Democrats Offer Plan to Cut Drug Costs, Seeking Climate and Tax Deal

WASHINGTON — Top Senate Democrats on Wednesday released an updated plan aimed at lowering the cost of prescription drugs, signaling progress on a crucial piece of their bid to salvage some of President Biden’s stalled social safety net, climate and tax bill.

Democratic leaders negotiated the drug-pricing proposal primarily with Senator Joe Manchin III of West Virginia, a conservative-leaning Democrat who abruptly walked away from talks on Mr. Biden’s marquee domestic policy bill in December, effectively stopping it in its tracks.

They released the plan this week in an attempt to smooth the path for a scaled-down tax and climate spending package they hope to push through the Senate as early as this month over Republican opposition. It would be paid for in part by the prescription drug proposal that is projected to save the government tens of billions of dollars in the coming years.

Under the new measure, Medicare would for the first time be allowed to directly regulate prescription drug prices. It would cap the out-of-pocket amount that Medicare patients can be asked to pay for prescription drugs at $2,000 a year, limit the amount drug companies can increase prices each year, and make more vaccines free for those patients, according to a draft put forward on Wednesday.

Its release was the most substantial progress in months toward reviving parts of Mr. Biden’s multi-trillion-dollar plan, coming after a painstaking set of closed-door talks in which leading Democrats have worked to accommodate the preferences of Mr. Manchin and other centrists in the Senate.

With Republicans expected to be uniformly opposed, it would need the support of every Democrat to move forward in the evenly divided Senate under special budget rules that could shield it from a filibuster.

Senator Chuck Schumer, Democrat of New York and the majority leader, has privately expressed a desire to vote on such a bill by late this month. Some aides and lawmakers remain skeptical that Democrats can coalesce behind one less than six months before the midterm elections, amid persistent worries about rising inflation.

Ahead of a planned August recess, Democrats are also juggling a tight time frame to pass sweeping manufacturing and technology legislation intended to boost American competitiveness with China and public pressure to respond to the Supreme Court’s decision to overturn Roe v. Wade, the landmark case that granted a constitutional right to an abortion.

In a bid to begin clearing procedural hurdles and pave the way for quick action if a broader deal can be reached, top Democrats on Wednesday asked the Senate parliamentarian to begin reviewing the updated version of the drug pricing plan, according to an official familiar with the private discussions who divulged them on the condition of anonymity. Because Democrats plan to use the fast-track budget process known as reconciliation, the measure must adhere to the strict limits enforced by the Senate’s top rules official.

The drug price regulation proposal was a cornerstone of the Build Back Better Act, Mr. Biden’s signature $2.2 trillion plan that encompassed much of his domestic agenda. It cleared the House in November with only Democratic votes but stalled a month later after Mr. Manchin declared he could not support such a sprawling and expensive package as inflation began to climb.

Mr. Manchin has repeatedly said any package must be focused on reducing the national debt, tackling the costs of prescription drugs and undoing pieces of the tax law Republicans muscled through in 2017. And while he opposed key pieces of his party’s ambitious plans to address climate change, Mr. Manchin has signaled openness to including a climate and clean energy tax package in his talks with Mr. Schumer.

“Senator Manchin has long advocated for proposals that would lower prescription drug costs for seniors, and his support for this proposal has never been in question,” said Sam Runyon, a spokeswoman. “He’s glad that all 50 Democrats agree.”

Reducing the high cost of prescription drugs remains a top priority for voters, one that Democrats have vowed to address for years without success. The current Medicare drug benefit exposes many patients to high prices because the program cannot negotiate directly with drugmakers and because it asks beneficiaries to pay a percentage of the cost of expensive drugs with no cap. Some seniors taking expensive medicines for cancer and autoimmune conditions regularly spend $15,000 or more a year on medicines.

Mr. Manchin and Mr. Schumer have met repeatedly in recent weeks to hammer out the details of a possible deal, which is likely to be around $1 trillion. The tax component must also win the support of Senator Kyrsten Sinema of Arizona, a centrist Democrat who has resisted her party’s proposals to overhaul the tax code to pay for a broad safety-net package.

Talks centered on those remaining pieces are expected to continue in the coming days. Democrats have already shelved many of their plans to boost support for families and children in the interest of keeping the overall cost of the legislation low and attracting Mr. Manchin’s support.

They are also pushing to include an extension of Affordable Care Act subsidies that were expanded under the $1.9 trillion pandemic relief law enacted last year. Those are set to expire at the end of the year.

The drug package unveiled on Wednesday is broadly similar to drug provisions that were part of earlier negotiations. But it reflects some of the pair’s negotiations: It now expands financial help to more low-income seniors, lowering their premiums, deductibles and other payments in Medicare’s drug benefit.

The current program provides such assistance to seniors earning less than 135 percent of the federal poverty level — about $18,000 a year for an individual — and more limited assistance for beneficiaries earning slightly more. The legislation would extend those subsidies up to 150 percent of the poverty level — around $20,000 a year — according to the summary.

It would also require the Department of Health and Human Services to negotiate lower prices for Medicare on certain prescription drugs. Previous legislation had given the department discretion to do so, but not mandated it, and Democrats were concerned that a future health secretary in a Republican administration might decline to.

Certain provisions of the original drug bill were also removed, including one that would have limited the amount Americans could be asked to pay out of pocket for insulin each month. But a vote on a separate bipartisan insulin bill led by Senators Susan Collins, Republican of Maine, and Jeanne Shaheen, Democrat of New Hampshire, is expected in the Senate in the coming weeks, though it is unclear whether it will attract enough Republican support.

Debra DeShong, the executive vice president of public affairs at the drug trade group PhRMA, expressed displeasure about the proposal, noting that some technical adjustments might cost Medicare beneficiaries more than they would have spent under previous versions of the bill. The industry has long opposed efforts to regulate prices.

“The prescription drug bill released today went from bad to worse for patients,” she said in a statement. “Democrats weakened protections for patient costs included in previous versions, while doubling down on sweeping government price-setting policies that will threaten patient access and future innovations.”

The urgency surrounding the overall package has increased as Mr. Biden’s popularity continues to slide and Democrats fear losing control of Congress

The Supreme Court’s decision to limit the Environmental Protection Agency’s ability to address carbon emissions last week also heightened a push among Democrats to pass legislation that would counter the impact of climate change. The proposal under discussion could include as much as $300 billion in clean-energy tax incentives that the House initially approved in November.

“We don’t have the help of a single Republican to be able to move forward lowering prescription drug prices and expanding our capacity around clean power and addressing the climate crisis,” said Senator Tina Smith, Democrat of Minnesota.

Republicans have remained uniformly opposed to the domestic policy package. After cheering Mr. Manchin’s decision to walk away from talks in December, some Republicans have watched with alarm as the West Virginian has resumed discussions with Mr. Schumer in recent weeks.

Senator Mitch McConnell of Kentucky, the minority leader, threatened on Thursday that Republicans would walk away from the manufacturing and technology bill, which has bipartisan support, if Democrats insisted on salvaging the climate spending and tax package.

In a speech at the Paducah Area Chamber of Commerce in Kentucky on Tuesday, Mr. McConnell slammed the legislation and warned, “If they bring that back, it will only make all of this considerably worse.”