WASHINGTON – Three House Democrats joined Republicans in killing a section of President Joe Biden’s $3.5 trillion budget that proposed having Medicare negotiate drug prices, one of a number of contentious issues in a bill that is at the heart of the president’s domestic agenda.
The Energy and Commerce Committee voted 29-29 on whether to add language on Medicare negotiations to the $3.5 trillion legislation, which failed to include it as part of the overall package.
Democratic Reps. Scott Peters of California, Kathleen Rice of New York and Kurt Schrader of Oregon each opposed the strategy, saying it discourages the development of new drugs.
A provision for Medicare drug negotiations could still be added before the full House votes on the $3.5 trillion package. But the vote reflected a major victory for drug manufacturers led by the advocacy group Pharmaceutical Research and Manufacturers of America.
Henry Connelly, a spokesman for House Speaker Nancy Pelosi, D-Calif., said polling consistently shows support for negotiating drug prices, “including overwhelming majorities of Republicans and independents who are fed up with Big Pharma charging Americans so much more than they charge for the same medicines overseas.”
“Delivering lower drug costs is a top priority of the American people and will remain a cornerstone of the Build Back Better Act as work continues between the House, Senate and White House on the final bill,” Connelly said.
Under the proposal, Medicare would effectively cap the amount it paid for drugs at 120% of the average price in Australia, Canada, France, Germany, Japan and the United Kingdom.
This would reduce the price of more expensive drugs in America and reduce federal spending by an estimated $456 billion over a decade, according to the nonpartisan Congressional Budget Office.
Democratic leaders in the House and Senate were optimistic the strategy could be approved because the $3.5 trillion legislation can be approved with straight majorities in both chambers. But with narrow majorities in both chambers, a few Democratic lawmakers can threaten any specific provisions.
“Medicare should be able to negotiate drug prices. Absolutely. We do so in Medicaid. We do so in the” Department of Veterans Affairs, Shrader said. “But we should not be using an international pricing index or an excise tax that is so harsh that it hardly qualifies as negotiation, as we’ve heard, and according to the Congressional Budget Office, it stifles innovation.”
Drug manufacturers are running ads, lobbying lawmakers and holding news conferences to warn about the pitfalls of negotiations.
A CBO study in August projected that negotiations based on foreign prices would lead to the development of two fewer drugs in the first decade and 23 fewer in the second decade.
“I hope my colleagues on both sides will consider a different approach, one that protects both our patients and our future,” added Peters, who said the life-sciences industry in San Diego County employs 27,000 workers at 1,000 companies.
Rep. Frank Pallone, D-N.J., chairman of the Energy and Commerce Committee, had pleaded with fellow Democrats to support the drug-pricing provision so that changes could be negotiated before the full House votes on the legislation.
“I don’t think we can fail the American people who are struggling under the crippling weight of astronomical drug prices that rise year after year. I really believe the current system is unsustainable,” Pallone said.
Pelosi had set Wednesday as a deadline for all committees to approve parts of the $3.5 trillion bill that are under their purview. Democrats leaders, including Biden, want to pass the full bill, which includes a number of liberal priorities, this fall.