With help from Eli Okun and Garrett Ross
BREAKING — Democrats have lost a key piece of the prescription drug pricing reform policy in their reconciliation bill.
In an email to Senate staffers at 3:30 a.m., ELIZABETH MACDONOUGH, the Senate parliamentarian, released her long-awaited guidance on the drug pricing plan. The good news for Democrats is that most of their drug reform proposals survived.
There are two crucial policies to lower drug prices in the bill. The first is the one you hear the most about: requiring the federal government to negotiate prices for a limited number of expensive prescription drugs covered by Medicare. One of the key enforcement mechanisms for this policy is an excise tax of up to 95% on pharmaceutical companies to force them into the price negotiation regime. Republicans strongly believed this excise tax violated the strict rules of reconciliation outlined in the Byrd rule. But MacDonough rejected challenges to the excise tax and declared that it can be included in the bill — though she did not explain her reasoning, at least in her written guidance, a fact that has frustrated Republicans this morning.
The bad news for Democrats: The Dems’ second major policy to lower prices is inflation caps. As the Kaiser Family Foundation explains, the bill “requires drug manufacturers to pay a rebate if drug prices increase faster than the rate of inflation (CPI-U) for Medicare and private insurance.”
But, according to a source briefed on MacDonough’s overnight guidance, the parliamentarian ruled that the inflation caps for the commercial market do indeed violate the Byrd rule.
What it means for the bill: The Democrats will need to change their inflation caps language so the caps no longer apply to the commercial market. And the change will affect the total savings in the bill. Inflation caps brought $100.7 billion of savings, according to the CBO. How much of that came from Medicare and how much came from the commercial insurance market is unclear, but one estimate says removing the latter would cost $40 billion in savings. On Friday, before this news, the CBO lowered its estimate of the total deficit reduction in the package by $11 billion, so in 24 hours the total savings of the bill has dropped considerably.
Alice Miranda Ollstein adds, “The exclusion of the private insurance price limits means there is little left that will reduce costs for the vast majority of Americans who receive health insurance through their private sector employer.”
Senate Majority Leader CHUCK SCHUMER released a statement putting a positive spin on MacDonough’s overnight guidance:
“Democrats have received extremely good news: for the first time, Medicare will finally be allowed to negotiate prescription drug prices, seniors will have free vaccines and their costs capped, and much more. This is a major victory for the American people. While there was one unfortunate ruling in that the inflation rebate is more limited in scope, the overall program remains intact and we are one step closer to finally taking on Big Pharma and lowering Rx drug prices for millions of Americans.”
Separately, per Caitlin Emma and Marianne LeVine, Sen. RON WYDEN (D-Ore.) said MacDonough has cleared the energy portions of the bill. “The Finance Committee’s clean energy tax package adheres to Senate rules, and important provisions to ensure our clean energy future is built in America have been approved by the parliamentarian,” Wyden said in a statement.
And Sen. TOM CARPER (D-Del.) said this morning that MacDonough signed off on the bill’s climate policies: “The Environment and Public Works Committee’s groundbreaking climate and equity provisions of the Inflation Reduction Act comply with the Senate rules, and are able to proceed to the floor. I am especially pleased that our methane emissions reduction program, environmental justice block grants, and climate bank provisions were approved. They will ensure a safer climate, create good-paying jobs, and lift up communities across the country.”
The Senate convenes at noon, and a crucial vote to move forward with the now-tweaked reconciliation bill is likely this afternoon.
Good Saturday morning. Thanks for reading Playbook. Drop us a line with your nerdiest takes on how the Dems fared in the Byrd bath process: Rachael Bade, Eugene Daniels, Ryan Lizza.
MORE ON RECONCILIATION — Brian Faler reports that the tax changes demanded by Sen. KYRSTEN SINEMA (D-Ariz.) “will satisfy Sinema while not alienating business — at least too much.”
NYT’s Alan Rappeport, Emily Flitter and Kate Kelly write that the death of the Dems’ carried interest loophole provision “underscores the influence of lobbyists for the finance industry and how difficult it can be to change the tax code.”
Though, per Bloomberg, Sen. MARK WARNER (D-Va.) isn’t giving up on getting Sinema onboard with narrowing the carried interest loophole.
Still, Rappeport writes, the bill’s new corporate minimum tax, even after Sinema altered it, constitutes “one of the most significant changes to America’s tax code in decades.”
And though the reconciliation bill wouldn’t raise wealthy Americans’ taxes, it could subject them to much more scrutiny and cut down on tax avoidance, Bloomberg’s Laura Davison reports.
