In a huge victory for Dems, Medicare poised to negotiate drug prices

WASHINGTON — President Biden is on the verge of his own crowning health care achievement to call, in his words, a BFD.

After two decades, Democrats are finally on track to break the firewall between the pharmaceutical industry and the Medicare program. Soon, the U.S. government will be able to use the full brunt of its leverage to negotiate discounts from drugmakers, like the governments in many other high-income countries.

Biden owes the win to dogged dedication by both Senate Majority Leader Chuck Schumer and House Speaker Nancy Pelosi, who each in separate instances resurrected drug pricing reform in the package from what appeared to be certain death. Schumer’s ultimate win came Sunday, when the Senate squeezed through a sweeping package that includes climate and tax reforms in addition to the historic win on letting Medicare negotiate drugs. The House is expected to pass it after the House returns to Washington on Friday, after which Biden can sign it into law.

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The reform is a stunning defeat for the pharmaceutical industry, which has invested a staggering amount of money to get its way in Washington, and which launched a seven-figure campaign last month to try to stop this effort. Allowing Medicare to negotiate drug prices has been the sector’s third rail for two decades. While drugmakers’ influence watered down the proposal, even the good will they earned after developing highly effective vaccines to treat Covid-19 wasn’t enough to stop it.

Implementing Medicare’s new negotiating power will be a contentious experiment. Drugmakers have tremendous resources to deploy and three years before any of the provisions would take effect — time they can use to try to bend the regulatory process to their will. How the new policy will change the complex dynamic of investors’ decisions, pharmaceutical companies’ calculations, and the outlook for generic drugs is still unclear. So is the way policymakers will grapple in the future with those patients the package leaves behind.

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But for some adults 65 or older who take expensive medicines, the policy capping annual out-of-pocket costs at $2,000 will be life-changing. And progressives hoping for additional measures see the win as a door cracked open to more aggressive reform.

“To seniors who’ve faced the indignity of rationing medications or skipping them altogether, this bill is for you,” Schumer declared on the Senate floor after the bill’s passage.

Drug pricing reform is a historic victory two decades in the making for Democrats and drug pricing reform advocates, and it may have come in the nick of time.

President Clinton’s failed pharmacy benefit proposal in Medicare would have given mandatory discounts to the government. President Obama gave up his own ambitions in the space, choosing instead to cut a deal with the pharmaceutical industry to earn its support for the Affordable Care Act. Even President Trump blustered about drug prices for years without doing much of anything to lower them.

Now Democrats have a major political victory to campaign on ahead of the midterm elections. Senators on the floor Sunday afternoon slapped each…