Democrats have come to terms that giving Medicare broad authority to negotiate for lower drug prices won’t fly in Congress and are now trying to figure out how to craft a framework that could affect products in Medicare Part B.
Democrats are racing to put together the finishing touches on a trillion-dollar infrastructure package that initially hoped to include legislation that gives Medicare the power to negotiate for lower prices in Parts B and D and apply those prices to commercial plans. But pushback from centrists in the House and Senate has caused lawmakers to scale back those plans.
“I think it is pretty clear there is not 50 votes to negotiate every single drug in Part B and Part D,” Sen. Chris Murphy, D-Connecticut, told reporters Tuesday, referring to the 50-50 split in the Senate. “I hope that we will all be thinking about creative ways to make a down payment on negotiation in a way that saves consumers money.”
But Democrats said there will be some type of negotiation in the package, which is still being hammered out and has been pared down from $3.5 trillion to between $1.5 trillion and $2 trillion after concerns from centrists.
“I think there is a growing awareness on all sides that there has to be negotiation,” said Sen. Ron Wyden, D-Oregon. “The issues on negotiation that all the members are asking about is, 'how many drugs?'”
Wyden refused to say what specific products he hopes would be subject to negotiation, but he wants there to be a robust framework.
“I will not accept some kind of fig leaf that somebody wants to call a negotiation,” he said without elaborating.
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But other lawmakers said that there could be an avenue to primarily negotiate for prices in Medicare Part B, which covers physician-administered drugs. Currently, Medicare pays an average sales price for such products and an additional 4% of that price to the physician for storage and handling costs.
“Whereas existing savings are in [Part] D, future savings are in [Part] B as you get more of these doctor administered drugs [and] the cost to the government starts to get bigger and bigger,” Murphy said.
The Senate cannot afford any defections on the package. Democrats are using a procedural tool called reconciliation to pass the package without Republican votes and bypass a legislative filibuster.
But the House also has a small margin of error, where Democrats have a three-seat majority and centrists have been opposing broad negotiation powers.
One of those centrists—Rep. Scott Peters, D-California—told Fierce Healthcare that he cannot support any bill that would give Medicare the power to negotiate on products still under market exclusivity.
Peters and several other centrists have introduced legislation that lets Part B negotiate on prices for drugs that no longer have exclusivity and no competition.
“We can’t discourage the innovation of the future, which means respecting that exclusivity period,” he said.
Peters said he proposed a negotiation regime in Part B because “the incentives in Part B are to mark up the cost of drugs, whereas [Part] D has competition and plans negotiating down.”
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He said House leadership is still trying to refine its proposal but hasn’t shown him anything that he can support yet.
It also remains unclear whether key progressives who have pulled for broad negotiation powers will agree to a scaled-down package.
People are "sick and tired of paying the highest prices in the world for prescription drugs," said Sen. Bernie Sanders, I-Vermont, to reporters. "They want Medicare to negotiate prescription drug prices, and that's got to be in this bill."
Wyden said that there are likely to be other drug pricing provisions in the package that aren’t as controversial, including redesigning Medicare Part D benefits so seniors have a catastrophic benefit and rebates to consumers to combat price gouging on insulin.
But even though there is conflict surrounding negotiation, Wyden was confident his colleagues would get something in the package.
“None of this is ever possible until 15 minutes before it comes together,” he said.