In drafting their massive social spending bill, House Democrats focused on three key areas: expanding coverage for low-income Americans without insurance, increasing subsidies for those who choose to purchase their own insurance, and expanding Medicare coverage for dental, hearing, and vision care for the elderly.
They also aimed high when it came to lowering drug prices in order to pay for those. As a way to save the government money, a plan was devised to link the prices of certain prescription drugs to those paid in other countries. Over the course of a decade, the pharmaceutical industry stands to gain $500 billion in savings as a result of the House approach.
Even so, taking on the pharmaceutical industry can be dangerous.
On Wednesday, three Democrats on a key House committee voted against the bill. Congressional leaders can still include the provision in their final bill, but with a slender Democratic majority, it’s possible that these three legislators will act as a significant roadblock in the way of passing the broader package.
Legislators who have worked on health issues are familiar with this dynamic: Health industries have powerful lobbies, and they don’t like having their revenue reduced.
A backlash has been generated by the House’s attempt to reduce payments to hospitals, doctors, and insurance companies, just like with measures that might reduce payments to drug companies.
He told Emily Cochrane on Tuesday that “I just don’t think paying for a lot of things by crippling investments in life sciences is really the way to go,” Democrat Scott Peters of California told my colleague.
It’s “too high a price to pay” to lose the pharmaceutical investment. Other House Democrats who voted against the measure included Oregon’s Kurt Schrader and New York’s Kathleen Rice.
Understand the Infrastructure Bill
- One trillion dollar package passed. The Senate passed a sweeping bipartisan infrastructure package on Aug. 10, capping weeks of intense negotiations and debate over the largest federal investment in the nation’s aging public works system in more than a decade.
- The final vote. The final tally in the Senate was 69 in favor to 30 against. The legislation, which still must pass the House, would touch nearly every facet of the American economy and fortify the nation’s response to the warming of the planet.
- Main areas of spending. Overall, the bipartisan plan focuses spending on transportation, utilities and pollution cleanup.
- Transportation. About $110 billion would go to roads, bridges and other transportation projects; $25 billion for airports; and $66 billion for railways, giving Amtrak the most funding it has received since it was founded in 1971.
- Utilities. Senators have also included $65 billion meant to connect hard-to-reach rural communities to high-speed internet and help sign up low-income city dwellers who cannot afford it, and $8 billion for Western water infrastructure.
- Pollution cleanup: Roughly $21 billion would go to cleaning up abandoned wells and mines, and Superfund sites.
His district in San Diego is home to tens of thousands of people who work in medical research and drug development. If pharmaceutical profits decreased, research investments decreased, or companies went out of business, some employees could lose their jobs.
Mr. Peters has co-sponsored a competing bill that he claims would better target inefficiencies and market failures in the drug pricing system. Neither the Senate nor a House committee has voted on this legislation, but it is similar to a Senate bill estimated to save only half as much money.
It’s going to be a challenge for Democrats to fund their other priorities without the drug pricing provision. To avoid a Republican filibuster, they’re passing their bill through a special budget procedure.
However, this means that their bill must meet predetermined budgetary constraints. The pot of money that can be used for other purposes decreases if the savings from drug price regulation are reduced. Other revenue-generating policies, such as a wealth tax, have already been abandoned by Democrats.
According to a recent report from the RAND Corporation, the United States pays more for prescription drugs than any other Organization for Economic Cooperation and Development (OECD) country.
As a result of the high costs, insurance premiums rise, and lifesaving medications are unavailable to some patients.
In order to pay for other things, Democrats in Congress want to lower the drug prices that Medicare and other insurers pay, as well as to benefit the general public and business.
However, lowering the cost of pharmaceuticals does have some drawbacks. Investors in early-stage drug companies make decisions based on their belief that a drug that works will generate a large financial reward if it is commercialised in the United States.
There is evidence that substantial price reductions in pharmaceuticals will have an impact on the number of new drugs being developed in the future, according to a report from the nonpartisan Congressional Budget Office (CBO).
Biden’s 2022 Budget
The 2022 fiscal year for the federal government begins on October 1, and President Biden has revealed what he’d like to spend, starting then. But any spending requires approval from both chambers of Congress. Here’s what the plan includes:
- Ambitious total spending: President Biden would like the federal government to spend $6 trillion in the 2022 fiscal year, and for total spending to rise to $8.2 trillion by 2031. That would take the United States to its highest sustained levels of federal spending since World War II, while running deficits above $1.3 trillion through the next decade.
- Infrastructure plan: The budget outlines the president’s desired first year of investment in his American Jobs Plan, which seeks to fund improvements to roads, bridges, public transit and more with a total of $2.3 trillion over eight years.
- Families plan: The budget also addresses the other major spending proposal Biden has already rolled out, his American Families Plan, aimed at bolstering the United States’ social safety net by expanding access to education, reducing the cost of child care and supporting women in the work force.
- Mandatory programs: As usual, mandatory spending on programs like Social Security, Medicaid and Medicare make up a significant portion of the proposed budget. They are growing as America’s population ages.
- Discretionary spending: Funding for the individual budgets of the agencies and programs under the executive branch would reach around $1.5 trillion in 2022, a 16 percent increase from the previous budget.
- How Biden would pay for it: The president would largely fund his agenda by raising taxes on corporations and high earners, which would begin to shrink budget deficits in the 2030s. Administration officials have said tax increases would fully offset the jobs and families plans over the course of 15 years, which the budget request backs up. In the meantime, the budget deficit would remain above $1.3 trillion each year.
Large price cuts are unwelcome news for the pharmaceutical industry, as one might expect. Steve Ubl, PhRMA’s CEO, said last week that the measure was “existential” to his organisation.
Drug companies alone should not bear the burden of such a large expansion in health care, he said. His response was to say, “We’re being asked to pay an excessively large portion of the bill.”
Throughout the years, the pharmaceutical industry has donated to political campaigns, lobbied members of Congress, and built relationships with other businesses. They’re taking advantage of those connections at a moment’s notice.
An open letter from PhRMA was published Wednesday in several Washington publications, in addition to television commercials that aired on national news programmes and football broadcasts.
Health lobbies around the country have followed a similar strategy. An enormous campaign to defeat bipartisan legislation banning surprise medical billing began in 2019. Despite their efforts, Congress eventually passed a more business-friendly version of the ban a year later.
Senate leaders have made it clear that they intend to pursue a different strategy for regulating drug prices. Their policy fine print and the magnitude of their cut to pharmaceutical profits are still up in the air.
The House, on the other hand, has been seen as more aggressive in its approach to the issue. This week’s setbacks could signal a more moderate approach and a smaller budget for Congress and the White House’s other lofty goals.