Pharma lobby eyes parliamentarian as last resort to nix drug pricing measure

Greg Nash

The pharmaceutical industry is banking on arcane Senate rules as a final plan of attack to unravel Democrats’ proposal to regulate prescription drug prices.

In addition to their usual flurry of lobbying — which centers around blaming other sections of the health care system for rising costs — drugmakers are assisting Republican senators as they argue before Senate Parliamentarian Elizabeth MacDonough that drug price controls cannot be included in Democrats’ $2 trillion climate and social spending bill.

The push to contest the drug pricing measure this week will take place through the so-called Byrd bath, a meeting where lawmakers can make their case to the parliamentarian over whether various provisions can be passed through the budget reconciliation process.

The last-ditch effort is the industry’s best chance to avoid its first legislative defeat in decades.

Democrats’ plan would empower Medicare to negotiate the price of some older prescription drugs, impose a $35 per month cap on what patients pay for insulin, cap the annual out-of-pocket drug costs for Medicare recipients at $2,000 and prevent drugmakers from raising their prices faster than the rate of inflation. 

While drugmakers successfully lobbied a handful of Democrats to weaken the party’s original drug pricing bill that originally would have lowered the price of far more drugs, the current scaled-back version would still cost the pharmaceutical industry billions of dollars in revenue every year. 

With the current drug pricing framework drawing support from moderates who opposed the more aggressive proposal, including Sen. Kyrsten Sinema (D-Ariz.), the industry’s attention has turned to the parliamentarian. 

Republicans will argue that the policy changes in the measure outweigh its budgetary impacts. Price controls for drugs purchased using private insurance and the insulin cap are the measures most at-risk of being removed, as they specifically target private industry, lobbyists said. MacDonough isn’t expected to gut the entire drug pricing provision, but it’s currently unclear how she will rule.

Senate Democrats have expressed confidence that the measure will emerge unscathed from backroom meetings. They argue that the measure, which would save the federal government an estimated $160 billion over the next decade, has an extraordinary impact on the budget.

“I feel very good about it … I expect we will win,” Senate Health Committee Chairwoman Patty Murray (D-Wash.) told supporters during a Tuesday event with liberal advocacy group Protect Our Care, adding that she is surprised that Republicans are challenging the measure.

If Senate Democrats lose their debate before the parliamentarian (they expect to get a decision this week), they could vote to overrule MacDonough with a simple majority. In March, eight Democratic senators voted against bypassing the parliamentarian to include a minimum wage hike in the party’s COVID-19 relief bill.

“Even if private insurance price controls are taken out, these are quite aggressive price controls under Medicare and every drug will be wrapped into this program,” said Nick Shipley, chief advocacy officer at the Biotechnology Innovation Organization, which represents drug manufacturers. “It’s a really aggressive system. It’s not small, despite what it’s being portrayed as,” Shipley added.

The pharmaceutical industry has continued its extensive lobbying push in the meantime, peppering congressional staffers with emails and calls and targeting lawmakers with seven-figure ad campaigns opposing the drug pricing measure. 

Drugmakers aren’t denying that health care costs are rising. Instead, they’re pinning the blame on pharmacy benefit managers (PBMs), which they say routinely pocket extra profits that they earn from negotiating drug prices with manufacturers rather than providing sufficient savings to patients.

Pharmaceutical Research and Manufacturers of America (PhRMA) President and CEO Stephen Ubl said in a statement this week that the provision “ignores persistent problems throughout the health care system, such as tactics by insurers and middlemen that shift higher costs onto vulnerable patients.”

“Middlemen shouldn’t be allowed to pad their profits by collecting massive rebates and then charge patients full price for medicines,” Ubl said. “Allowing patients to share in the savings like they do for other services in Medicare is a common-sense reform that would provide immediate relief for consumers.”

The pharmaceutical industry has repeatedly defeated efforts to regulate drug prices in recent years. It spent roughly $267 million on lobbying through the first nine months of 2021, according to money-in-politics watchdog OpenSecrets. That’s far more than any other industry and on pace to surpass last year’s record-breaking figure by 11 percent. 

But competing health sector interests have ramped up their own influence campaigns in recent years, combining forces to push for price controls on drugmakers. 

Lauren Aronson, executive director of the Campaign for Sustainable Rx Pricing, which is backed by PBMs, insurers, hospitals, physicians and other health care players, said in a statement that lawmakers “must stay the course and deliver on repeated promises to lower drug prices and hold Big Pharma accountable.”

“In the face of unprecedented momentum for action, Big Pharma is relying on bogus blame game rhetoric and debunked innovation arguments in an all-out attempt to stop solutions that would provide relief for millions of Americans who face financial hardship affording their medications,” Aronson said. 

The current drug pricing plan does little to regulate PBMs. It does require PBMs to be more transparent with health insurance plans they contract with — another provision that could come under scrutiny from the parliamentarian. 

In recent months, drugmakers’ arguments about the middlemen have landed with some Senate Democrats, who are concerned that going after drugmakers alone won’t dramatically reduce out-of-pocket costs for most patients, industry lobbyists said.

A recent report from the PBM Accountability Project, a coalition that includes labor unions and independent pharmacies, found that the highly consolidated PBM industry has dramatically increased its profits amid rising drug prices. Advocates want Democrats to require PBMs to pass off a certain percentage of the rebates they earn from drugmakers to patients.  

“PBM price-makers have the ability to set prescription drug prices for hundreds of millions of Americans and a perverse incentive to raise prices to increase growth in their own profits at the expense of patients,” said Mark Blum, executive director of America’s Agenda, a member of the coalition whose partners include labor unions, insurers and PhRMA.

The Pharmaceutical Care Management Association, which represents PBMs, has responded with its own lobbying campaign accusing drugmakers of shifting the blame to PBMs in an attempt to dodge price controls.

“Rather than the finger pointing coming from the pharmaceutical industry, we should be working together on common solutions to lower costs for patients,” JC Scott, president and CEO of the trade group, said in a statement.

Senate Finance Committee Chairman Ron Wyden (D-Ore.) has said that Democrats should do more to regulate both drugmakers and PBMs. This week, he urged the Federal Trade Commission to investigate how the vertical integration of PBMs prompted closures of rural pharmacies in his home state. 

Still, it’s unlikely that increased regulation of PBMs will lead to a better deal for drugmakers. Democrats are wary about further watering down the drug pricing plan — which consistently polls as the most popular measure in their reconciliation package — after extensively campaigning on lowering prescription drug prices in each of the last two elections.

An October Kaiser Family Foundation survey found that 83 percent of voters, including 82 percent of independents and 71 percent of Republicans, support allowing the government to negotiate lower drug prices.  

President Biden on Monday used the drug pricing measure to make his case for the Build Back Better Act, ramping up the pressure on Sen. Joe Manchin (D-W.Va.) to support its passage this year. 

“There aren’t a lot of things that almost every American can agree on,” Biden said. “But I think it’s safe to say that all of us — all of us — whatever our background, our age, where we live, we can agree that prescription drugs are outrageously expensive in this country. It doesn’t need to be that way.”

Updated 10:34 a.m.

Tags Joe Biden Joe Manchin Kyrsten Sinema Patty Murray Ron Wyden

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