Senate drug pricing bill may not apply to those with job-based insurance

Senate Democrats’ bill aimed at lowering prescription drug prices may not apply to the millions of people who get health insurance through their jobs, Senate aides and lobbyists say, prompting alarm from employers and progressive groups.

Democrats’ signature drug pricing measure, set to be included in their coming $3.5 trillion package, would allow the secretary of Health and Human Services to negotiate lower drug prices, a long-held Democratic goal. The House measure would apply those lower negotiated prices not only to seniors on Medicare, but also to the roughly 150 million Americans who get health insurance through their employers.

But in the Senate, the push is running into an obstacle from the complicated rules in the upper chamber. The “Byrd rule,” requires that provisions have a sufficient impact on the federal budget. Lowering drug prices for people with private insurance does not have as direct of an impact on the federal budget as lowering prices with Medicare.

Employer and progressive groups are pushing for the lower drug prices to apply to people with private insurance as well, saying all Americans, not just those on Medicare, need relief.

Furthermore, employer groups warn that if prices only apply to Medicare, drug companies will simply raise prices in the private insurance market, shifting costs onto them.

James Gelfand, senior vice president for health policy at The ERISA Industry Committee, an employer group, said that employers would oppose the drug provisions in the bill unless the lower drug prices extend to the employer market.

“If you can’t find a way to protect the private sector, then the bill could mean explosive drug price increases for employers and working families,” he said.

Backers argue that if lawmakers really believe in extending lower drug prices to the private market, they can find a way to do it within the rules.

For example, Gelfand said one alternative that his group is pushing that could comply with the Byrd rule is to impose an excise tax on drug companies that set prices in the employer market above the negotiated rate.

However, the situation is still fluid and could change.

Senate Finance Committee Chairman Ron Wyden (D-Ore.), who is leading the Senate’s drug pricing effort, has expressed support in the past for extending lower prices to the employer-sponsored insurance market.

On Tuesday, asked about the fate of the provisions for the private market, a Senate Finance Committee aide said: “These policies have not yet been finalized.”

Steve Knievel, an advocate at the progressive group Public Citizen, said: “Limiting the benefits of drug price negotiation to Medicare beneficiaries would leave tens of millions of Americans at the mercy of drug corporations’ monopoly pricing.”

In addition to Senate rules, Wyden is also navigating delicate politics as he tries to find a balance between moderate and progressive Democrats in a 50-50 Senate — the party cannot lose a single vote on the measure.

Some Democrats, including Sen. Robert Menendez (D-N.J.), are wary of cracking down too hard on the pharmaceutical industry.

The Senate bill is also likely to leave out a provision to use the prices paid on drugs in other countries as a benchmark in the U.S., an idea known as “international reference pricing.”

The bill could instead use a “domestic reference price,” though the details on that proposal are not clear.