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Progressives score win in Pelosi drug bill; CBO estimates $456B in savings

The U.S. House Rules Committee set up Speaker Nancy Pelosi's drug pricing package for a floor vote, an action that looked imperiled earlier in the day when a group of progressive Democrats had threatened to block the measure unless changes were made.

That strategy worked for the progressives, who managed to score a significant victory in getting a change made to the bill requested by Rep. Lloyd Doggett, D-Texas, that would raise the minimum number of drugs for price negotiations from 35 to 50.

SNL ImageHouse Speaker Nancy Pelosi, D-Calif.
Source: AP Photo

Price negotiations on behalf of the Medicare program and the commercial insurance market are at the heart of Pelosi's bill, the Elijah E. Cummings Lower Drug Costs Now Act, or H.R. 3. But that key provision is also what Republicans have objected to the most, calling it government-imposed price controls.

If the U.S. Defense Department secretary is allowed to negotiate for "big ships," the head of Health and Human Services should be permitted to "negotiate for small pills," said Rep. Donna Shalala, D-Fla.

"Negotiation is not a new idea for the federal government," said Shalala, who served as HHS secretary during the Clinton administration.

But Rep. Kevin Brady, R-Texas, said that analogy did not work, since the Defense Department does not negotiate for aircraft carriers, but is mandated to use a federal bidding process with contractors.

Republicans also said the penalties in H.R. 3 for drugmakers that refuse to negotiate, which could reach as high as 95% of a drug's revenue, could devastate the industry.

But Rep. Frank Pallone, D-N.J., told the Rules Committee that "you have to have a club to bring the company to the table."

"Any negotiation that involves a club is a mugging and probably illegal," responded Rep. Michael Burgess, R-Texas.

Victories for progressives, Republicans

Another amendment added to H.R. 3 at the Dec. 10 Rules Committee hearing restored a measure that would extend the legislation's price-spike protections beyond Medicare to drugs covered under group health plans — another victory for the progressives.

That provision was initially added to H.R. 3 by Rep. Pramila Jayapal, D-Wash., co-chair of the Congressional Progressive Caucus, during the House Education and Labor Committee's markup session in October. But it was stripped from the bill before coming to the Rules panel.

Rep. Alexandria Ocasio-Cortez, D-N.Y., who is not on the Rules Committee, had urged members of the Congressional Progressive Caucus to join her in voting against H.R. 3.

Five of the nine Democrats on the Rules Committee are members of the progressive group, though none of them voted against Pelosi's bill at the Dec. 10 hearing.

SNL Image

Rep. Jim McGovern, D-Mass.
Source: AP Photo

Before the two changes were made to H.R. 3, Rules Committee Chairman Jim McGovern, D-Mass., had already declared the legislation "the most progressive" drug pricing bill ever to be considered on Capitol Hill.

In the end, the Rules Committee voted along party lines 8 to 3 to advance H.R. 3, as amended, to the House floor. The chamber is expected to start four hours of debate on the legislation on Dec. 11, with a vote anticipated the next day.

Democrats will also permit Republicans to bring up their recently crafted drug pricing bill on the House floor, offering it as a substitute amendment.

That bill, known as H.R. 19, includes 40 bipartisan provisions that have already been adopted by House and Senate committees, including 28 from the Senate Finance Committee drug pricing legislation.

Rep. Greg Walden, R-Ore., ranking member on the House Energy and Commerce Committee, noted that 17 of the measures in H.R. 19 have also already been approved by the House — bills Democrats were quick to point out have been ignored by Senate Majority leader Mitch McConnell, R-Ky.

Rep. Tom Cole, R-Okla., ranking member on the Rules Committee, praised Democrats for being "generous" in allowing H.R. 19 to be considered.

"That was our number one ask," Cole said.

SNL ImageFrom left, Reps. Richard Neal, D-Mass., and Frank Pallone, D-N.J., with House Speaker Nancy Pelosi
Source: AP Photo

Greater savings

The Rules Committee's action on H.R. 3 came hours after the Congressional Budget Office released a new analysis of the bill, estimating the legislation could save the U.S. government $456 billion over a decade by permitting the Medicare program to negotiate drug prices directly with biopharmaceutical manufacturers.

That amount was even greater than the $345 billion over 10 years the CBO estimated in a preliminary analysis released in October.

The CBO also estimated that under H.R. 3, there would be eight fewer drugs introduced to the U.S. market over the first decade, with that increasing to 30 fewer medicines over the subsequent decade.

But the CBO also emphasized that its estimates are uncertain.

Republicans said the CBO report was evidence Pelosi's bill would stifle innovation and prevent Americans from accessing cures, though congressional analysts did not provide any evidence the drugs that may not come to the market because of lower company revenue would be lifesaving therapies.

Pallone noted that Democrats want to reinvest a large part of the savings into providing dental, vision and hearing coverage under the Medicare program — a cost CBO put at $358 billion.

CBO also projected there could be $5 billion over 10 years from H.R. 3 that could go toward reducing the U.S. deficit.