For months now, President Biden’s ambitious economic and social justice reforms have been whittled down and whittled down again. Every time a major policy package has been put together with the hope that it will pass with 51 Senate votes via budget reconciliation, it eventually runs afoul Senators Joe Manchin & Kyrsten Sinema.
In desperate need of concrete policy achievements to present to voters before the midterm elections, last week the Democrats settled on a dramatically smaller package of reformsThe bill, which was centered on lowering the cost of prescription drugs for Medicare consumers, is something that the two recalcitrant senators seem more willing to endorse. A few days later, Senator Manchin, after months of obstruction, announced that he would now support a smaller version of Build Back better that would still include hundreds of billions in climate change legislation investments as well as the health care package that is close to his heart. That is all. Sinema remains on board — and given her track record this year, that’s by no means a given — and provided that moderate Democrats in the House don’t balk on some of its tax provisions, the Democrats may finally have a narrow window to pass significant climate legislation and health care reforms via the budget reconciliation process, which allows financial packages to pass in the Senate via a simple majority.
If this legislation is adopted, titled the Inflation Reduction Act of 2022If the law is passed, the health care section will allow the Health and Human Services Secret to negotiate, for Medicare, discounts on many drugs (ten most-used drugs in the first few year, then 15 and finally 20), and financial penalties can be imposed on Big Pharma companies who increase their prices more than the rate inflation. These provisions will, according to the nonpartisan Congressional Budget Office, save the Medicare system nearly $300 billion over the first 10 years of its existence — which is why Manchin has signed onto it as a deficit reduction and inflation-curtailing exercise.
The reform package will likely include a $2,000 annual cap on out-of-pocket pharmacy costs for Medicare enrollees. This provision is both beneficial and necessary. massively politically popularAs well as being economically sound medical costs continue to be a driver of personal bankruptcies in the U.S. It will also extend enrollment subsidies under Affordable Care Act (ACA), for two additional years. This is vital in order to keep millions of people enrolled in ACA insurance during the crisis on health plans they can afford.
Given the popularity of the reforms and the amount of money they will help the government and the individual Americans, one would expect that there would be cross-party support. In this polarized age, almost no policy is supported by both the Democrats and the Republicans. It is possible that none of the Republican senators, even those who are considered moderates like Susan Collins, Lisa Murkowski, and Mitt Romney will vote in favor of the legislation during its debate later this summer.
GOP opposition is fuelled Big Pharma’s disingenuous arguments that price caps will negatively affect research and development efforts for new drugsThis will discourage companies from investing in products that will eventually have price limits. This argument is not valid in relation to research and development efforts funded either by the government or privately funded drug development. These projects generate rates of profit that are unmatched by any other industry and will continue to generate high rates of return even with price caps.
As Democrats created their (ultimately doomed!) ambitious economic package last year, Big Pharma spent tens of millions of dollars lobbyingThe package relating to drug pricing was criticized. They aggressively sought out politicians from both parties and hired many ex campaign staffers from all political spectrums. Arizona Senator Kyrsten Sinema, in particular, was showered with hundreds of thousands of dollars of contributions, and, ultimately, came out against her party’s big-picture reform package.
The better part of a year later, however, Democrats are banking on Sinema’s support for the proposed legislation, though she hasn’t yet explicitly committed to voting for the Inflation Reduction Act. And while many Democrats do, of course, continue to maintain deep ties to the pharmaceutical industry, this summer it’s the Republican Party that has fully embraced the industry’s claimsAny attempt to negotiate lower prices will invariably stifle research and development for new drugs.
If and when the legislation comes up for debate in the Senate — which it will, as soon as the Senate Parliamentarian signs off on the changes as being of a sort that the Democrats can pass via the budget reconciliation process — it’s likely to run into a unified opposition from Mitch McConnell’s foot-soldiers. Since McConnell knows that he can’t block legislation greenlighted for budget reconciliation, his Plan B appears to be to hold other legislation hostage, and he has threatened to block other vital Senate business this summer if the Democrats move ahead with their plans to legislate on drug prices via the budget reconciliation process. McConnell is saying he must engage in this retaliation as a way to stymie the Democrats from imposing what he calls “socialist price controls,” according to Fox News.
It’s a disingenuous argument. Big Pharma is one of the most lucrative industries on Earth. Its ability to unimpeded raise drug prices has resulted in huge financial gains. Many of these will be retained even with negotiated price reductions. The industry will continue to be a huge cash cow for investors. After all, there’s a tremendous amount of financial fat on this particular bone. You can see the evidence. from 2009-2018, the average price of a brand-name prescription drug sold via Medicare increased from $149 to $353This is far more than inflation. Over the past decade, the average annual return on shares by the major drug companies has been 11 percent. And that many of the biggest names in the game have seen profit margins in excess of 25 percent in recent years.
Many GOP senators admit this truth in their most honest moments. Even as recently as last month Mitt Romney put his support behind an amendment to the Food and Drug Act, titled “Advancing Affordable Medicines for Families Act,” that would promote nonprofit generic drug companies as a way to both lower drug costs and accelerate the development of new, affordable pharmaceutical products. In 2019, during the Trump presidency, Romney introduced another bill, the Prescription Drug Rebate Reform Act, which he described as an attempt to bring “transparency to drug pricing” and to lower the out-of-pocket expenses faced by consumers.
2015 Susan Collins and then-Sen. Claire McCaskill launched a bipartisan Senate investigation into price gougingby drug companies. Four years later, a Maine senator introduced the Biologic Patent Transparency ActDesigned to limit the ability for Big Pharma to use the patent system in order to prevent the coming to market of cheaper drugs.
In 2019, Lisa Murkowski voted for the Lower Health Care Costs Act,This is to end the atrocious practice called surprise billing. It also aims to increase prescription drug competition to lower prices.
But despite these glimmers of the possibility for a vein of pragmatism running through the moderate wing of the GOP on this issue, so rigid is McConnell’s leadership method that he is corralling his moderates to oppose the legislation even though many of these same individuals generally support the principles behind the health care reforms.
Politicians on both sides should know that the U.S. cannot continue to go bankrupt due to medical costs. Americans pay more for prescription drugs than anyone else on Earth. And yet, as the midterm elections near, the Republican senators under McConnell’s obstructionist leadership are so wedded to stymieing Democratic-led initiatives that they appear committed to oppose legislation that offers a meaningful pathway to lower drug costs for millions of Americans. Unfortunately, it is yet another example of the dysfunction into the which the Senate has fallen as a legislative body.
