Schumer, Pelosi, Moderates Strike Deal to Lower Prescription Drug Prices
WASHINGTON — Senate Majority Leader Chuck Schumer, D-N.Y., announced Tuesday that Democrats have reached a deal on legislation to lower prescription drug prices.
“It’s not everything we all wanted. Many of us would have wanted to go much further, but it’s a big step in helping the American people deal with the price of drugs,” Schumer told reporters on Capitol Hill.
The measure, which will now be included in the budget reconciliation package, would allow Medicare to negotiate lower prices for older drugs that are no longer subject to exclusivity protections from competition.
Previously, Democrats in the House and Senate had pushed for more sweeping proposals that included new drugs as well.
The deal struck Tuesday would also prevent drug companies from raising prices faster than the rate of inflation and cap out-of-pocket costs for seniors on Medicare at $2,000 per year.
The slimmed down proposal was crafted to overcome the concerns of several lawmakers, including Rep. Scott Peters, D-Calif., and Kurt Schrader, D-Ore., who had both expressed concerns that earlier proposals would have impaired drug companies’ abilities to develop new pharmaceuticals.
In a joint statement, the representatives noted Tuesday’s agreement is largely based on the drug pricing reform framework laid out in the Reduced Costs and Continued Cures Act they introduced with cosponsors Reps. Kathleen Rice, D-N.Y., Stephanie Murphy, D-Fla., and Lou Correa, D-Calif.
“Americans absolutely need better, cheaper access to quality prescription drugs; that’s why it’s critical that we include drug pricing reform in the Build Back Better Act and that we do it in a way that can earn support in both chambers,” Rep. Peters said. “We believe we’ve reached a resolution that everyone can get behind.”
Peters went on to say the legislation would address loopholes in the system to allow for greater competition, which will lead to lower drug costs for all consumers “without stifling the discovery of future cures and ceding America’s scientific leadership to China or other countries.”
Key elements of the compromise deal include:
- Allowing negotiation of drug costs in Parts B and D for some drugs older than nine years and others older than 12 years.
- Capping out-of-pocket costs for all seniors to $2,000 per year and including a “smoothing” mechanism that allows seniors to pay their out-of-pocket expenses throughout the calendar year via monthly installments instead of all at once.
- A $35 out-of-pocket maximum for insulin.
- Penalties for drug manufacturers that raise the price of a drug beyond the inflation rate for drugs in Medicare Parts B and D beginning Oct. 1, 2021. This inflation cap also applies to private insurance markets.
- Increased transparency by establishing reporting requirements for pharmacy benefits managers — the corporate middlemen between drug manufacturers and payers — so private plans know the true cost of drugs and price concessions can be passed on to consumers.
- Promotion of lower-cost options, such as generics, by incentivizing and bolstering competition in the marketplace.
“I have been fighting for meaningful reforms to lower prescription drug prices throughout my time in Congress that have the broad support needed to pass both the House and Senate,” Rep. Schrader said. “Securing our framework for negotiating drug prices in Medicare in the Build Back Better Act has led to a historic agreement that allows Medicare to finally rein in rapidly escalating prescription drug prices for Oregonians, especially our seniors.”
Tuesday’s deal was also drafted to alleviate the concerns of Sen. Kyrsten Sinema, D-Ariz., who, along with Sen. Joe Manchin, D-W.Va., has been an opponent of both earlier prescription drug pricing measures and the reconciliation package as a whole.
In a statement posted on Twitter, Sinema’s office said, “After Sen. Sinema reached an earlier agreement with President Biden to include historic Medicare drug negotiation in the reconciliation package — policies that were omitted from the initial framework at the request of members of the U.S. House — Speaker Pelosi reached out to Sen. Sinema this past weekend to continue negotiations.
“The Senator welcomes a new agreement on a historic, transformative Medicare drug negotiation plan that will reduce out-of-pocket costs for seniors — ensuring drug prices cannot rise faster than inflation — save taxpayer dollars, and protect innovation to ensure Arizonans and Americans continue to have access to life-saving medications, and new cures and therapeutics,” the statement continued.
House Speaker Pelosi also released a statement that said Tuesday’s agreement is “a path forward to make good on [the] transformational agenda” of President Biden’s Build Back Better agenda, particularly for seniors.
“In the Build Back Better Act, Democrats will deliver strong drug price negotiations to lower prices for our seniors and halt Big Pharma’s outrageous price hikes above inflation, not just for seniors but for all Americans,” Pelosi said. “For seniors, we have also reduced out-of-pocket co-pays and created a new $2,000 out-of-pocket limit for seniors’ expenses in Medicare Part D.”
She added, “We are now finishing the drafting of the legislative text to reflect this important agreement. I am pleased with the compromise reached by House Members and Senator Sinema.”
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