AP’s Lisa Mascaro looks at Sinema’s role in altering the bill and notes, Sinema “seeks to emulate the maverick career of JOHN MCCAIN, drawing on his farewell address for her maiden Senate speech, and trying to adopt his renegade style alongside her own — a comparison that draws some eyerolls for its reach and scope. Still, in her short time in the Senate, Sinema has proven herself to be a serious study who understands intricacies of legislation and a hard-driving dealmaker who does not flinch. She has been instrumental in landmark legislation.”
More reconciliation reading: “Democrats’ Long-Sought Plan for Lowering Drug Costs Is at Hand,” NYT … “Washington bureaucracy could rescue Democrats from their EV tax credit problem,” by Tanya Snyder and Alex Daugherty … “Progressives Embrace Climate and Tax Deal, Despite Disappointments,” NYT … “Joe Manchin’s price for supporting the climate change bill: a natural gas pipeline in West Virginia,” Mountain State Spotlight
STORY OF THE DAY, from our deputy editor Zack Stanton in Royal Oak, Mich., going deep on the HALEY STEVENS/ANDY LEVIN primary: “Why a Michigan Democratic Political Dynasty Just Fell”: “To pundits on the left in particular, the unseating of Levin has deep national meaning. … But on the ground in Oakland County, the reality is quite different. … Rather than a national-style ideological fight, it was a race in which the two candidates agreed on almost all the issues. …
“Instead, the race turned on a few key points: new district lines that gave Stevens a substantial advantage, a misreading of the new suburban Democratic electorate by the Levin camp, a decades-long trend in Oakland Democrats’ preference to elect women and the Supreme Court’s decision in Dobbs — which, in eliminating the guaranteed right to abortion, supercharged that gender dynamic.”
PHOTO OF THE DAY
9 THINGS THAT STUCK WITH US
1. KEEPING UP WITH THE JONESES: Jurors in the ALEX JONES trial slapped the conspiracy theorist with an additional $45 million in punitive damages Friday, on top of the $4 million penalty he’d received the day before, in the case brought against him by Sandy Hook victims’ families. “Whether the financial hit will muzzle Jones will depend on several factors, including a possible appeal, proceedings already underway in bankruptcy court and whether the Texas cap on punitive damages of $750,000 per cause of action applies,” reports the Austin American-Statesman’s Chuck Lindell.
2. PRIMARY COLORS: Rep. DAN NEWHOUSE (R-Wash.) has officially made it to the general election after this week’s primary, on his way to another term despite committing the GOP heresy of voting to impeach DONALD TRUMP. But it’s hardly a resounding victory for the party’s anti-Trump wing: Newhouse benefited from a fractured opposition and has captured just 26% of the primary vote. And his fellow impeachment voter Rep. JAIME HERRERA BEUTLER (R-Wash.) is in serious trouble of getting edged out of the general by Trumpist challenger JOE KENT, who has gained on her in the latest vote tallies. More from The Seattle Times
3. LOOK WHO’S (NOT?) TALKING: DOUG MASTRIANO’s lawyer told the House Jan. 6 committee that the Pennsylvania GOP gubernatorial nominee will renege on his interview with the panel unless he can record it (which the committee likely won’t accept), reports Betsy Woodruff Swan. Mastriano agreed to sit down a couple of months ago, but his team is now threatening to take it to court if the House panel won’t get on board with its terms for the testimony. His lawyer “told POLITICO that Mastriano is worried about the way video clips from the interview could be edited.”
4. THE LATEST ABORTION BAN: After much political tumult, Indiana Republicans passed and signed into law a new near-total ban on abortion — the country’s first to be created since the overturning of Roe v. Wade. The law, which includes exemptions only for rape, incest and threats to the life of the mother or fetus, will go into effect Sept. 15. The bill’s passage followed an intense few weeks during which abortion-rights protesters swamped the statehouse and anti-abortion groups urged legislators to strip out the ban’s exceptions, fracturing conservatives. More from the Indianapolis Star
5. BATTLE FOR THE SENATE: Democratic Rep. TIM RYAN has managed a good summer in his longshot Ohio Senate campaign — with the airwaves all to himself, he’s built a 3-point lead over Republican J.D. VANCE in internal polling that Adam Wren and Natalie Allison scooped this morning. But the GOP is about to come to Vance’s rescue with a barrage of donations and ads. Ryan’s polling has him up 20 among independents, and he says he can still reel in Republicans — including JOHN BRIDGELAND, a former GEORGE W. BUSH Domestic Policy Council director and former chief of staff to GOP Sen. ROB PORTMAN, who’ll endorse him soon. But Republicans feel confident they’ll knock Ryan out of pole position.
A similar dynamic is playing out across the country, as Senate Dems are showing surprisingly well in key swing states — but the GOP predicts they won’t be able to outrun Biden’s low approval ratings in the end, NYT’s Shane Goldmacher and Maggie Haberman report from Phoenix.
