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Parliamentarian weakens Democrats’ drug plan in Inflation Reduction Act, as Senate prepares to vote

The senator on Saturday dealt a blow to Democrats’ plan to curb drug prices, but left the rest of the sprawling economic bill largely intact as party leaders prepare for the first vote on a package containing many of President Joe Biden’s key domestic goals.

Elizabeth McDonough, the chamber’s nonpartisan arbiter of rules, said lawmakers should remove language that imposes heavy penalties on drug companies that raise prices beyond inflation in the private insurance market. That was the bill’s main pricing protection for the nearly 180 million people whose health coverage comes from private insurance, either through work or buying on their own.

Other key provisions were left as is, including giving Medicare the ability to negotiate what it pays for pharmaceuticals to its 64 million elderly recipients, a long-standing goal of Democrats. Penalties will apply to manufacturers for inflation to override drugs sold to Medicare, and there is an annual $2,000 out-of-pocket cap on the costs of free drugs and vaccines for Medicare beneficiaries.

Her rulings come as Democrats plan to begin voting in the Senate on Saturday on a broad package that addresses climate change, energy, health care costs, taxes and even deficit reduction. Party leaders said they believed they had the unity they would need to move the legislation through the Senate 50-50, with Vice President Kamala Harris expected to cast ballots to break ties, as all Republicans are expected to oppose the bill.

“This is a huge victory for the American people,” Senate Majority Leader Chuck Schumer, a Democrat from New York, said of the bill, which both parties use in their election-year campaigns to blame the worst inflation period in four years. contracts.

“At a time of seemingly impenetrable stalemate, the Inflation Cut Act will show the American people that when the moment demands it, Congress can still take big steps to solve big challenges,” Schumer said. “We will show the American people that, yes, we can pass a historic climate package, rein in drug companies, and make our tax code fairer.”

In response, Kentucky Senate Minority Leader Mitch McConnell said Democrats were “misreading the anger of the American people as mandating another reckless tax and spending spree.” He said Democrats “have already robbed American families once through inflation and now the solution is to rob American families again.”

Dropping penalties for drug companies reduces incentives for drug companies to restrict what they charge, increasing costs for patients.

Analysts said erasing this language would cut $288 billion in savings over 10 years that the Democrats’ overall drug restrictions have been estimated to generate – possibly slashing tens of billions of dollars.

Schumer said McDonough’s decision to cap the private insurance rate was an “unfortunate one.” But he said the drug-pricing language that survived represented a “big victory for the American people” and that the overall bill “remains largely the same.”

The ruling came after a 10-day period that saw Democrats revive key components of Biden’s seemingly dead agenda. In brisk deals with two of the Democrats’ most unpredictable senators — first conservative Joe Manchin of West Virginia, then Arizona centrist Kirsten Sinema — Schumer assembled a broad package, while a small portion of the larger previous versions that Derailed, Manchin would give an achievement against the backdrop of this fall’s congressional elections.

The parliamentarian also approved charges on excess emissions of methane, a strong contributor to greenhouse gases, from oil and gas exploration. It also allowed for environmental grants for minority communities and other initiatives to reduce carbon emissions, said Thomas Carper, chair of the Senate Environment and Public Works Committee.

It approved a provision requiring union-wide wage payments if energy efficiency projects qualify for tax credits, and another that would limit tax credits for cars and trucks assembled in the United States.

The public action faces collective opposition from Republicans. But assuming the Democrats resist non-stop “voting the amendments” — many of them designed by Republicans to block the measure — they should be able to support the measure through the Senate.

The House of Representatives will return Friday to vote on the bill.

“What is going to be the vote on Rama. It’s going to be like hell,” South Carolina Senator Lindsey Graham of South Carolina, the top Republican on the Senate Budget Committee, said Friday of the amendments that the Republican Party has approached. By supporting the Democratic bill, he said, Manchin and Cinema “are empowering legislation that will make the average person’s life more difficult” by imposing energy costs while raising taxes and making it more difficult for companies to hire workers.

The bill introduces spending and tax incentives to move toward cleaner fuels and subsidize coal with the help of reducing carbon emissions. It would extend the end of subsidies that help millions of people with private insurance premiums for three years, and there’s $4 billion to help Western countries combat drought.

There will be a new minimum tax of 15% on some companies that earn more than $1 billion annually but pay much less than the current 21% corporate tax. There will also be a 1% tax on companies buying back their shares, after Sinema refused to support higher taxes on private equity firm executives and hedge fund managers. The IRS budget will be injected to boost tax collections.

While the bill’s final costs are still to be determined, it would overall spend more than $300 billion over 10 years to slow climate change, which analysts say would be the country’s largest investment in the effort, and billions more on health care. It would collect more than $700 billion in taxes and government savings in drug costs, leaving about $300 billion to cut the deficit — a modest portion of the projected 10-year shortfall of several trillion dollars.

Democrats are using special procedures that would allow them to pass the measure without having to reach the 60-vote majority often needed by legislation in the Senate.

The parliamentarian’s job is to decide whether parts of legislation should be dropped for violating those rules, which includes a stipulation that the provisions are intended primarily to affect the federal budget, not force new policy.

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