HEALTH CARE BRIEFING: Senate Passes Landmark Drug-Pricing Bill

The Senate 51-50 passed a landmark tax, drug and health-care bill, speeding a slimmed-down version of President Joe Biden’s domestic agenda on a path to becoming law after a year of party infighting that the White House was unable to control. It now goes to the House, where the Democratic majority is expected to pass it on Friday.

The final legislation would let Medicare negotiate drug prices for the first time—a goal Democrats have chased for decades. That would start with 10 high-priced drugs by the middle of this decade and expanding from there on. It would cap out-of-pocket drug costs for seniors enrolled in Part D at $2,000 a year. But the Senate’s parliamentarian spared drugmakers any penalties for raising prices in the commercial market.

The Congressional Budget Office estimated the drug-pricing negotiation provision would save Medicare about $102 billion over a decade. The savings for Medicare will be used to pay for three more years of subsidized Obamacare premiums, which would be a major boon for many Affordable Care Act-dependent Americans facing increases in ACA premiums come January, when subsidies from Covid relief legislation are set to expire.

The bill also caps out-of-pocket costs at $35 per month for insulin co-pays under Medicare programs, even though Republicans succeeded in removing the cap for private insurance. Erik Wasson, Steven T. Dennis, and Laura Davison have more.

• Negotiation Provision Impact: In 2026, the 10 costliest prescription drugs without a generic substitute that have been sold for nine or 13 years, depending on the type, would be subject to negotiation. If drugmakers refuse, they’d need to pay a tax of 65% to 95% on sales made a year prior. By 2029, Medicare could tackle up to 20. Drugs that could end up a target include AbbVie-Johnson & Johnson’s cancer pill Imbruvica and Gilead’s HIV treatment Biktarvy. Angelica Peebles has more.

Not in the Final Package

Insulin Cap for Private Sector: Despite the bill’s passage, Republicans successfully pulled out a proposed $35 per month cap on out-of-pocket spending on insulin for patients enrolled in private insurance from the legislation. The Senate parliamentarian had ruled that the provision, from Sen. Raphael Warnock (D-Ga.), isn’t primarily related to the federal budget, providing the GOP a chance to raise a procedural objection.

Seven Republicans—William Cassidy (La.), Susan Collins (Maine), Josh Hawley (Mo.), Cindy Hyde-Smith (Miss.), John Kennedy (La.), Lisa Murkowski (Alaska), and Dan Sullivan (Alaska)—sided with Democrats to keep the insulin limit in the bill, but that wasn’t enough. Some Republicans backed an amendment from Sen. Kennedy to instead provide government funding to subsidize insulin purchases for low income individuals.

Democrats plan to use the GOP move in fall midterm campaigns. They immediately attacked Sens. Ron Johnson (R-Wis.) and Marco Rubio (R-Fla.), who are both up for re-election, over their votes. “Republicans have just gone on the record in favor of expensive insulin,” Sen. Ron Wyden (D-Ore.) said.

Medicaid Gap Fix: Warnock also failed in his bid to add funds to the bill to cover expansion of Medicaid eligibility in states that had refused to expand the program with Obamacare funds. The Medicaid provision was part of the $2 trillion House version of the bill, but it ended up being cut during months of talks with Sen. Joe Manchin (D-W.Va.). Republicans objected to the bill, citing Senate rules and a motion to waive the objection failed with 94 votes against it and only five in favor.

Child Care Credits: Sen. Bernie Sanders (I-Vt.) failed in an effort to boost the corporate tax rate for larger companies to 28% to pay for expanded child tax credits through 2026. The 97-1 vote against Sanders’ amendment reflected a determination by many Democrats to resist changes to the bill to keep pushing it through—even for a provision most in the party would favor. The House-passed package would have offered a year of expanded child credit payments of up to $300 a month.

Regulatory & Legal News

Indiana Enacts Near-Total Abortion Ban: Indiana’s governor signed a law instituting a near-total ban on abortion, making it the first state in the nation to draw up and pass new legislation restricting access to the procedure since the Supreme Court reversed Roe v. Wade. The move has met with strong opposition. Eli Lilly, one of the state’s largest employers, said the ban would force the drugmaker to “plan for more employment growth outside our home state.” Read more from Ian Fisher.

Biden Tests Negative After Rebound: Biden tested negative for Covid-19 for a second consecutive day, ending more than two weeks spent mostly self-isolating at the White House. The latest antigen test for Biden, 79, came back negative Sunday morning, presidential physician Kevin O’Connor said in a letter released by the White House. His second diagnosis was notably a rebound case after he received Pfizer’s antiviral drug Paxlovid. Read more from Tony Czuczka.

WHAT ELSE TO KNOW TODAY

• Monkeypox Shot Supply: One proposal to stretch the nation’s monkeypox vaccine supply by injecting smaller doses more superficially has promise due to technology used to make the shot, infectious disease specialists say. The head of the FDA said the agency is exploring the strategy. Read more from Jeannie Baumann.
• Muscular Dystrophy Treatment: A science journalist can’t access redacted portions of documents submitted to the FDA relating to the accelerated approval of Sarepta Therapeutics’ drug for treating Duchenne muscular dystrophy, the Second Circuit affirmed Friday. Read more from Maia Spoto.
• Ineligible Medicaid Costs: New York spent over $700 million in Medicaid payments for recipients who were ineligible for the long-term care program, and billions more on behalf of people who received minimal care, according to a new audit released Friday by the state comptroller’s office. Read more from Keshia Clukey.
• Covid Injury Cases: Two Pennsylvania nursing homes failed to convince the D.C. Circuit to hear interlocutory appeals from an out-of-circuit district court that refused to dismiss suits arising out of residents’ Covid deaths. The Public Readiness and Emergency Preparedness Act doesn’t give the D.C. Circuit jurisdiction, it said, Mary Anne Pazanowski reports.

Editor’s Note: The headline of the Aug. 5 edition of Bloomberg Government’s Health Care Briefing was corrected to reflect that the health-coverage gap relates to Medicaid, not Medicare.

To contact the reporter on this story: Brandon Lee in Washington at blee@bgov.com

To contact the editors responsible for this story: Giuseppe Macri at gmacri@bgov.com; Michaela Ross at mross@bgov.com