CORRY BLISS, GOP strategist: “The Democrats do have some good candidates … But the key point is very simple: If Joe Biden has an approval rating in the 30s, what RAPHAEL WARNOCK says or does is irrelevant. Because he’s going to lose. Period.”
6. CASH DASH: “Some top Democratic donors are disenchanted with Biden. So far, Trump has kept them from fleeing,” by NBC’s Jonathan Allen, Peter Nicholas and Carol Lee: “Crucially, influential buck-rakers see his White House as indifferent to them, giving them less reason to stand behind Biden if he looks vulnerable following the midterms. Whether it’s failing to arrange for a White House tour, a grip-and-grin photo with the president, or an invitation to one of his events outside Washington, Democratic insiders say the Biden team’s engagement with donors has been anywhere from nonexistent to woefully ineffectual. That has triggered deep resentment.”
7. WHITHER SEAN HANNITY?: The Fox News host was a dominant figure in the Trump years, but he’s been eclipsed by TUCKER CARLSON and even threatened in the ratings by the likes of JESSE WATTERS, The Daily Beast’s Justin Baragona reports. Hannity’s GOP boosterism is losing out to hosts who are “more ‘own the libs’ culture warriors than card-carrying Trumpists,” Baragona writes, citing “Hannity’s inability to evolve with the changing right-wing media landscape—one that has long moved into darker ideological terrain after decades of loyally defending and touting the Republican Party above all else.” (The network says in response that “no other host in the industry has the longevity and staying power of Sean Hannity.”)
8. THE PANDEMIC: “Biden administration planning to extend Covid emergency declaration,” by Adam Cancryn and David Lim: “The planned renewal follows extensive deliberations among Biden officials over the future of the emergency declaration, including some who questioned whether it was time to let the designation lapse. Under the proposed extension, the Department of Health and Human Services would continue the declaration beyond the November elections and potentially into early 2023.”
9. NEXT WEEK’S ELECTIONS: “Progressive and centrist Dems battle for Vermont House seat,” by AP’s Wilson Ring in Stowe: “Lt. Gov. MOLLY GRAY and Senate President Pro Tempore BECCA BALINT are the leading candidates in a Democratic U.S. House primary that could make either of them the first female member of Vermont’s congressional delegation.”
CLICKER — “The nation’s cartoonists on the week in politics,” edited by Matt Wuerker — 16 funnies
GREAT WEEKEND READS, curated by Ryan Lizza:
— “The Making of Silent Bruce,” by N.Y. Mag’s Matt Zoller Seitz: “Willis was a fast-talking lead who became a man-of-few-words star. It made his mental decline that much harder to notice.”
— “Democrats Might Avoid a Midterm Wipeout,” by The Atlantic’s Ronald Brownstein: “White-collar suburban voters will play an outsize role in upcoming elections.”
— “Hocus focus: how magicians made a fortune on Facebook,” by Ashley Mears for The Economist’s 1843 Magazine: “A group of illusionists got rich making addictive videos for social media. Did it cost them their souls?”
— “Inside a Kansas Clinic Where the Battle Over Abortion Is Still Raging,” by Mother Jones’ Becca Andrews: “Kansas voted to save abortion, but the hardest work is yet to come.”
— “New evidence shows how Myanmar’s military planned its brutal purge of the Rohingya,” by Reuters’ Poppy McPherson and Wa Lone: “War crimes investigators have obtained thousands of pages of documents that shed new light on Myanmar’s campaign to expel the country’s Muslim minority, as well as efforts to hide it from the world.”
— “He started a movement to help drug users. He couldn’t save himself,” by WaPo’s Joanna Slater in Portland, Maine: “The opioid crisis was getting worse and Jesse Harvey was sick of people dying, so he began asking a pointed question: What would Jesus do?”
— “State Legislatures Are Torching Democracy,” by The New Yorker’s Jane Mayer: “Even in moderate places like Ohio, gerrymandering has let unchecked Republicans pass extremist laws that could never make it through Congress.”
Peter Alexander will throw the first pitch Sunday at the Seattle Mariners vs. Los Angeles Angels game in Seattle, per NBC.
Bill Barr thinks the federal Jan. 6 investigation is “taking a hard look at the group at the top, including the president and the people immediately around him,” though he doesn’t expect there’s enough yet to convict Donald Trump.
Jared Kushner told Ivanka Trump that he was ready to leave the White House and return to normalcy by December 2020.
MEDIA MOVE — Mimi Montgomery will be home and features editor at Washingtonian. She previously was senior editorial writer at the Martin Agency.
