Senate Majority leader Chuck Schumer (D.N.Y.), announced Tuesday that Democrats finally came to an agreement over a plan to reduce the price of prescription drugs,Possibility This is the solution to one of the most pressing issues that prevented passage of their Build back Better legislation.

“I’m pleased to announce that an agreement has been reached to lower prescription drug prices for seniors and families in the Build Back Better legislation,” Schumer said at a press conference. Schumer also stated that Sen. Kyrsten Silena (D-Ariz.) approved the plan. released a statementThank you for confirming your support.

Sinema also cited the negotiations she had with House Speaker Nancy Pelosi(D.Calif.), but also thanks Reps. Scott Peters and Kurt Schrader for their assistance. Pelosi was pushing for a prescription drug deal, while Peters and Schrader had been resisting, just like Sinema. If they are all onboard, the deal will most likely pass the House.

According to Schumer’s sources and Democratic sources the agreement gives the federal government power to control the prices for a limited number of drugs. This would be done using both Medicare Part B (which covers drugs that are delivered to clinics, hospitals or other outpatient locations) and Part D (which covers prescriptions seniors can buy and use on their own through pharmacies).

Another key feature of the plan are “inflation caps” ― basically, a limit on how much companies can raise prices year after year. Next year’s inflation caps would be in effect, and the negotiations for 10 drugs would commence in 2023.

Schumer indicated that Part D benefits will be redesigned to lower out-of-pocket expenses for seniors. The deal would limit the cost of insulin to no greater than $35 per injection.

Still unclear about the impact and details

The impact of the plan on what individuals, employers and the government pay for drugs is not yet clear ― and won’t be until full details are available and analysts have time to go through them, line by line.

Even seemingly minor points, like changing the “base year” that are the basis for measuring drug inflation, could change the impact by tens, or maybe hundreds, of billions of dollars over the next decade.

But nobody thinks the plan will regulate prices as aggressively ― or deliver as much in savings ― as advocates once hoped.

This initiative’s original goal was to create legislation that would allow the federal government to negotiate at least 50 drug deals per year. The formula used to determine what other countries pay and with very few restrictions as to the types of drugs to be negotiated. The plan included inflation caps to deliver significant, immediate savings.

Together with a redesign of the Medicare Part D benefits, these provisions promised relief to millions of Americans who struggle with medication costs ― in the worst of cases, skipping doses in order to save money and then suffering more serious medical problems as a result.

Senator Majority Leader Chuck Schumer, D-N.Y., said Tuesday that Democrats had finally reached an agreement on a crucial element of their Build Back Better agenda.
MANDEL NGA via Getty Images

Polls repeatedly show that such reforms are extremely popular. And it has broad support in the Democratic Party ― from President Joe Biden, congressional leaders and most of their members.

The proposal was met with vocal opposition by a few Democrats. There were less than twelve in each house combined. Sinema and Peters were the most prominent. Schrader was also opposed. All of these Democrats were drug industry supporters and had contributed to campaigns. They argued aggressive efforts to lower drug prices would hinder their ability to raise capital. This could threaten innovation.

Biden promised that Democratic leaders would increase investments in basic research as well as support small biotech startup companies, where most of today’s innovators are located. But that wasn’t enough to win over the holdouts, so they began discussing compromises that would scale back initiative’s reach.

Recent discussions focused on allowing negotiation of prices only for medications that were past the “exclusivity” period during which manufacturers have a government-granted monopoly. Another compromise envisioned exempting “orphan drugs,” which treat rare conditions, from any kind of negotiations.

Advocates for Aggressive Reform Applaud The Compromise

It’s not yet clear which of those compromises made it into the final bill. And Sen. Amy Klobuchar (D-Minn.) mentioned that one key piece ― an enforcement mechanism to make sure drug companies accept negotiated prices ― was still “being written.”

Original idea was to place a severe excise tax upon drug companies who refused to bargain over price. That too ran into opposition from the drug industry and its allies ― and it’s not clear what alternative, if any, Democrats are willing to support.

Klobuchar acknowledged that the bill was not perfect, but she still praised its benefits and worked with others to find compromises.

“It includes limits on insulin, this idea of out-of-pocket limit, some type of limit on inflationary pressure on drugs, and beginning negotiations,” she said. “Obviously, I wanted the robust House bill, this is now making sure we have an enforcement mechanism in it, that’s being written.”

Ron Wyden (Deputy Chairman of Senate Finance), a proponent for regulating drug prices and a long-time advocate, said that it would be the inflation caps which will make an impact on the public.

“What we’re coming out of the gate on in 2023 is negotiating over the most expensive drugs, cancer, arthritis, anti-coagulants,” Wyden said. “I think the people are going to pay, you know, the most attention to price gouging penalties for that can be felt in 2022.”


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