policy, and they recognized the possibility that an even more restrictive stance could be appropriate if elevated inflation pressures were to persist,” the minutes said.
The June meeting resulted in a 0.75 percentage point increase in the Federal Reserve’s benchmark interest rate, and the minutes indicate that another hike of 0.50 or 0.75 percentage points is coming at the July 26-27 meeting.
Stimulus Checks Likely Provided No Long-Term Benefit for the Poor: Study
The U.S. government sent out more than $800 billion in pandemic stimulus checks over three rounds of payments in 2020 and 2021. A new study finds that those payments likely provided only a short-term boost to low-income households — and, in some cases, may have made the recipients feel worse about their financial situation.
The study, authored by researchers at Harvard University and the University of Exeter, surveyed more than 5,000 Americans living in poverty. Those in the survey received either a one-time payment of $500, a one-time payment of $2,000 or nothing.
The researchers found that the households that received the cash transfers increased their spending for a number of weeks, using the money to pay bills, buy food, shop and cover transportation. But the cash had little lasting impact on spending or savings, the researchers found. “These results suggest that the cash allowed participants to spend more money, improving objective financial outcomes for the few weeks immediately following the transfer and then dissipating thereafter,” the study says.
The surveys also found that the groups that received cash also reported feeling worse about their financial situation. “We had anticipated that providing $500 or $2,000 to low-income Americans would yield positive results on the survey indices and were surprised to learn that we were wrong,” the researchers write. They add that “the data are most consistent with the notion that receiving some but not enough money made participants’ needs—and the gap between their resources and needs—more salient, which in turn generated feelings of distress.”
The bottom line: The researchers note that larger payments, perhaps distributed over time, might do more to cover people’s financial needs and thus produce more positive results — or that cash transfers coupled with other resources and services could address some of the reported feelings of distress.
- Democrats Offer Plan to Cut Drug Costs, Seeking Climate and Tax Deal – New York Times
- Fed Sees ‘More Restrictive’ Policy as Likely if Inflation Fails to Come Down, Minutes Say – CNBC
- Fed Officials Worried About Inflation Becoming 'Entrenched' – Axios
- Inflation Index Powell Watches Is Set to Show a Big Jump – Bloomberg
- Wall Street Says a Recession Is Coming. Consumers Say It's Already Here – Bloomberg
- The Job Market Is Still ‘Red Hot’ Despite Recession Fears, as the Great Resignation Continues – CNBC
- The Dollar’s "Remarkable" Double-Edged Sword – Axios
- Biden Administration Plans to Make Sweeping Changes to ‘Broken’ Student Loan System – CNBC
- US Pandemic Checks Had No Lasting Impact on Poor, Study Shows – Bloomberg
- Big Spending Boost May Be Too Little for National Parks’ Needs – Roll Call
- Most Americans Say Life Is Starting to Return to Normal, a Poll Shows. – New York Times
- How Pfizer Won the Pandemic, Reaping Outsize Profit and Influence – Kaiser Health News
- U.S. Pharmacists Receive Permission From the F.D.A. to Prescribe Pfizer’s Covid Pills. – New York Times
- How Much Health Insurers Pay for Almost Everything Is About to Go Public – Kaiser Health News
- ‘My Body, My Choice’: How Vaccine Foes Co-Opted the Abortion Rallying Cry – Kaiser Health News
Views and Analysis
- For Chips and Budget Packages, Democrats Face Choices – Peter Cohn, Roll Call
- Is Joe Manchin About to Do the Right Thing? – Paul Waldman and Greg Sargent, Washington Post
- The Economy Is Already Cooling, So Why Is the Fed Dousing It With Cold Water? – Peter Coy, New York Times
- Inflation Is Even Worse Than the Official Numbers Suggest – Henry Olsen, Washington Post
- A Viable Third Party Is Coming, and It’s Starting With a New Jersey Lawsuit – Rep. Tom Malinowski (D-NJ), New York Times