Schumer announces deal to lower prescription drug prices

Democratic lawmakers have reached a deal on legislation to lower prescription drug prices to be included in President Biden’s social spending package, Senate Majority Leader Charles Schumer (D-N.Y.) announced Tuesday.  

The agreement is less far-reaching than earlier Democratic proposals, but it still represents progress on an issue the party has campaigned on for years.  

The agreement would allow Medicare to negotiate drug prices in limited instances, prevent drug companies from raising prices faster than inflation and cap out-of-pocket costs for seniors on Medicare at $2,000 per year.

Democrats scaled back their earlier sweeping measure because of concerns from a handful of moderates that it would have harmed innovation from drug companies to develop new treatments. Sen. Kyrsten Sinema (D-Ariz.) as well as Reps. Scott Peters (D-Calif.) and Kurt Schrader (D-Ore.) were among those moderates and helped lead negotiations with leadership over the compromise measure.

“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 Tuesday.

Sinema said in a statement that she supported the agreement.

“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,” Sinema’s office said.

One of the key compromises leading to a deal was limiting the scope of Medicare’s ability to negotiate lower drug prices, which has long been a signature Democratic proposal. Lawmakers agreed to limit Medicare’s ability to negotiate to older drugs that no longer have “exclusivity,” meaning the period when they are protected from competition. Earlier versions of Democratic bills would have allowed negotiation for newer drugs, too.

The final deal would extend the limits on drug prices rising faster than inflation to people with private health insurance plans as well, which has been a point of debate at some points in the process.

The deal would allow negotiation after nine years for many drugs, known as small molecule drugs, and after 12 years for more complex drugs known as biologics, according to a summary obtained by The Hill.

If drug companies refuse to negotiate, they would face an excise tax as a punishment, a provision that has been controversial with some moderates.

Medicare could negotiate up to 10 drugs starting in 2025, and up to 20 drugs in 2028 and beyond, according to the summary.

Insulin copays would be capped at $35 per month.

Speaker Nancy Pelosi (D-Calif.), who had championed Democrats’ earlier, more sweeping drug price bill for years, praised that provision and the agreement overall. Pelosi spoke to Sinema over the weekend to help finalize the agreement, according to Sinema’s office.

“For a generation, House Democrats have been fighting to deliver real drug price negotiations that will lower costs,” Pelosi said. “With today’s agreement on strong lower drug price provisions for the Build Back Better Act, Democrats have a path forward to make good on this transformational agenda for our seniors.”

She said the legislative text is still being drafted.

The pharmaceutical industry blasted the deal, warning it would harm innovation.
“If passed, it will upend the same innovative ecosystem that brought us lifesaving vaccines and therapies to combat COVID-19,” said Stephen Ubl, CEO of the Pharmaceutical Research and Manufacturers of America.
“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.”

–Updated at 6:33 p.m.

Tags Charles Schumer Chuck Schumer Joe Biden Kurt Schrader Kyrsten Sinema Nancy Pelosi Scott Peters

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