Senate Democrats taking first action to advance deal on ACA subsidies, drug price reform

Senate leadership said they reached a deal with centrist Sen. Joe Manchin, D-West Virginia, to give Medicare narrow authority to negotiate lower drug prices and extend key Affordable Care Act (ACA) subsides for another two years.

“We are excited about doing something on prescription drugs,” Majority Leader Chuck Schumer said during a press conference Tuesday. “This is something we have waited for.”

Manchin had reached a narrow deal to give Medicare the power to negotiate for lower prices on up to 10 drugs in 2026 and up to 20 drugs starting in 2029. The package includes a host of other reforms that include a $2,000 cap on out-of-pocket drug costs.

The deal, released earlier this month, would also repeal a controversial Trump-era rule that stripped Part D rebates of their safe harbor from prosecution under federal anti-kickback laws. 

It now includes a two-year extension of a boost to ACA subsidies that has helped fuel record-breaking enrollment of more than 14 million people.

The healthcare industry has also been fervently lobbying Congress to extend enhanced subsidies for ACA exchange customers set to go away after 2022. Centers for Medicare & Medicaid Services Administrator Chiquita Brooks-LaSure has said Congress needs to act fast to extend the subsidies before open enrollment begins Nov. 1.

There remain several obstacles for Democrats, though, to get the legislation through Congress and to President Joe Biden.

Democrats hold a 50-50 majority in the Senate with Vice President Kamala Harris providing the tie-breaking vote. They plan to pass the legislation via a procedural move called reconciliation, which ensures any budgetary bill can pass via a simple majority and bypass the need for 60 votes to end a legislative filibuster. 

Schumer said that, starting Thursday, there will be a parliamentarian review of the legislation to ensure it is within reconciliation guidelines. The Senate parliamentarian has the right to strip out any part of the bill that falls outside that guideline.

The legislation would be a far cry from the more expansive Build Back Better Act, a $1.75 trillion package that Manchin torpedoed last year due to concerns it would contribute to inflation.

For now, it appears other Democratic healthcare priorities won’t be included in the narrow package to be considered this year, meaning that policies such as closing the Medicaid coverage gap and expanding benefits for traditional Medicare are off the table.