TRANSITION — Sam Salk is now senior adviser to the U.S. ambassador to the U.K., focusing on public-private partnerships and sports diplomacy. He most recently was White House liaison at the State Department, and has worked for Biden since 2015.
ENGAGED — William Morrow, a partner at Lightfoot, Franklin & White, proposed to Jessica Medeiros Garrison, VP of government affairs at Clearview AI, on Wednesday at the A Bar A Ranch in Encampment, Wyo. The couple met when Medeiros Garrison was walking Rep. Gary Palmer (R-Ala.) through Morrow’s law firm in 2018 and introducing the firm’s lawyers to the congressman. Morrow’s office was one of the offices they walked into. The two both noticed each other but they were both dating other people. A few months later he asked if she wanted to go on a run together, and they soon started dating. Pic … Another pic
— Brendon Earle, engagement manager for McKinsey and a former DOD staffer, proposed to Molly Erman, assistant VP of corporate digital content at L’Orèal USA and a New Yorker alum, on Friday on a windy beach in Portugal. The couple met over to-go drinks in June 2020 in NYC (arranged by Bumble). Pic
BIRTHWEEK (was Tuesday): J.D. Vance … (was Friday): Blake Masters … Laura Booth
HAPPY BIRTHDAY: EPA Administrator Michael Regan … Federal Trade Commissioner Rebecca Kelly Slaughter … WaPo’s Dan Diamond and Pat Reap … Axios’ Neil Irwin … WSJ’s Julie Bykowicz … former VA Secretary Robert Wilkie … David Maraniss … Google’s Malika Saada Saar … Erin Karriker … Jonathan Riskind … Corey Jacobson of Rep. Ted Lieu’s (D-Calif.) office … Jill Farrell of Judicial Watch … CNN’s Mike Melia … Steptoe’s Elizabeth Burks … Doug Stafford … Marta Hernandez of Senate Armed Services … Tom Brandt of Sen. Jerry Moran’s (R-Kan.) office … Andrew Eisenberger … Sarah Coyle … Supermajority’s Amanda Brown Lierman … Adjoa Adofo Kyerematen … Anna Sekulow … Russ Anello of the House Oversight Dems … McClatchy’s Ben Wieder … Lindsay Bednar … Viktoria Seale … Melissa Beaumont … Klon Kitchen … Allyson Gale … Cameron Lynch … Nicole Cohen … Rem Rieder … former Rep. Parker Griffith (D-Ala.) … Nathan Baca of WUSA9 … Ashley MacLeay … POLITICO’s Stacia Smith … Cherie Paquette Gillan … Democratic strategist Jeff Person … Everytown’s Morandon Henry … Dan Tomanelli
THE SHOWS (Full Sunday show listings here):
MSNBC “The Sunday Show”: Energy Secretary Jennifer Granholm … Kathleen Sebelius … Max Boot … Steve Phillips … Rep. Sean Patrick Maloney (D-N.Y.) … Trevor Hunnicutt … Rep. Peter Welch (D-Vt.) … Rep. Raja Krisnamoorthi (D-Ill.).
CBS “Face the Nation”: Sen. Rick Scott (R-Fla.) … Rep. Gregory Meeks (D-N.Y.) … Scott Gottlieb … Rep. Peter Meijer (R-Mich.) … Mary Daly.
CNN “State of the Union”: Sens. Lindsey Graham (R-S.C.) and Richard Blumenthal (D-Conn.) … Stacey Abrams. Panel: Rep. Colin Allred (D-Texas), Scott Jennings, Ashley Allison and Kristen Soltis Anderson.
NBC “Meet the Press”: Stacey Abrams … Rep. Nancy Mace (R-S.C.) … Sen. Chris Van Hollen (D-Md.). Panel: Cornell Belcher, Pat McCrory, Susan Page and Anna Palmer.
ABC “This Week”: Sen. Chris Coons (D-Del.) … Sen. Mike Rounds (R-S.D.) … Bill Richardson. Panel: Jonathan Karl, Chris Christie, Yvette Simpson and Julie Pace.
FOX “Fox News Sunday,” guest-anchored by Mike Emanuel: Nikki Haley … Sen. Ben Cardin (D-Md.). Panel: Doug Heye, Francesca Chambers, Aishah Hasnie and Mo Elleithee.
CNN “Inside Politics”: Panel: Kaitlan Collins, Molly Ball, Harry Enten, Marianne LeVine and Susan Glasser.
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Corrections: Friday’s Playbook misstated how the drug negotiation price setting program in the reconciliation bill works. Pharmaceutical companies that do not comply with the negotiation requirement for Medicare for selected drugs would be subject to a 95% excise tax. It also misstated the size of the savings presented by three policies in the reconciliation proposal: Each is about $100 billion.