It’s smaller than they’d hoped, but Democrats have their ‘win’ on drug prices

3 min
November 03, 2021

By Rachel Roubein

November 3, 2021

Democrats clinched a drug pricing deal after a days-long frenzy to revive the effort.

Now they can tout action on drug prices after promising it to voters in 2020 – even if the “win” is smaller than they’d hoped for.

The compromise reached yesterday allows Medicare to negotiate the cost of prescription drugs for the first time. The plan delivers a defeat to the pharmaceutical industry, but it’s a far cry from the sweeping reforms Democrats originally envisioned.

The deal would:

  • Let Medicare negotiate 10 drugs starting in 2023 — with prices taking effect in plan year 2025 — and up to 20 drugs by 2028
  • Small-molecule drugs couldn’t be negotiated until after they’ve been on the market for nine years; 12 years for more complex medicines
  • Limit how much seniors pay for insulin to $35 per month
  • Cap out-of-pocket spending for seniors at $2,000 annually
  • Require drugmakers pay money back to the U.S. government when they increase prices more than inflation (with 2021 serving as the benchmark)

Assume the deal passes as is (there is no legislative text yet). It would make good on some long-sought-after reforms to the pharmaceutical industry and Medicare. It’d also give vulnerable lawmakers, desperate for a drug pricing victory, new initiatives to tout on the campaign trail just days after it appeared drug pricing was dead before the midterms.

To forge a deal, congressional leaders had to negotiate with more moderate members pushing an even narrower vision for drug price negotiations. And to many Democrats, bucking the powerful drug industry — and its multimillion dollar lobbying machine — even to a lesser degree is a feat in its own right.

  • “Fixing prescription drug prices consistently has been a top issue for Americans year after year,” Senate Majority Leader Chuck Schumer said at a press conference yesterday, per our colleague Tony Romm. “We’ve heard this from people across the country. . . . Today, we’ve taken a massive step forward in helping alleviate that problem.”

Or the plan doesn’t go far enough.

In 2019, the House passed a sweeping drug pricing bill without losing a single Democratic vote. That legislation, known as H.R. 3, would have required the federal government to negotiate a minimum of 25 drugs a few years after passage, and then ramping up to 50 medicines in the following years.

Fast forward to 2021, where even a few of the lawmakers who voted for the legislation two years ago opposed it during a committee vote. Now, lawmakers and aides are openly admitting the legislation, particularly its negotiation measures, have been scaled back, blaming the need to get the holdouts on board given Democrats’ slim majority in Congress.

  • It is substantially better than current law, but if your starting point is H.R. 3, it looks disappointing compared to the type of revolutionary change that a lot of people were hoping for,” said Shawn Gremminger with the Purchaser Business Group on Health, which represents large employers and which quickly praised the deal’s inflation caps yesterday.
  • We are concerned that the agreement will not go far enough, fast enough. … We see today’s agreement as a positive step forward, but it falls far short of the bold reform that is needed,” Shelley Lyford, president and CEO of nonprofit West Health, said in a statement.

Democrats pushing for a more far-reaching policy are coalescing around the message that something is better than nothing. They point to policies they believe can result in the greatest savings, or tangible benefits for voters, such as limiting the cost of insulin and how much seniors pay for drugs every year. And they’re already alluding to the deal as a downpayment for the future.

  • I did not — of course, as happens in negotiations — get every single thing that I fought for, and there’ll be another day to wage that fight,” Sen. Amy Klobuchar (D-Minn.), who worked to salvage a deal over the weekend, said in an interview. “This is still a very, very good first step.”


Shelley Lyford
CEO, Chair & Trustee, Gary and Mary West Foundation
CEO & Chair, West Health Institute