Moderate Democrats Threaten “Build Back Better” Drug Price Controls

September 16, 2021

Congressional committees this week got down to business writing the details of the Biden Administration’s $3.5 trillion “Build Back Better” reconciliation bill. Of particular interest to the life sciences industry was consideration of drug price control provisions in the House Energy and Commerce and Ways and Means Committees.

In its version of “Build Back Better,” the Energy and Commerce Committee sought to include H.R. 3, the Democrats’ “Lower Drug Costs Now Act” that would, among other things, mandate Medicare negotiated drug prices based on prices paid in certain other countries. It would also impose a hefty 95% tax penalty on drug manufactures that don’t agree to the negotiations.

Fortunately, H.R. 3 failed in committee on 29-29 tie vote, with Democrats – Reps. Scott Peters (D-CA), Kathleen Rice (D-NY), and Kurt Schrader (D-OR) joining all Republicans in voting “no”. 

Utah Rep. John Curtis (R-UT), who sits on the committee, also voted against the measure, stating that “these government price control mechanisms would impede the private capital that many small Utah bioscience companies rely on to further their efforts to find new treatments and cures.”

Meanwhile, in writing its portion of the reconciliation bill, the Ways and Means Committee approved legislation providing for Medicare negotiations as well as an inflation rebate requirement for drug manufacturers. The Ways and Mean package would limit the Orphan Drug Tax Credit for qualified clinical testing expenses by eliminating this important incentive for all but the first approved orphan use of a new drug.

In the Senate, the Finance Committee appears to be crafting a more modest proposal around Medicare negotiations, tying pricing for instance to a domestic price standard, rather than an international price index, and refraining from establishing a stiff penalty on drug manufacturers that don’t negotiate.

Recently, a group of moderate House Democrats, led by Reps. Peters and Schrader, introduced a compromise approach to drug pricing – a key development in pushing back on the more heavy-handed pricing mandates contained in H.R. 3. The Congressional Budget Office (CBO) has estimated that H.R. 3 would save $456 billion – dollars that could be used to help offset the cost of the bill’s trillions in social spending and pay for new dental, vision and hearing coverage under Medicare. These additional Medicare benefits are currently part of the House reconciliation package.

Moderate Democrats in the House and Senate may ultimately influence the outcome of any drug pricing provisions included in the Act. Expect further negotiations over drug pricing provisions as Build Back Better advances to the full House and Senate for debate.