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President Trump and HHS Sec. Alex Azar. (Photo: Nicholas Kamm/AFP/Getty Images)

The Trump administration has no intention of backing off of its controversial proposal to change the way Medicare pays for some prescription drugs, and lawmakers are starting to respond with their own modified versions.

Why it matters: The pharmaceutical industry is adamantly opposed to the proposal, which ties some drug payments to what other countries pay for the same drugs. While this is likely to drive down Medicare's drug costs, it also could be radically disruptive.

The big picture: The administration last year proposed tying Medicare Part B reimbursement rates to what certain other countries pay — including prices set using government controls.

  • The pharmaceutical industry has launched an all-out effort to defeat the proposal, saying it threatens access to innovative treatment.

What they're saying: A senior administration official said it isn't backing down, although it's open to other substantive alternatives.

  • Both Health and Human Services Secretary Alex Azar and the White House "have told stakeholders and the Hill, ‘If you give us a substantive alternative to [the proposal], that is more durable, sustainable than a regulation, we will take that to the president,'" the official said. "Absent an alternative, it’s going to get finalized.”
  • "I think it’d be better for the entire system if we had a bipartisan drug solution that was more sustainable over time than a fight over a regulation," the official added.

Meanwhile, the White House has been having discussions with Speaker Nancy Pelosi's office on what a drug deal could look like on the Hill. The official laid out three areas where there's the most room for a deal.

  • The first is a restructuring of Medicare's prescription drug benefit, which some experts worry encourages high drug costs.
  • The second is "structural reforms" to how Medicare pays for drugs administered by doctors, which is the area targeted by the administration's controversial proposal.
  • The third is things like cracking down on anticompetitive behavior by branded drug companies trying to keep generics off of the market — or "for lack of a better term, low-hanging fruit, which used to be third-rails, don’t touch," the official said.

What we're watching: There's a slew of drug pricing bills being introduced by members of both parties. But there may be particular pressure to do something on Part B, given the administration's threat to implement their proposal if nothing better is presented.

  • House Freedom Caucus Chairman Mark Meadows said he's part of a bipartisan group trying to modify the proposal, specifically by tying Part B rates to those in countries that use market-based measures to determine their drug prices versus government price controls.
  • "At the end of the day, setting prices according to foreign countries is something that is very hard for a number of members of Congress to swallow, but it's certainly something that the president has stated is a priority, so were working with the administration on how to best implement that plan," Meadows said.

Go deeper

Republicans pledge to set aside differences and work with Biden

President Biden speaks to Sen. Mitch McConnell after being sworn in at the West Front of the U.S. Capitol on Wednesday. Photo: Erin Schaff-Pool/Getty Images

Several Republicans praised President Biden's calls for unity during his inaugural address on Wednesday and pledged to work together for the benefit of the American people.

Why it matters: The Democrats only have a slim majority in the Senate and Biden will likely need to work with the GOP to pass his legislative agenda.

The Biden protection plan

Joe Biden announces his first run for the presidency in June 1987. Photo: Howard L. Sachs/CNP/Getty Images

The Joe Biden who became the 46th president on Wednesday isn't the same blabbermouth who failed in 1988 and 2008.

Why it matters: Biden now heeds guidance about staying on task with speeches and no longer worries a gaffe or two will cost him an election. His staff also limits the places where he speaks freely and off the cuff. This Biden protective bubble will only tighten in the months ahead, aides tell Axios.

Bush labels Clyburn the “savior” for Democrats

House Majority Whip James Clyburn takes a selfie Wednesday with former President George W. Bush. Photo: Patrick Semansky-Pool/Getty Images

Former President George W. Bush credited Rep. James Clyburn with being the "savior" of the Democratic Party, telling the South Carolinian at Wednesday's inauguration his endorsement allowed Joe Biden to win the party's presidential nomination.

Why it matters: The nation's last two-term Republican president also said Clyburn's nod allowed for the transfer of power, because he felt only Biden had the ability to unseat President Trump.