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Illustration: Sarah Grillo/Axios

Senate Democrats have a new pay-for to finance a "soft" infrastructure bill: renegotiating Medicare prescription drug prices to save $600 billion — setting up a battle between progressives and well-capitalized drug companies.

Why it matters: By targeting pharma, Democrats are opening up a funding stream President Biden didn't initially include in his $4 trillion Build Back Better agenda. It relied on hiking taxes on corporations and Americans earning over $400,000.

  • Democrats also pick a fight with an industry prepared to spend millions to fend off attempts to alter its lucrative reimbursement rates.
  • Using drug-price savings to finance an already complex legislative package adds another powerful player to a game with no margin for error — complicating final passage of the legislation.

What they are saying: “It's time that the pharmaceutical industry realizes that the federal budget is not a cow to be milked,” Sen. Elizabeth Warren (D-Mass.) told Axios.

  • Sen. Bernie Sanders (I-Vt.), chair of the Senate Budget Committee, not only confirmed the $600 billion figure but suggested it was slightly higher.
  • "I am definitely in favor of saving money from pharmaceutical drug prices," said Sen. Joe Manchin (D-W.Va.). “I think Medicare should be competitive. It’s bullshit that Medicaid is and Medicare is not. That doesn’t make any sense at all.”
  • The federal government already exerts its considerable market power to negotiate down Medicaid drug prices.

The big picture: Renegotiating Medicare drug prices has long been a goal of Democratic politics, but the industry has successfully thwarted efforts to cut its profits.

  • In May, the path ahead for the House’s drug pricing bill — HR 3, the technical name for a measure allowing Medicare to negotiate prices — suffered a blow when 10 centrist Democrats signaled their opposition in a letter to Speaker Nancy Pelosi (D-Calif.).
  • In the Senate, any bill would face an even heavier lift, because it would require the support of all 50 Democrats.

Driving the news: Democrats are proceeding with a two-track infrastructure process: a $579 billion infrastructure "hard" package to pay for roads and bridges, and a Democrat-only, $3.5-trillion, tax-and-spending plan covering other concerns like climate change and child care.

  • Biden paid Senate Democrats a lunchtime visit Wednesday to sell both packages. "We’re going to get this done," he later told reporters.
  • Democrats working on the bipartisan component insist they're closing in on a deal, Axios' Alayna Treene reports.
  • "I am optimistic that we can resolve the remaining issues and be in a place for floor action next week," Sen. Chris Coons (D-Del.) said.
  • Sen. Jon Tester (D-Mont.), a key negotiator, echoed the same timeline.

Between the lines: The industry is counting on Democrats like Sen. Bob Menendez (N.J.), whose state is home to many drug companies, to fend off any challenges. Menendez was noncommittal.

  • "I got to look at the whole package," he told Axios.
  • "They will be at the table and participate in some way. What this is, and what’s the amount? That’s an open question."
  • His Democratic colleague from New Jersey, Sen. Cory Booker, appeared more open to the proposal.
  • "It’s an aberration of the free market not to be able to negotiate for drug prices," Booker told Axios.

Go deeper

Scoop: “How about zero?” Manchin, Sanders get heated behind closed doors

Sen. Joe Manchin. Photo: Tom Williams/CQ-Roll Call via Getty Images

Sens. Joe Manchin (D-W.Va.) and Bernie Sanders (I-Vt.) squabbled behind closed doors Wednesday, with Manchin using a raised-fist goose egg to tell his colleague he can live without any of President Biden's social spending plan, Axios has learned.

Why it matters: The disagreement, recounted to Axios by two senators in the room, underscores how far apart two key members remain as the Democratic Party tries to meet its deadline for reaching an agreement on a budget reconciliation framework by Friday.

The biggest headline from Biden's town hall

President Biden greets attendees during a commercial break in Baltimore last night. Photo: Nicholas Kamm/AFP via Getty Images

What matters from President Biden's town hall with CNN's Anderson Cooper at Baltimore Center Stage on Thursday:

The biggest headline: Biden is jettisoning the corporate tax increases that White House officials have insisted, for the past 10 months, are wildly popular across the country. He admitted he doesn't have the votes.

Dan Primack, author of Pro Rata
Oct 22, 2021 - Economy & Business

Congressional Democrats take aim at private equity

Illustration: Shoshana Gordon/Axios

Congressional Democrats are again taking aim at private equity, but they don't have much more firepower than the last time around.

Driving the news: The Senate Banking Committee held a pair of hearings earlier this week, one focused broadly on PE misdeeds and one focused specifically on PE's role in the U.S. housing market. The former was chaired by Sen. Elizabeth Warren (D-Mass.) and the latter by Sen. Sherrod Brown (D-Ohio).