Drug-Pricing Bill Advances to Full Senate With Uncertain Fate

(Bloomberg) -- A key Senate panel voted to approve legislation that would cap how much pharmaceutical companies can raise prices, though a lack of overwhelming Republican support leaves its fate in question.

The 19-9 vote Thursday by the Finance Committee saw more votes in favor from Democrats, who are in the minority, than Republicans, a rare occurrence in the chamber. Chairman Chuck Grassley, an Iowa Republican, warned his GOP colleagues who opposed the measure that it could have been worse. Grassley proposed the bill along with the top Democrat on the panel, Senator Ron Wyden of Oregon. It will now advance to the full Senate.

“The Grassley-Wyden approach is a very modest approach,” Grassley said after the vote. “There’s got to be a realization among Republicans on that.”

Wyden added that neither he nor Grassley got everything they wanted in the bill, “but it’s a helpful start.”

The less modest approach the chairman was hinting at is one expected in September from House Democratic leaders that would allow Medicare to negotiate prices for about 250 drugs that don’t have competition. President Donald Trump had expressed support for that approach on the campaign trail but has since backed away from it. An amendment from Senator Debbie Stabenow, a Michigan Democrat, that would have enabled such negotiations failed Thursday in a 16-12 vote.

The White House said this week it supports Grassley and Wyden’s bill. The Pharmaceutical Research and Manufacturers of America, the main lobbying group for drugmakers, met Wednesday with Trump as part of a White House effort to meet with groups that would be affected by the changes. PhRMA, which opposes the measure, said it would stifle innovation and patient access to treatments.

“We will continue to work with senators to ensure this proposal moves forward and advances the president’s priority of lowering drug prices even further,” White House spokesman Judd Deere tweeted Thursday.

The drug-pricing bill’s fate hinged largely on a major provision that would penalize drugmakers for increasing prices above inflation in the Medicare Part D prescription-drug benefit for seniors. Those that raise prices above inflation would have to pay a rebate on that amount above the benchmark.

The Congressional Budget Office estimates the legislation would save taxpayers $100 billion over a decade. Most of that, $57.4 billion, would come from the inflation cap.

An amendment from Republican Senator Patrick Toomey of Pennsylvania to strike the cap narrowly failed, largely along party lines. That led some Republicans to reject the full package.

Toomey, who voted against final passage, said the inflation cap is “a price-control mechanism.” He and others in the GOP are concerned the provision could cause drugmakers to set higher prices when they initially bring a medication to market to make up for limits on future increases.

“It is an incentive and it is a factor that will affect prices, but it does not control prices,” said Congressional Budget Office Director Phillip Swagel, who attended the committee meeting to answer member questions about the legislation.

Not Ready

Senator John Cornyn, a Texas Republican, said he voted for the final measure to support Grassley but added that it wasn’t “anywhere near ready for a vote on the floor.” He supported Toomey’s amendment to strike the inflation cap. It’s likely there will be other attempts to strike or modify the provision.

Wyden said Democrats won’t vote to begin debate on the measure in the full Senate if they don’t get assurances there will be votes on amendments to preserve pre-existing condition protections under the Affordable Care Act and to allow Medicare to negotiate drug prices. An amendment on pre-existing conditions could put Republicans who are largely supporting a lawsuit to overturn the ACA in a difficult position and potentially hand Democrats a talking point to play up as the 2020 election nears.

Grassley expects the drug-pricing package to be considered together with one from Senators Lamar Alexander, a Tennessee Republican, and Patty Murray, a Washington Democrat, that attempts to eliminate surprise medical bills.

“We think we only have once chance to get these through the U.S. Senate,” Grassley said.

To contact the reporter on this story: Anna Edney in Washington at aedney@bloomberg.net

To contact the editors responsible for this story: Drew Armstrong at darmstrong17@bloomberg.net, Mark Schoifet, Timothy Annett

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