Is there a win-win way out?

Partial failure on drug price controls need not deep-six social and climate progress

As I predicted last week, Democratic disarray over drug price negotiations is on the verge of undermining the entire Biden agenda. Rep. Scott Peters (D-CA) and a handful of centrist party members are pushing a bill that does far less to lower prices than the bill backed by House Speaker Nancy Pelosi.

If the centrists get their way, the Democrats may be forced to scale back proposed programs for fighting climate change, increasing early childhood education and home care support, and expanding Medicare benefits.

This centrist opposition has nothing to do with attracting bipartisan support for the bill (a sentiment often attributed to Senators Joe Manchin of West Virginia and Kyrsten Sinema of Arizona — the most wobbly bill backers among Democrats in the upper chamber). Republicans in both the House and Senate, who are now completely under Trump’s thumb, would destroy our democracy before allowing Democrats a victory on anything.

Rather, the opposition to giving Medicare broad powers to negotiate drug prices comes from more prosaic concerns: the false belief that lower prices will shut down the search for new drugs and that it will cost jobs in the industry. An article in today’s Wall Street Journal (subscription required) analyzing Peters’ opposition noted his San Diego district employs 27,000 people in the life sciences. “It’s my job to make sure that that economy continues to thrive,” he said.

Of course, it doesn’t hurt that health care and pharmaceutical companies and their employees have been his top contributors since 2018. Citing data from the nonpartisan Center for Responsive Politics, the paper reported Pfizer, Eli Lilly, Amgen and Gilead Sciences are among his top campaign contributors in the run-up to next year’s mid-term election.

It also doesn’t help that business groups appear split on the issue even though the legislation would save corporate America and small businesses close to half a trillion dollars over the next decade by lowering their health care bills. The Purchaser Business Group on Health, whose 40 members include Walmart, Costco, Microsoft and Boeing, would not only like to give Medicare far-reaching powers to negotiate drug prices, they want those same prices be applied to the drugs purchased by private companies and their insurers.

The U.S. Chamber of Commerce and the National Association of Manufacturers, on the other hand, have thrown their considerable lobbying clout behind the drug makers. In a letter sent to every member of Congress last week, the groups warned that “we steadfastly oppose allowing the government to directly negotiate prescription drug rates and permitting other health care markets to pay these same rates. Imposing government price controls on  prescription drugs threatens to cut critical medical research dollars essential for innovation and development of new cures,” they wrote.

As STAT, a trade journal website that covers the life sciences, noted in an article that appeared this morning (subscription required), the Chamber often acts like a lobby shop for hire when it comes to supporting the health care industry in major policy debates. “When lawmakers were debating adding a pharmacy benefit to Medicare in the early 2000s, drug makers funneled millions to the Chamber to pay for advertisements on behalf of Republicans opposing the benefit,” the article noted.

“The Chamber similarly opposed the passage of the Affordable Care Act after receiving more than $100 million from the insurance industry, and sued to stop price transparency rules that hospitals and insurers despise, even though the information could help employers design their insurance benefits,” STAT reported, citing earlier reports in the Wall Street Journal and Forbes.

Is there a way out of this conundrum? Harold Meyerson, who writes for The American Prospect, offers an intriguing suggestion in an article that appeared online today. Even if centrists get their way and the amount of money raised from lower drug prices get cut in half, all the social spending and environmental programs in the Pelosi bill should remain intact, he argues. Moreover, the Democrats should immediately implement every program in the bill.

They could meet their budget neutrality goal by sun-setting those provisions half way through the ten-year budgetary time frame used to calculate total costs. That would put them up for re-adoption in the year following the 2024 presidential election.

This is the exact opposite of the strategy used to pass the ACA. Its insurance expansion didn’t go into effect until nearly half way into the 10-year period to save money. Republican attacks on the legislation before it went into effect helped them win an overwhelming victory in the 2010 mid-terms because very few people had experienced any benefits from the bill.

If Democrats adopt Meyerson’s proposal, Republicans running for president in 2024 would face their own conundrum. They could stay true to ACA form and call for total repeal of the bill. But that would end programs already in place like early childhood education, home care, and hearing, dental and vision benefits for seniors. Or they could suggest how to pay for them.

Either way sounds like win-win for the Democrats.