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Democrats’ sweeping healthcare expansion at risk amid new clash over drug pricing

Rep. Scott Peters
Rep. Scott Peters (D-San Diego) is leading the opposition to Democrats’ prescription drug plan, arguing that it would decimate investment in the pharmaceutical industry and threaten jobs.
(Sam Hodgson / San Diego Union-Tribune)

Democrats are sharply divided over whether to require drugmakers to negotiate prices with the federal government, a rift threatening key parts of President Biden’s $3.5-trillion social safety net bill — including the possible expansion of Medicare and Obamacare — and one that could put the entire effort at risk.

Three House Democrats on Wednesday blocked the House Energy and Commerce Committee from advancing a provision to allow drug-pricing negotiation in favor of an alternative that other Democrats say is far weaker.

Given the slim majority Democrats have in the House, if they remain opposed, they would be just one vote away from being able to block the entire effort on the House floor, assuming all Republicans remain opposed, as expected.

The intraparty disputes underscore the sharp policy differences Democrats are trying to overcome as they try to pass Biden’s “Build Back Better” plan, which aims to enact a series of social benefits, such as universal prekindergarten, child-care tax credits and elder care.

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Although the drug policy was approved by a rival committee later Wednesday afternoon, the “no” votes amount to an escalation of brewing friction among Democrats. The policy was approved by the Ways and Means Committee, where it picked up another “no” vote from Rep. Stephanie Murphy (D-Fla.).

Democrats hope to enact their overall plan in the coming weeks, but the policy differences and the slim margins in both chambers suggest that consensus could take months to reach. Biden was due to meet Wednesday with two moderate Senate Democrats who oppose the $3.5-trillion price tag, Sens. Joe Manchin III of West Virginia and Kyrsten Sinema of Arizona.

The prescription drug policy is key to the rest of Democrats’ plans because it would bring in an estimated $700 billion over a decade that would be used to shore up other parts of the healthcare system, such as Medicare and the 2010 Affordable Care Act, often called Obamacare.

Rep. Scott Peters (D-San Diego) is leading the opposition to Democrats’ existing plan, arguing that it would decimate investment in the pharmaceutical industry and threaten jobs, including about 27,000 in San Diego.

“The promise we made was to lower drug prices, to negotiate with drug manufacturers,” Peters said of Democrats’ decade-long pledge to voters. “We did not promise to kill the goose that lays the golden egg.”

Peters, as well as Reps. Kurt Schrader (D-Ore.) and Kathleen Rice (D-N.Y.), the three Democrats who oppose the prescription drug plan, have drawn the ire of fellow Democrats, progressives and advocacy groups, who for years have been fighting to lower drug prices.

Peters and Schrader’s alternative would allow negotiation on only a fraction of all prescription drugs, unlike the broader plan in the existing proposal.

It would also enact a yearly out-of-pocket cap for Medicare enrollees who make a modest income and caps out-of-pocket insulin costs. Peters estimates that his bill would bring in $200 billion, far less than the $700 billion in savings in the existing plan.

Progressives and Energy and Commerce Committee Chairman Frank Pallone (D-N.J.) say it doesn’t do nearly enough to rein in the pharmaceutical industry’s prices.

“A lot of our voters would be pretty disappointed to find out that the drug industry has the ability to stop the Democratic Party from going after their profits,” said Sen. Chris Murphy (D-Conn.). “If they’re not willing to go in that direction, then they’ve got to identify other” ways to pay for healthcare improvements.

Pallone had lobbied the trio to stay on board to advance the bill out of committee. While Democrats have other means of advancing the provision through another committee, they will need those votes on the House floor.

Pallone insisted that Democrats will be able to enact some kind of prescription drug reform in a bill that can get through the House and Senate, a sentiment echoed by a spokesperson for House Speaker Nancy Pelosi (D-San Francisco).

“Polling consistently shows immense bipartisan support for Democrats’ drug-price negotiation legislation, 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,” said Pelosi spokesperson Henry Connelly.

The three House Democrats’ strategy is to find agreement with a group of centrists in the Senate, Peters said. That would send a message to House Democrats to modify their prescription drug plan if they want to get it to Biden’s desk.

“I’ll be around all week and happy to talk to any senators who want to finalize something so that we can get done before next week,” Peters said. “Enough of us have expressed concern that we should be working on a different course. I want to be constructive.”

In the Senate, Democrats are similarly divided over prescription drug policy, but generally are closer to Peters’ proposal than the existing House plan.

“There are differences of opinion,” Senate Finance Committee Chairman Ron Wyden (D-Ore.) said, adding that “a number” of senators say they can’t support the House bill.

His committee has not yet publicly released a drug-pricing plan, but senators say several proposals have been floated.

Drugmakers, who strongly oppose price negotiation, hailed the defeat in committee and said House Democratic leaders should take the trio’s concerns seriously.

“These concerns have been known for months, yet they’ve been ignored by House leaders,” said Debra DeShong, a spokesperson for the industry trade group PhRMA. “This should be a strong signal to the House leadership that there is broad support for lowering costs for patients without sacrificing access to new cures and treatments.”

Prescription drug pricing is just the first conflict on health policy in the bill. Democrats aren’t aligned on how they would spend the savings created by forcing drugmakers to negotiate their prices with the federal government.

They can use it to extend Medicaid benefits to people who live in Republican-controlled states that have not expanded the program under the ACA. Or they can expand Medicare to include vision, hearing and dental benefits. And they can use it to make permanent the bump to ACA subsidies that they enacted on a short-term basis earlier this year.

“It’s a competition for a limited amount of funds, which right now is funded exclusively by a bill that is not yet law,” said Rep. Lloyd Doggett (D-Texas), who is advocating that the money be spent to expand Medicaid to GOP-led states such as his.

“If we have a competition now [between expanding Medicaid versus adding new Medicare benefits], not having the prescription drug policy really intensifies that and it also raises questions of whether alternative sources of funding need to be found,” Doggett said.

Many Democrats privately admit that they won’t be able to do all these things in one bill. There are discussions about implementing all of them on a short-term basis, with hopes that they will become so popular that even a future GOP-controlled Congress won’t have the political will to not renew them, a risky gambit given the contentious nature of the ACA.

Another option is that the Medicare expansion — coverage of vision, hearing and dental programs, which is strongly backed by progressives — will go head-to-head with making permanent the expansion of ACA subsidies, a plan strongly supported by Pelosi.

Pelosi has said Democrats won’t have to choose. “I think both will be present. That’s not a problem,” she said last week.

“It’s probably not a false choice given the pressure that we’re going to be under,” Murphy said. “But at this point, we don’t negotiate against ourselves. We’re going to fight for both.”


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