Washington Focus

Build Back Better Act Update: Drug Price Limits Back in Spending Bill

Nov. 4, 2021 – Update on spending bill from Coalition for Healthcare Communication Executive Director Jon Bigelow:

On Oct. 28, President Joe Biden announced a new “framework” for the Build Back Better Act, reducing the scope to $1.8 trillion and dropping several initiatives, conspicuously including measures to limit the cost of prescription drugs.

Very quickly, that framework was open for further negotiation on both the spending and revenue side. Now, reportedly an agreement has been reached to add three strategies for reducing drug prices.

Medicare negotiations: For the first time, Medicare would be permitted to negotiate with manufacturers on prices, but apparently this would be only for a small number of drugs, most of which would be past their period of exclusivity. This falls short of the original goal of addressing the most expensive agents, and it is not yet clear how large the penalty would be for companies that refuse to negotiate. The first negotiated prices reportedly would not be effective until 2025.

Capping out-of-pocket expenses: The deal includes a $35 per month cap on what patients pay for insulin. Patients on Medicare part D would benefit from a $2,000 per year cap on out-of-pocket expenditures for prescription drugs.

Limiting increases to the rate of inflation: Rebates would be imposed if a manufacturer raised drug prices faster than the rate of inflation.

What are the odds? The agreement has been endorsed by key figures such as Sen. Kyrsten Sinema (D-Ariz.), Sen. Bob Menendez (D-N.J.), and House Energy and Commerce chair Rep. Frank Pallone (D-N.J.). Senate Majority Leader Chuck Schumer (D-N.Y.) called the agreement “a massive step forward.”

While many observers see the watered-down nature of the Medicare negotiations as a major win for the biopharma industry’s lobbying efforts, the trade organization PhRMA disagrees. “Under the guise of ‘negotiation,’ it gives the government the power to dictate how much a medicine is worth and leaves many patients facing a future with less access to medicines and fewer new treatments,“, said PhRMA CEO Stephen Ubl.

But with Sinema as well as moderate House Democrats on board, the drug price provisions have an excellent chance of being included in the final version of Build Back Better. The larger question is, will any version of this act win the necessary 50 votes in the Senate and 218 votes in the House (where Democrats can lose no more than three votes)?

Certainly, obstacles remain: Sen. Joe Manchin (D-W.Va.) still criticizes the bill’s size and climate change proposals, Sinema hasn’t yet committed to supporting the overall bill, several House Democrats want to wait for re-analysis of the cost of the bill by the Congressional Budget Office, some Republicans are backing off from support of the separate bipartisan infrastructure package, and moderates and progressives still feud about the timing of votes on the two bills.

A wild card is whether a weak performance in Tuesday’s gubernatorial elections will cause Congressional Democrats to back off from the bills (not wanting to appear too far left for voters) or instead to embrace them (wanting to show their party can get something done for voters).

It’s inherently difficult to report on these fast-moving negotiations, but we’ll offer more information as major new zigs and zags develop.