Document-On June 15, 2018, drugs appeared in North Andover, Massachusetts. Workers and families with private health insurance will save on prescription drugs from a little-known clause in President Joe Biden’s comprehensive social agenda bill. If pharmaceutical companies raise prices above the inflation rate, they will have to pay rebates to health insurance. Business groups are paying close attention, and this issue has split them in a fierce lobbying war. (AP Photo/Elise Amendola, file)

Washington (Associated Press)-Workers and families with private health insurance will save on prescription drugs from a little-known clause in President Joe Biden’s comprehensive social agenda bill. It aims to break the annual price increase cycle of widely used drugs.

If the pharmaceutical company raises the price above the inflation rate, the clause will require the pharmaceutical company to pay a rebate to medical insurance. Drugs sold to private schemes will count towards fines, such as taxes on price increases. The problem is to divide the business community in the fierce lobbying war.

Corporate groups that focus on affordable employee benefits want to stay as they are in order to provide companies and their employees with protection from price increases, not just those insured by medical insurance. Other organizations, such as the influential American Chamber of Commerce, support the pharmaceutical industry’s efforts to prevent pricing restrictions, including inflation caps, saying it will stifle innovation.

House Democrats passed about $2 trillion in social agenda legislation on Friday and submitted it to the Senate. The bill resets national priorities for issues ranging from climate to family life, and faces stricter scrutiny in this equally distributed chamber. Prescription drugs are just one component, and most of the attention is focused on medical insurance provisions to reduce out-of-pocket expenses for seniors and allow the plan to negotiate prices for a limited number of drugs.

But the inflation ceiling will have a profound impact on as many as 180 million Americans with private insurance.

"A lot of people don't realize that the bill applies to people with private insurance and will help people with private insurance," said Sean Greminger, director of health policy at Purchasers Health Business Group. "But it's not certain. According to the current structure, this is the case. But we have always worried and will continue to worry that this situation will change." His coalition represents nearly 40 large employers, covering more than 15 million workers, retired Personnel and their families.

James Gelfand, vice president of ERIC, said that the inflation ceiling will be a "game changer," and the organization represents large state-owned companies as providers of employee benefits.

Earlier legislation would calculate the "inflation rebate" based on the sale of medical insurance plans, but the bill passed by the House of Representatives expanded the formula to include private plans.

"If they raise prices in the private market faster than the rate of economic growth, they will be required to return the money to the government," Gelfand said. The goal is to prevent pharmaceutical companies from raising prices excessively.

Opinion polls show that Americans within the political sphere overwhelmingly support the government's actions to reduce drug prices. The main cost complaints are: high out-of-pocket costs for patients, high and rising list prices, and high listing prices for new drugs. The Biden package will solve the first two issues, but the Democrats cannot reach an agreement on authorizing medical insurance to negotiate new drug prices.

Annual price increases for established prescription drugs usually exceed inflation, although there have been mild periods in recent years.

Gremminger said his team estimated that the private insurance market could save $250 billion in 10 years based on the bill’s current inflation ceiling. Gelfand estimates that without them, employers may face an additional 3.7% annual health care costs over normal medical inflation, because pharmaceutical companies may actually increase prices for privately insured patients to make up for the rebates paid on behalf of Medicare participants.

"Indeed, not all business groups are in the same place," Gelfand said of the differences in the business world. "If you look at the groups on both sides of the problem, you will find groups that protect the commercial interests of the pharmaceutical industry, and then everyone else."

The main pharmaceutical industry lobby group, the American Association of Pharmaceutical Research and Manufacturers, stated that the inflation rebate would undermine the innovation that continues after the drug is approved.

The generic drug industry wants their products to be exempted. Dan Leonard, president of the General Lobby Group Accessible Medicines Association, said he fears that his members will be punished for rising prices, which can reach a few cents. "When generic drugs are not exempted... they will fall into jet cleaning," he said.

In the Senate, Ron Wyden, chairman of the Oregon Finance Committee, who takes the lead in prescription drugs, supports maintaining the inflation ceiling for private insurers.

Opponents can challenge parliament based on the rules of the Senate, arguing that penalizing a private company for the price increase of another company has nothing to do with the federal budget. If the challenge is successful, the cost of the private insurance plan will be deducted from the inflation rebate. Proponents of the ceiling say that they do have a budget because they will increase revenue and save money for medical insurance.

Katie Mahoney, a top health policy expert at the U.S. Chamber of Commerce, said her organization is “very concerned” that drug pricing regulations will weaken the industry’s motivation to develop new drugs, and is urging this in the Senate.

"We continue to combat the damage that such policies can cause," she said. "We think this information is making progress with senators and some members of Congress."

When asked about other business groups that support the inflation ceiling, Mahoney said that they did not generally reflect private companies.

"When you look at those other organizations, first of all they are much smaller and their policy focus is very narrow," she said. "They don't fully represent the business, they represent very cautious and narrow issues."

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