Sen. Bob Menendez, D-N.J., one of the top recipients of campaign contributions from the pharmaceutical industry, said last week that he won't support a House plan to allow Medicare to negotiate lower drug costs as part of President Biden's Build Back Better plan.
This article first appeared in Salon.
Menendez told NBC News' Sahil Kapur last week that he is a "no" on H.R. 3, a longtime Democratic priority that was advanced earlier this year by the House Ways and Means Committee. The bill would save $456 billion over the next decade, according to the Congressional Budget Office, which Democrats hope to use to pay for other priorities in the bill like expanding Medicare coverage and health care access.
Menendez told Salon on Friday that the House bill "does not currently have a pathway to pass the House of Representatives," where Democrats hold a razor-thin majority. He did not rule out supporting legislation to allow Medicare to negotiate drug prices and is waiting to see the plan being drafted by Senate Finance Chairman Ron Wyden, D-Ore., who announced that he was working on a compromise solution earlier this year amid pushback from lawmakers in states with a heavy pharmaceutical industry presence. Rep. Lloyd Doggett, D-Texas, told Politico that the legislation had already been "eviscerated" in negotiations under pressure from Big Pharma-aligned Democrats.
"Sen. Wyden is working on the Senate proposal, the principles of which he laid out earlier this summer and they are not H.R. 3," Menendez said in a statement to Salon. "I continue to wait to see what proposal comes out of the Senate Finance Committee, which I expect will include language to allow Medicare to negotiate drug prices. I continue to believe the focus must be lowering patient costs, and that will drive my analysis of any proposal."
Menendez told NJ Advance Media earlier this week that allowing Medicare to negotiate prices would not guarantee that consumers would pay lower costs, saying that his goal was to "ensure that the consumer at the counter gets relief and not just simply the government."
The House proposal was introduced by Energy and Commerce Chairman Frank Pallone, D-N.J. In an official statement, the committee pushed back against Menendez's argument that the bill does not provide relief for consumers.
"H.R. 3 would lower prescription drug prices for both seniors on Medicare and Americans with private health insurance," a committee spokesperson told Salon. "It empowers the federal government to negotiate fair prices for Medicare and makes those prices available to private health insurance plans. As a result, consumers would finally pay lower prices at the pharmacy counter."
As the committee statement later emphasized, the CBO has estimated that H.R. 3 would lower both prescription drug prices and health insurance premiums, and that prices would decrease by nearly 55% for the first group of drugs negotiated by the federal government. "It's clear that negotiation is the most meaningful way to rein in out of control prescription drug prices in the United States," the statement concluded.
Rep. Peter Welch, D-Vt., a leading proponent of the drug pricing bill and chief deputy whip for the Democratic House majority, told Salon in an interview that the legislation would in all likelihood ultimately include private health plans, thanks to pressure from employers who shoulder a "significant burden" from the cost of prescription drugs. His goal, he said, was to "make certain that employers get premium reductions," but added that applying Medicare costs to private plans could run afoul of budgetary rules.
"I definitely want consumers to get relief, as well as taxpayers and employers," Welch said. "The goal that Sen. Menendez is outlining is one I share."
Welch said H.R. 3 would accomplish that goal but acknowledged that as things stand the bill did not have enough votes to pass both chambers of Congress.
"We're going to have to make some modifications and we're in the process," he said adding that the goal of "having this benefit consumers" was the most important ingredient.
The Senate framework for the final bill is expected to include some Medicare negotiation and a cap on out-of-pocket costs, David Mitchell, the founder of the patient advocacy group Patients for Affordable Drugs Now, told Salon.
But Politico reported last Friday that pressure from pharma-backed lawmakers, including Menendez, Sen. Kyrsten Sinema, D-Ariz., Sen. Tom Carper, D-Del., Rep. Scott Peters, D-Calif., and Rep. Kurt Schrader, D-Ore., is likely to force Democrats to make major concessions on the number of drugs that could be negotiated.
Welch told Salon that negotiators are trying to address concerns about innovation raised by lawmakers from districts with a large pharmaceutical presence, like Peters, who represents San Diego and some of its affluent suburbs.
Mitchell, however, dismissed those concerns as a Big Pharma talking point. "Pharma itself reports that it expects to spend $300 billion on marketing and advertising," he said. Of the $500 billion in corporate profits that even the most aggressive bill, H.R. 3, might have taken in revenue, pharmaceutical companies "could cover $300 billion of that by reducing marketing and advertising expenditures" and deploying them to research and development.
Lawmakers like Peters and Schrader have lobbied to exclude drugs from being negotiated during their period of exclusivity, which can last as long as 12 years, and to limit the negotiations to drugs listed in Medicare part while excluding Part D, which purchases four times as many drugs.
"This provision would not fulfill the Democrats' promise to help patients and all Americans by allowing Medicare to negotiate lower drug prices," Audrey Baker, a spokesperson for Patients for Affordable Drugs Now, told Salon. "It would rob Medicare-negotiation legislation of its impact and would leave patients continuing to suffer from high drug prices.
