Democrats Pitch New Drug Plan, Seeking Deal With Holdouts (1)

  • Government would negotiate prices of a smaller set of drugs
  • Proposal would exempt small biotech drug companies

(Updates throughout with additional reporting.)

The government would negotiate lower prices for just 10 drugs starting in 2025 under a new compromise drug pricing plan, according to an outline shared with Bloomberg Government.

The proposal was pitched to Democratic holdouts who have opposed previous, broader schemes to lower drug prices — one of the last remaining sticking points in Democrats’ sweeping tax and social spending bill (H.R. 5376).

Sen. Ron Wyden (D-Ore.), chairman of the Finance Committee and a central part of discussions, told reporters Tuesday the proposal “sets a precedent” for government negotiation on drug pricing.

“We’re talking about, starting with the most expensive medicines, government will no long have its hands tied behind its back in advocating for patients,” Wyden said.

Photo: Tom Brenner/Bloomberg
Sen. Ron Wyden (D-Ore.) speaks to members of the media at the U.S. Capitol on Oct. 27, 2021.

The proposed deal would empower the government to increase the number of drugs that face negotiation to 30 by 2028 and beyond. Those limits are sharply smaller than Democrats’ original drug pricing bill (H.R. 3) that proposed allowing negotiation of 250 drugs per year.

The Health and Human Services Department would select the drugs from a list of the highest gross spending products in both Medicare Part B, the outpatient benefit, and Part D, the pharmacy benefit. Only drugs outside their initial exclusivity period would be subject to negotiation.

The price of these drugs would be reduced on a sliding scale, with the government asking for the lowest relative price for drugs more than 16 years past their initial exclusivity.

Senators involved in the discussions say they think they’re nearing an agreement with all 50 Democrats in the chamber — the level of support needed to advance the bill under budget reconciliation.

“We’re in striking distance of an agreement,” Sen. Chris Murphy (D-Conn.) said.

Compromise Sought

A Senate Democratic aide familiar with the discussions said a compromise was still being sought with holdouts such as Sen. Kyrsten Sinema (D-Ariz.) and Rep. Scott Peters (D-Calif.) as of Tuesday morning. The details could change based on those discussions.

Sen. Bob Menendez (D-N.J.), who has opposed drug price negotiations in the past, said he supports many of the changes, such as a redesign of Part D that includes a $2,000 cap on what seniors pay for medicines.

“We’re moving in the direction that I think we can have a bill that does that, and that includes price negotiation,” he said.

Peters, who has pushed to keep negotiations limited to just Part B drugs, said he’s optimistic a deal could be reached as soon as this week.

“What we agree on is so compelling and what we disagree is just small details,” he said on a Clubhouse discussion with Politics and Media 101.

Rebates, Employer Plans

The proposal would also require drugmakers to rebate the government for profits made from increasing the price of their products starting in 2021. That rebate would be calculated on the total drug units sold and would not have exemptions.

One sticking point appears to be whether the negotiated prices and price hike rebates reach employer-sponsored plans.

Employer plans won’t be able to access the negotiated prices under the latest plan, James Gelfand, executive vice president of public affairs of the ERISA Industry Committee, an employer group, told reporters.

Wyden, however, said Tuesday he’s “insisting” the rebates apply to private plans and Medicare.

Small Biotechs

The proposal also includes special rules for small biotechnology companies. It would exempt from negotiations all drugs that contribute less than $200 million to Medicare spending and the products of any company where one drug makes up 80% or more of its Medicare revenue but constitutes less than 1% of the total Medicare spending.

Sen. Tom Carper (D-Del.) said he pushed “on ensuring that small, innovative American biotech companies can continue their investment” in new medicines.

“I am hopeful that we are on the precipice of a principled compromise that can achieve these goals,” he said in a statement.

With assistance from Sara Hansard

To contact the reporter on this story: Alex Ruoff in Washington at aruoff@bgov.com

To contact the editors responsible for this story: Sarah Babbage at sbabbage@bgov.com; Loren Duggan at lduggan@bgov.com

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