Democrats’ Long-Sought Plan for Lowering Drug Costs Is at Hand

WASHINGTON — For decades, as prescription drug costs have soared, Democrats have battled with the pharmaceutical industry in pursuit of an elusive goal: legislation that could drive down prices by allowing Medicare to negotiate directly with drug makers.

Now they are on the verge of passing a broad budget bill that would do just that, and in the process deliver President Biden a political victory that he and his party can take to voters in November.

Empowering Medicare to negotiate prices for up to 10 drugs initially — and more later on — along with several other provisions aimed at lowering health care costs, would be the most substantial change to health policy since the Affordable Care Act became law in 2010, affecting a major swath of the population. It could save some older Americans thousands of dollars in medication costs each year.

The legislation would extend, for three years, the larger premium subsidies that low- and middle-income people have received during the coronavirus pandemic to get health coverage under the Affordable Care Act, and allow those with higher incomes who became eligible for such subsidies during the pandemic to keep them. It would also make drug makers absorb some of the cost of medicines whose prices rise faster than inflation.

Significantly, it also would limit how much Medicare recipients have to pay out of pocket for drugs at the pharmacy to $2,000 annually — a huge benefit for the 1.4 million beneficiaries who spend more than that each year, often on medicines for serious diseases like cancer and multiple sclerosis.

Lower prices would make a huge difference in the lives of people like Catherine Horine, 67, a retired secretary and lung recipient from Wheeling, Ill. She lives alone on a fixed income of about $24,000 a year. Her out-of-pocket drug costs are about $6,000 a year. She is digging into her savings, worried she will run out of money before long.

“Two years ago, I was $8,000 in the hole,” she said. “Last year, I was $15,000 in the hole. I expect to be more this year, because of inflation.”

Between 2009 and 2018, the average price more than doubled for a brand-name prescription drug in Medicare Part D, the program that covers products dispensed at the pharmacy, the Congressional Budget Office found. Between 2019 and 2020, price increases outpaced inflation for half of all drugs covered by Medicare, according to an analysis from the Kaiser Family Foundation.

The budget office estimates that the bill’s prescription drug provisions will save the federal government $288 billion over 10 years, in part by forcing the pharmaceutical industry to accept lower prices from Medicare for some of its big sellers.

Opponents argue that the measure would discourage innovation and cite a new C.B.O. analysis that projects that it would actually lead to higher prices when drugs first come on the market.

Drugs for common conditions like cancer and diabetes that affect older people are most likely to be picked for negotiations. Analysts at the investment bank SVB Securities pointed to the blood thinner Eliquis, the…