The Senate Finance Committee on Thursday approved, 19-9, a draft bill meant to reduce the cost of drugs in Medicare and Medicaid.
Only six of the panel’s 15 Republicans voted to advance the measure, joining all 13 Democrats. The most controversial amendments to the measure were rejected on mostly party-line votes.
The bill, which is still in proposal form before the committee converts it into legislative text, would hit drugmakers with penalties if they raise their prices higher than the rate of inflation and would take other steps to lower costs for the government and seniors on Medicare’s prescription drug benefit, Part D.
The approval, after some contentious debate, was an important step for the carefully-crafted measure by Chairman Charles E. Grassley, R-Iowa, and ranking member Ron Wyden, D-Oregon. But the discussion also underscored numerous challenges before the bill would go to the Senate floor or pass the chamber, much less be negotiated with the House and signed into law.
Grassley was confident about the bill’s prospects despite no votes from just nine Republican colleagues and several yes votes, like those from Cornyn and Young, that were conditional based on future expected changes.
“This is a bipartisan bill and you get nothing done in the United States Senate that’s not bipartisan,” Grassley told reporters after the markup. Combined with endorsements from the Trump administration, “it seems to me that we have a lot of momentum,” he said.
But over the next few months, the bill will likely face intense lobbying after attempts to amend it Thursday fell short.
An effort to remove the bill’s Part D inflation penalties by Sen. Patrick J. Toomey, R-Pennsylvania, fell short of the majority it needed to be adopted, and was rejected on a tied 14-14 vote. Grassley and Cassidy voted against it, and Sen. Robert Menendez, D-New Jersey, joined the panel’s other Republicans in supporting it.
Democrats’ efforts to require Medicare to directly negotiate with drugmakers on prices, a longtime party platform offered as an amendment by Sen. Debbie Stabenow, D-Michigan, was rejected, 12-16. Menendez, whose state is home to many large drug companies, again voted with Republicans to oppose the amendment.
Toomey also fell short with his amendment to block a controversial Trump administration proposal that would link some Medicare drug reimbursements to lower prices paid by other wealthy countries. The amendment wasn’t adopted, by a 14-14 vote. Grassley and Richard M. Burr, R-North Carolina, joined most panel Democrats to oppose it. Delaware Democrat Thomas R. Carper voted with Republicans in support of the amendment.
Grassley doesn’t support the administration’s international price proposal, but earlier in the markup, Grassley framed the Finance bill as a compromise that would help stop the Trump administration from putting it into effect.
Citing Stabenow’s amendment — and the likelihood of House Democrats advancing a Medicare negotiation bill of their own — Grassley implored Republicans to see the Finance bill as a better option than anything that could be negotiated by Speaker Nancy Pelosi and President Donald Trump, who has previously been open to direct Medicare price negotiations.
“It seems to me the Grassley-Wyden approach is a very moderate approach to what could come out,” he said. “There’s got to be a realization on the part of Republicans about that.”
Noncontroversial changes to the bill were also incorporated to the base proposal at the start of amendment debate.
The penalties for drug price increases are controversial with Republicans and the drug industry. While the government and seniors’ premiums help pay for the Part D program, it is administered by private insurers whom Republicans say run the program very efficiently. Sen. John Thune, R-South Dakota, said the bill “would unravel one of the foundational pieces of a successful conservative health care policy, and that’s free-market competition.”
Others said that the inflation cap would encourage drugmakers to raise their prices by the allowable rate every year, or introduce their drugs with higher launch prices than they otherwise would.
Grassley pushed back against criticism that the measure represented “price controls” and rebutted Thune, saying that getting a unanimous committee vote wasn’t worth taking out a provision that would provide more than $50 billion in savings for taxpayers over a decade, according to a Congressional Budget Office estimate.
“We’d save more than $50 billion with this inflation cap and I would think that any conservative Republican would want to save $50 billion,” Grassley said after the markup.
CBO Director Phillip Swagel, responding to a question from Wyden at the markup, said that the “inflation rebate is a factor that would affect prices, but it would not control prices,” adding drugmakers “would see lower price increases than they might have seen without this provision.”
Grassley also pointed to an analysis by conservative economist Avik Roy to justify the caps on Part D price increases. Because the bill would also cap seniors’ out-of-pocket costs in Part D, Roy argued, consumers would become less price sensitive to expensive drugs, giving drug companies an incentive to raise prices. Since a significant portion of the expense above the bill’s proposed out-of-pocket limit would be paid for by the government, Roy said the inflation cap would be appropriate to protect taxpayers against that outcome.
Cassidy was Grassley’s lone GOP colleague to speak in support of the Part D inflation caps. He said it was a “pretense” to suggest that Medicare, and the Finance Committee itself, didn’t already set prices. He pointed to provisions in the bill that would increase the add-on payments for the generic versions of pricey biologic drugs, biosimilars, which the industry says it needs if it is to help bring down prices in the long term. He pointed to the example of the bipolar depression drug Latuda, which he said has increased in price 19 percent a year from 2013.
“That’s not innovation, that’s shareholder benefit,” Cassidy said. “That is taxpayers as a captive payer paying monopolistic prices. That is not a free market.”