Democrats Take Small Step Toward Reviving Joe Biden’s Domestic Policy Agenda

Medicare negotiations for lower prescription prices have become the cornerstone of a new domestic policy bill.

WASHINGTON — Senate Democrats on Wednesday took a key step toward advancing a proposal that would lower the price of prescription drugs in America, making some progress to revive President Joe Biden’s domestic policy agenda.

The initial hope had been to include a drug pricing initiative in the larger Build Back Better initiative that stalled last year. Senate Majority Leader Chuck Schumer (D-N.Y.) is now crafting a smaller version of that bill, or at least the parts agreed to by holdouts like Sen. Joe Manchin (D-W.Va.).

They’re still a long way from making it a reality. Schumer and Manchin have not announced any agreement on provisions dealing with climate and energy, nor on a fix to avert a spike in health care insurance costs under the Affordable Care Act.

Anything that makes the bill expensive could also be a problem. Manchin is concerned that more government spending would exacerbate inflation at a time when the cost of living is skyrocketing.

But on Wednesday, Schumer submitted to the Senate parliamentarian the text of the prescription drug proposal, according to a source familiar with the process.

The parliamentarian verifies whether the legislation is allowed under the Senate’s internal rules for the “budget reconciliation” process Democrats are using for this legislation. A reconciliation bill can get through the Senate with a simple majority instead of the usual 60 votes needed to clear a filibuster.

Democrats want to give the U.S. government the same kind of authority to limit drug prices held by the governments of other developed countries. The proposal would work by requiring Medicare to negotiate prices of some drugs directly with manufacturers, leveraging the social insurance program’s massive buying power to wring savings from drugmakers.

The new proposal would also cap a Medicare patient’s out-of-pocket expenses at $2,000 per year.

The Congressional Budget Office has said that a House-passed version of the prescription drug reform would save the government a lot of money — $345 billion over a decade — which is partly why it’s the first thing Democrats are advancing, since it meets Manchin’s criteria for fiscal responsibility.

Democrats could use higher tax revenue to offset the cost of additional spending provisions, such as on Obamacare premiums, but face a host of internal disagreements on taxes that never got resolved during last year’s Build Back Better debate.

Democratic leaders do seem to have realized that they can’t win Manchin’s support for previous proposals on things like a child allowance or paid leave.

Schumer’s decision to press forward with reconciliation could hamper the fate of his other priority this summer — bipartisan legislation aiming to make the U.S. more competitive with China by boosting research and semiconductor development. Senate Minority Leader Mitch McConnell (R-Ky.) has threatened to block the bill, known as the U.S. Innovation and Competition Act, if Democrats don’t abandon reconciliation.

“Let me be perfectly clear: there will be no bipartisan USICA as long as Democrats are pursuing a partisan reconciliation bill,” McConnell said last week.

Democrats clearly have more work to do to pass a reconciliation bill. The prescription drug component is in some ways the easiest part since Manchin has been supportive of its goal all along.

But McConnell’s ultimatum signals that Democrats are far enough along in the process for Republicans to be taking it seriously once again.

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