Reviews | On prescription drugs, is Joe Manchin about to do the right thing?

The effort to save some of the programs of Build Back Better, the now-defunct centerpiece of President Biden’s national agenda, is so dependent on Senator Joe Manchin III that some in Washington call him Build Back Manchin. Yet the West Virginia Democrat has so often shattered the dreams of Democrats that many have given up hope that he would agree to anything.

But now there are new indications that negotiations are moving forward, and in ways that could rekindle several Democratic goals. It’s a reminder that no matter how desperate things seem, nothing is what it seems in the Senate, a murky, impenetrable place.

Senate Majority Leader Charles E. Schumer (DN.Y.) released a proposed bill allowing Medicare to negotiate prescription drug prices, which emerged from talks with Manchin. The bill has been given to the Senate parliamentarian to ensure it meets the conciliation requirements to allow the filibuster to be circumvented so that it can be passed by a simple majority.

The Democrats will need it, because so far precisely zero Senate Republicans support the bill. That could change, however, as allowing drug price negotiation has long been almost absurdly popular.

The bill would do the following:

  • Require the Department of Health and Human Services to negotiate prices for commonly used drugs, which will almost certainly reduce their cost.
  • Cap out-of-pocket drug costs for Medicare beneficiaries at $2,000 per year.
  • Limit the amount that drug companies can increase annually on existing drug prices to the rate of inflation.
  • Extending assistance to seniors earning up to 150% of the poverty line to afford medication (currently those earning up to 135% of poverty receive such assistance).

A lobbyist for PhRMA, the drug companies trade group, criticized the plan, which is a good indication that it would indeed bring prices down.

Manchin has frequently cited inflation as a justification for scrapping Democratic spending bills, but those proposals are a way to address inflation. The Prescription Drug Bill limits annual price increases, and other spending that savings could fund would help ease the burden of inflation, particularly the Affordable Care Act’s extended subsidies (see below).

Not to mention the political advantage. Every election, Democrats promise to rein in the abysmal price of prescription drugs (and more than a few Republicans do too). This desire then collides with the enormous lobbying power of the pharmaceutical industry, which is why Americans continue to pay far more for drugs than the citizens of any other country.

So securing that would be a serious achievement, after a year in which Democratic infighting and BBB paralysis have helped define the party.

What’s more, the Medicare prescription drug movement also offers a tantalizing possibility: It could open the door for Manchin to strike a broader deal that also extends the ACA’s expanded subsidies.

The expanded grants, which were originally passed in the 2021 covid-19 bailout, are set to expire at the end of this year. They were meant to be extended as part of BBB, but Manchin killed that.

Expiring now would mean millions of people would see their premiums go up, and a few million more could lose their coverage altogether. Given that Democrats have spent a decade winning the ACA argument, while slowly expanding it toward universal health care, such a massive regression would be a total disaster, both substantively and politically.

Fortunately, NBC News reports that Manchin is open to extending the grants, though he doesn’t seem enthusiastic about it.

Here’s the thing, though: if Manchin is willing to do it, it absolutely can be done within the parameters he has set himself.

Here’s why: Most reports suggest Manchin seems open to a revived, scaled-back BBB that raises about $1 trillion, both by undoing some GOP tax cuts in 2017 and with Medicare prescription drug reform. (which would save the government money).

Manchin wants to invest half of that trillion dollars in deficit reduction. That would leave about $500 billion for public and social spending.

If about $300 billion of that were dedicated to funding the clean energy transition, through tax incentives and other means — a key part of the BBB that Manchin seems open to — that would leave about $200 billion. dollars for extension of ACA grants.

Larry Levitt, executive vice president of health policy at the Kaiser Family Foundation, says it’s entirely possible to fund the vast majority of extended grants with that amount. The cost of extending them to all would be estimated at $220 billion, so it would be feasible to reduce it to $200 billion, perhaps by reducing these subsidies for those eligible on the highest incomes.

“You could definitely extend the ACA grants and still help the vast majority of enrollees with $200 billion,” Levitt told us. “The numbers certainly add up for a package that lowers drug prices and keeps premiums in check under the ACA.”

So Manchin can have it all! He can have a reformed tax code, climate tax incentives, lower prescription drug prices and expanded ACA subsidies — cutting costs for people he says are being hammered by inflation — and he can have hundreds of billions of dollars in deficit reduction to boot.

All Manchin has to do is take yes for an answer.

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About Alex S. Crone

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