Parliamentarian weakens Democrats’ drug plan in Inflation Reduction Act, as Senate prepares to vote

The Senate lawmaker on Saturday dealt a blow to Democrats’ plan to lower drug prices but left the rest of his sprawling economic bill largely intact as party leaders prepared for the first votes of a package that contains many of President Joe Biden’s top national goals.

Elizabeth MacDonough, the chamber’s nonpartisan rules arbitrator, said lawmakers must remove language that imposes heavy penalties on drugmakers who raise their prices beyond inflation in the private insurance market . These were the main price protections in the bill for the approximately 180 million people whose health coverage comes from private insurance, either through work or purchased on their own.

Other important provisions were left untouched, including giving Medicare the power to negotiate what it pays for drugs for its 64 million seniors, a longtime goal of Democrats. Penalties on manufacturers for exceeding inflation would apply to drugs sold to Medicare, and there is an annual cap of $2,000 to pay the costs of free drugs and vaccines for Medicare beneficiaries.

Their decisions came as Democrats planned to begin Senate votes Saturday on their broad package that would address climate change, energy, health care costs, taxes and even deficit reduction. Party leaders have said they believe they have the unity they will need to move the legislation through the Senate 50-50, and Vice President Kamala Harris is expected to cast the tie-breaking votes as all Republicans are expected to oppose the bill.

“This is a huge victory for the American people,” Senate Majority Leader Chuck Schumer, D-N.Y., said of the bill, which both parties are using in their election campaigns to blame the worst period of inflation in four years. decades

“At a time of seemingly impenetrable gridlock, the deflationary act will show the American people that when the moment calls for it, Congress is still capable of taking big steps to solve big challenges,” Schumer said. “We’re going to show the American people that, yes, we are capable of passing a historic climate package and reining in drug companies and making our tax code fairer.”

In response, Senate Minority Leader Mitch McConnell, R-Ky., said Democrats “are misinterpreting the outrage of the American people as a mandate for another reckless tax and spending.” He said Democrats “have already robbed American families once through inflation and now their solution is to rob American families a second time.”

Eliminating penalties on drugmakers reduces incentives for drug companies to restrict what they charge, raising costs for patients.

Stripping that language will reduce the $288 billion in savings over 10 years that Democrats’ sweeping drug restrictions were estimated to generate, a reduction of perhaps tens of billions of dollars, analysts say.

Schumer called MacDonough’s decision on the private insurance price cap “an unfortunate decision.” But he said the surviving drug pricing language represented “a huge victory for the American people” and that the overall bill “remains largely intact.”

The ruling followed a 10-day period in which Democrats resurrected major components of Biden’s agenda that seemed dead. In quick deals with the Democrats’ two most unpredictable senators, first conservative Joe Manchin of West Virginia, then Arizona centrist Kyrsten Sinema, Schumer put together a broad package that, while some of the older, larger versions of Manchin derailed, would give the one success against the backdrop of this fall’s congressional elections.

The MP also signed a levy on excess emissions of methane, a powerful greenhouse gas contributor, from oil and gas drilling. It also allowed for environmental grants to minority communities and other initiatives to reduce carbon emissions, said Senate Environment and Public Works Committee Chairman Thomas Carper, D-Del.

He passed a provision requiring union-level wages to be paid if energy-efficiency projects are to qualify for tax credits, and another that would limit electric vehicle tax credits to cars and trucks assembled in the United States.

The sweeping measure faces unanimous Republican opposition. But assuming Democrats fight off an endless “vote-a-rama” of amendments, many designed by Republicans to derail the measure, they should be able to push the measure through the Senate.

The House returns on Friday to vote on the bill.

“What’s the vote-a-rama going to be like. It’s going to be like hell,” Sen. Lindsey Graham of South Carolina, the top Republican on the Senate Appropriations Committee, said Friday of the upcoming GOP amendments. He said that by supporting the Democratic bill, Manchin and Sinema “are boosting legislation that will make life harder for the average person” by forcing down energy costs with tax increases and making it harder for businesses to hire workers.

The bill offers tax and spending incentives to move toward cleaner fuels and support coal with aid to reduce carbon emissions. Expired subsidies that help millions pay private insurance premiums would be extended for three years, and there is $4 billion to help Western states fight the drought.

There would be a new minimum tax of 15% for some corporations that earn more than $1 billion a year but pay much less than the current 21% corporate tax. There would also be a 1% tax on companies buying back their own shares, changed after Sinema refused to shoulder higher taxes on private equity firm executives and hedge fund managers. The IRS budget would be increased to strengthen its tax collection.

While the bill’s final costs are still being determined, it would generally spend more than $300 billion over 10 years to curb climate change, which analysts say would be the nation’s largest investment in the effort, and billions more in health care. It would raise more than $700 billion in taxes and from the government’s drug cost savings, leaving about $300 billion for deficit reduction, a modest bite out of projected multi-trillion-dollar 10-year deficits.

Democrats are using special procedures that would allow them to pass the measure without having to reach the 60-vote majority that legislation often needs in the Senate.

It’s up to parliament to decide whether parts of the legislation should be struck down for violating those rules, which include the requirement that provisions be primarily aimed at affecting the federal budget, not imposing new policy.

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