Updated Aug 6, 2022 - Politics & Policy

Private insurers won't get drug price break, clause struck from Senate bill

Senate Majority Leader Chuck Schumer. Photo: Sarah Silbiger/Bloomberg via Getty Images

Democrats’ plans for lowering prescription drug prices took a hit Saturday as they prepared to move their massive reconciliation bill through the chamber.

Driving the news: The Senate parliamentarian said provisions had to be struck from the plan that would have forced pharmaceutical companies to give rebates if prices for their products sold to private insurers exceeded inflation, the Associated Press reports.

  • The provisions were included in the Inflation Reduction Act of 2022, the wide-ranging package with portions covering health care costs, energy and climate change and the national deficit, per AP.

Why it matters: Striking the language could lead to patients with private insurance paying higher cost for prescription medications by disincentivizing drugmakers from keeping prices at bay, per AP.

  • However, the companies would still have to pay penalties if their prices for drugs that Medicare buys are too high.
  • The changes will eliminate some of the $288 billion in savings that Democrats had estimated the original provisions would lead to over a decade, per AP.

Yes, but: Other key provisions remain, including ones permitting Medicare to negotiate costs for the drugs it buys, capping out-of-pocket expenses for seniors and making free vaccines available, the AP reports.

What they’re saying: Despite the setback, Democrats said their plan would still benefit people.

  • “This is a major victory for the American people,” Senate Majority Leader Chuck Schumer (D-N.Y.) said in a statement Saturday. “While there was one unfortunate ruling in that the inflation rebate is more limited in scope, the overall program remains intact and we are one step closer to finally taking on Big Pharma and lowering Rx drug prices for millions of Americans.”

Mitch McConnell (R-Ky.) released his own statement Saturday, lamenting Democrats' "taxing-and-spending spree" ahead of a planned vote on the $739 billion spending bill.

  • "Democrats have already robbed American families once through inflation, and now their solution is to rob American families a second time. Democrats want to ram through hundreds of billions of dollars in tax hikes and hundreds of billions of dollars in reckless spending — and for what? For a so-called inflation bill that will not meaningfully reduce inflation at all, and will actually make inflation even worse in the short term," the statement said.

What's next: Minority whip John Thune said the Senate expects to begin the vote-a-rama process this evening in order to pass the bill.

Editor's note: This story was updated to correct the financial impact of the removal of the bill's original language.

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