"To be abundantly clear, a bill that does not allow negotiation on drugs covered by both Medicare parts B and D and on drugs still in their period of exclusivity is not a negotiation bill, and will not deliver the relief patients need."
The final legislation is also likely to drop a proposed excise tax on pharmaceutical companies that refuse to negotiate, according to Politico. Schrader told the outlet that the bill is expected to keep "just a little bit of negotiation."
Menendez and Sen. Bill Cassidy, R-La., previously introduced their own drug pricing plan. While H.R. 3 would cap seniors' out-of-pocket costs at $2,000, Menendez's bill would set a cap at $3,100, but would not allow Medicare to negotiate prices.
The pharmaceutical industry has supported legislation that would cap out-of-pocket costs but would not allow for any price negotiation, which Mitchell called the "pharma scam."
"Pharma and the Menendez-Cassidy bill both aim to do this thing where pharma wants to be able to charge whatever it wants, don't lower prices [and] someone else pays for it," he said. As a result, Mitchell said, consumers would never see how high the prices are, but "the fact is, I will wind up paying for them as a patient, either through higher premiums, higher taxes or less money in our paychecks."
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Menendez, whose state is home to headquarters for 14 of the 20 largest pharmaceutical companies and more than 300,000 industry jobs, has been one of the top beneficiaries of Big Pharma's tsunami of campaign contributions over the last two years as the drug bill has moved closer to passing. Menendez has raised more than $1.1 million from the pharmaceutical industry over his career, and leads all senators in campaign contributions from the industry this election cycle, with more than $50,000 — even though he's not up for re-election until 2024.
This spring, as the bill made its way through Congress, Menendez received contributions of at least $1,000 each from the CEOs of eight top drug companies, including more than $5,000 from the heads of Pfizer and Merck, Stat News reported earlier this year. The pharmaceutical industry also spent more than $170 million on lobbying in the first six months of the year, more than any other industry, according to data from the Center for Responsive Politics.
"While it might be true that the Senator has received donations from the pharmaceutical industry, as many other Senators have, it's no secret that New Jersey is considered the 'Medicine Chest of the World,'" a spokesman for Menendez said in a statement to Salon.
"The work the pharmaceutical industry does in the state is vital for the innovation of lifesaving therapies in general and specifically for New Jersey's economy, employing over 300,000 people. In spite of this, the Senator's focus is clear and has repeatedly urged the pharmaceutical companies publicly and privately to be part of the solution when it comes to tackling the high cost of prescription drugs."
Menendez has joined Sinema in opposing the House bill, but while he has left open the possibility of supporting a provision for Medicare negotiation, other Democrats have said that Sinema does not yet favor "any proposal to deal with prescription drugs." Sen. Joe Manchin, D-W.Va., one of the driving forces in seeking to slash Biden's $3.5 trillion proposal, has said he supports the Medicare negotiation legislation, telling reporters earlier this month that it "makes no sense at all" that Medicare is not allowed to negotiate drug costs.
Peters and Schrader, two of the biggest recipients of Big Pharma cash in the House, voted against the bill in committee and are pushing their own alternative to drastically cut the number of drugs that Medicare could negotiate and the amount it could save. Sinema, who has raised over $750,000 from the pharmaceutical and medical device industries, has opposed that proposal as well, even though she campaigned for her seat in 2018 on a promise to lower prescription drug costs. "I'm trying to get her to come my way because I think frankly, I think it would just be good to put this issue to rest," Peters recently told Politico.
A spokesperson for Menendez sought to distance him from the other Democrats who are endangering Biden's proposal.
"Senator Menendez has never once said he will oppose allowing Medicare to negotiate drug prices in the reconciliation package," the spokesperson told Salon. "Throughout this process he's been clear on his priorities to address this issue in a way that benefits consumers at the pharmacy counter, not just providing savings for the government. He's certainly not one of the Democrats in the Senate threatening to derail the President's agenda and continues to work closely with his colleagues to advance multiple priorities in the reconciliation package to deliver results for New Jerseyans. He remains laser-focused on ensuring this package benefits all of New Jersey."
But pressure from Menendez and others to change the drug-pricing proposal likely means that Democrats will be unable to raise as much revenue as they had hoped to pay for other top priorities.
Doggett, who chairs a Ways and Means health subcommittee, questioned this week whether it was worth passing the legislation at all "if it's going to be some meaningless thing."
Welch said the final bill is also likely to cut revenue significantly for other Democratic priorities.
"The less savings we have, the more difficult it is for us to increase access to health care through lowering premiums and the ACA, expanding Medicaid in states that don't have it, expanding Medicare to include hearing, dental and vision," he told Salon. "The money we save by getting fair pricing in pharma would be immensely beneficial to our prospects of expanding health care."