In the News
August 20, 2022
By Michael Smolens
San Diego Democrat was excoriated for blocking broader legislation, but his framework to lower drug costs was adopted and now receives wide praise
About a year ago, Rep. Scott Peters was not very popular in some quarters.
He helped block a broad plan to lower prescription drug prices, a Democratic priority. Even a direct appeal from House Speaker Nancy Pelosi could not persuade him to vote for the bill.
All the while, media reports highlighted the hundreds of thousands of dollars the San Diego Democrat had received from pharmaceutical companies and biotech firms, which have supported him since his election in 2012.
The criticism was brutal. A group called Patients for Affordable Drugs Now ran an ad featuring a woman identified as a registered nurse and a multiple sclerosis patient talking about the high cost of her medication.
“It makes me so angry that members of Congress are choosing Big Pharma over patients. It’s unforgivable,” she says.
A narrator then mentions Peters voted against the bill that would have, among other things, allowed Medicare to negotiate with drug companies to lower costs.
“Tell Congressman Peters, stop selling us out to drug companies.”
Others, including AARP, also criticized Peters and a small handful of other House Democrats who stood in the way of HR 3. Peters proposed a scaled-back alternative measure that included some of the concepts in the broader bill, such as Medicare negotiating with pharmaceutical companies.
There were suspicions this was a fig leaf and Peters’ goal was to block any drug-pricing reforms. That turned out not to be the case.
Peters’ framework was included in the Inflation Reduction Act that was signed by President Joe Biden on Tuesday. As the bill headed for final approval in the Senate, some of those critics were full of praise.
“Make no mistake, this legislation is game changing,” said David Mitchell, founder of Patients for Affordable Drugs Now. “It alters the trajectory of drug pricing and policy in the United States. It finally begins to break the power of multinational drug corporations to dictate prices of brand-name drugs to the American people.”
Jo Ann Jenkins, AARP chief executive officer, said: “This bill will save Medicare hundreds of billions of dollars and give seniors peace of mind knowing there is an annual limit on what they must pay out-of-pocket for medications.”
Drug companies aren’t wild about all the components of the adopted plan, but they fought tooth and nail against the earlier proposal. They insisted it would dry up investments needed to continue producing drugs, though some analysts contended their real concern was that it would reduce profits.
Peters shared the companies’ view on the policy implications, but also said there was a simple political reason to oppose it.
“I knew HR 3 would not get 50 votes needed to clear the Senate,” he said, “and that it would stifle drug discovery and the development of cures.”
Drug companies, Peters and like-minded members of Congress weren’t the only ones who had problems with HR 3. The Lupus Foundation of Southern California, the American Autoimmune Related Diseases Association and other organizations criticized the measure.
A key concern of opponents was that the bill would link U.S. drug prices to those in other countries. It would have allowed the federal government to negotiate drug prices with a guarantee that medicines in the U.S. would cost no more than 120 percent of their average price across Australia, Canada, France, Germany, Japan and the U.K.
That wasn’t in the approved version.
The Congressional Budget Office concluded the Medicare negotiating provision in the original bill would have saved about $450 billion over 10 years. The CBO projects the adopted version will save close to $300 billion over a decade.
One notable change involves the cost for insulin, which is prescribed for people with diabetes. The Peters plan called for a $50 out-of-pocket cap per month. The proposal for the Inflation Reduction Act put it at $35, but that was blocked by Senate Republicans for privately insured people. The $35 cap for Medicare recipients remains.
Under the approved measure, Medicare drug-cost negotiations start in 2026 with a list of 10 drugs that will increase in subsequent years.
Significantly, Medicare recipients starting in 2025 won’t have to pay more than $2,000 a year in out-of-pocket costs for prescription drugs. Also, drug companies will have to pay the government a rebate for drugs whose prices increase faster than the rate of inflation.
The Inflation Reduction Act includes policies and incentives to combat climate change, lower energy costs, provide tax credits for electric vehicles and other energy-efficient products, and reduces health insurance costs for millions of people. The bill is largely funded by tax increases on corporations and people earning $400,000 or more annually.
The drug-pricing plan arguably is the most popular part of the law. It’s often one of the first things Democrats mention when they talk about the Inflation Reduction Act, particularly on the campaign trail.
Peters acknowledged the efforts of Reps. Stephanie Murphy of Florida, Kathleen Rice of New York, Kurt Schrader of Oregon and Lou Correa of Santa Ana to advance the drug plan. He also singled out Sen. Kyrsten Sinema, D-Ariz., for her “partnership and leadership.” Sinema was the last Democratic senator — and the 50th vote — to commit to supporting the bill after she won some concessions.
The revelry hit a bit of a bump late in the week by way of Sen. Joe Manchin, D-W.Va. Manchin was key to shaping the bill and forced compromises that reined in its scope while providing benefits for the fossil fuel industry. He criticized Sinema, claiming the Arizona senator insisted on more narrow Medicare negotiating parameters than he wanted, and that she delayed implementation for two years, according to NBC News on Friday.
Manchin later tried to walk back his comments. Regardless, the drug-pricing provisions will have sweeping impacts.
“We worked hard in the past year through negotiations and setbacks, and did not give up on delivering this relief for Americans struggling to pay for medications,” Peters said in a statement.
This is a big victory for Peters, especially given the heat he took as HR 3 was going down the tubes. But it looks to be a bigger win for millions of Americans.
Just ask the erstwhile critics.