Drug price caps ripped from Inflation Reduction Act by Senate parliamentarian — Schumer says bill still ‘major victory’

A nonpartisan Senate official removed a key platform from the Inflation Reduction Act on Saturday, saying it violated Senate rules.

The bill’s proposed imposition of stiff penalties on drug companies to make them keep prices in line with inflation was a bridge too far for nonpartisan Senate parliamentarian Elizabeth MacDonough.

She said if Democrats wanted such a provision, they couldn’t do so through reconciliation, which allows the Senate to bypass the 60-vote filibuster on budget issues.

MacDonough said private price caps were not even tangentially tied to the federal budget.

Senators voted 50-50 to start debate on the bill, with Vice President Kamala Harris providing a tie-breaking vote to kick things off.

That 7:40 p.m. vote started a 20-hour debate clock, likely just a lengthy formality as the bill is expected to pass with full Democratic support — but not before Republicans made things as hard as possible.

The bill calls for an increase in corporate taxes, sets aside money to fight climate change, and gives Medicare new powers when buying drugs.

It was put together from the ashes of the Build Back Better bill that Joe Manchin (D-W.Va.) and Kyrsten Sinema (D-Ariz.) squashed late last year.

The initial Build Back Better bill called for $2 trillion in spending. The rebranded Inflation Reduction Act calls for slightly more than $430 billion.

The new bill sets a 15% minimum earnings tax on corporations that earn more than $1 billion annually but use loopholes in the tax laws to pay far less than the current 21% corporate tax rate. That provision was important to getting Manchin on board.

Chuck Schumer talks about the Inflation Reduction Act on Friday on Capitol Hill. (Mariam Zuhaib/)

Manchin has railed against the low corporate tax rate in America. He complained last week about the 2017 Republican tax cuts that lowered that rate from 35% to 21%. He has said the 15% minimum corporate tax is about “fairness in closing a loophole.”

The bill also includes $300 billion, to be spent over 10 years, to fight climate change. While that’s the most the U.S. government has ever budgeted for saving the planet, it’s also far short of what climate scientists say is needed to make an impact.

Joe Manchin leaves the Senate floor on Saturday. (Anna Rose Layden/)

Additionally, the bill caps out-of-pocket pharmaceutical costs for Medicare patients at $2,000 per year.

It also allows the US Department of Health and Human Services to negotiate with companies over the prices of certain drugs offered by the Medicare program, which serves 64 million older Americans.

Democrats said letting the government negotiate Medicare drug prices would save the government money. That provision was also a longtime goal for Manchin.

Senate Majority Leader Chuck Schumer (D-N.Y) said the parliamentarian’s decision to cut the bill’s proposed caps on privately sold drugs was “one unfortunate ruling” — but he still claimed that the bill is “a major victory for the American people.”

Republicans have universally opposed the legislation. Sen. Lindsey Graham (R-S.C.) promised to make it “hell” to pass.

But after MacDonough ruled that the vast majority of the bill was in line with Senate rules, the 50 Republican senators stood little chance of stopping it. Vice President Kamala Harris was expected to serve as the tie-breaking vote to push the bill through the Senate.

The pared-down bill surprised even Washington insiders last week when Schumer and other Democrats agreed to deals with Manchin and Sinema, the two most conservative Senate Democrats who have sometimes stalled major legislation.

Sinema was the last one on board for the Inflation Reduction Act — and bought in to the proposal after Schumer dropped a provision that would’ve closed a tax loophole for hedge fund managers and private equity executives.

“She would not vote for the bill, not even move to proceed unless we took it out — so we had no choice,” Schumer said Friday.

Schumer and President Biden need all 50 Democrats in line to pass the bill, which they hope will give the party a boost ahead of the midterm elections in November.

Republicans seek a boost of their own by describing the bill as classic tax-and-spend Democratic politics.

With News Wire Services