How Kathleen Rice Is Threatening the Biden Agenda

Rice and two other House Democrats oppose aggressive drug price reform, which provides the budget savings available to fuel spending in the Build Back Better Act.

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The latest intraparty skirmish over President Biden’s agenda was set in motion shortly after the 2020 elections. As committee assignments for the next Congress were being doled out, Rep. Alexandria Ocasio-Cortez (D-NY) made a bid to join the House Energy and Commerce Committee, a key panel for health care and climate issues. Eliot Engel, a longtime Energy and Commerce member, had lost his primary to Jamaal Bowman, and his seat on that committee was going to be filled by another New Yorker.

But although AOC had the blessing of Rep. Jerry Nadler, the dean of the New York delegation, she lost out to Rep. Kathleen Rice, a centrist who represents parts of Long Island. This was a power move by establishment Democrats on the Steering Committee, which hands out committee assignments, and was seen at the time as punishment for AOC’s willingness to help with left-wing primaries of sitting members.

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Flash forward to this week, where Rice joined with two other centrists to temporarily block an enormously popular drug pricing reform measure from advancing through the Energy and Commerce Committee. The Democratic-Republican split on the committee is 32-26. The objections of Reps. Rice, Scott Peters (D-CA), and Kurt Schrader (D-OR) to the drug price reform deadlock the vote. If AOC were on the committee instead of Rice, that measure would have passed.

The standoff does not mean that drug price reform is finished. The Budget Committee can always fit it back in with a “manager’s amendment,” and because it provides at least $700 billion in budget savings for the overall bill, the committee almost certainly will. But it’s a show of force from pro-pharma members in a Democratic caucus that only has three votes to spare to pass the reconciliation package out of the House.

No agreement on drug prices threatens the entire bill and the Biden agenda, because of its importance in offsetting spending.

Weakening drug price reform is a demonstrably fiscally irresponsible policy, as well as deeply unpopular with Rice’s own constituents.

Here, Rice’s position is central. Schrader opposes the entire reconciliation package, and Peters has been agitating against drug price reform for months, including leading a letter in May opposing the House effort. Several of the ten members who signed on to that letter later recanted. But Peters, backed significantly by Big Pharma, hasn’t relented.

While Peters has received $265,100 from pharmaceutical company PACs since the 2020 election cycle, and Schrader has received $166,000, Rice has only received a skinny $8,500. That was apparently enough for her to sign the May letter, though she has kept a relatively low profile on the topic until this week.

Activists are concentrating all of their attention on Rice in attempting to persuade her to flip and support the drug price reform. The popularity of it among her constituents could be a deciding factor.

Allowing Medicare to negotiate prescription drug prices with pharmaceutical companies is supported by 90 percent or more of voters polled in Peters, Schrader, and Rice’s districts. They cannot just say they oppose negotiation. So instead, Peters released his own legislation, backed by Schrader and Rice, on drug prices. It’s not hard to see how it differs from the House Energy and Commerce version, and whom it benefits.

Like the House bill, Peters-Schrader-Rice provides an out-of-pocket cap for seniors in Medicare Part D; it’s alternately more and less generous than what Energy and Commerce does, depending on a senior’s income level. There’s a measure that allows seniors on fixed incomes to pay off drug costs in monthly installments, and a $50-per-month out-of-pocket cap for insulin. It also mirrors the Energy and Commerce bill with its cap on drug price increases in Medicare at the rate of inflation, though in Peters-Schrader-Rice that does not apply to commercial payers. There are a handful of other provisions in there to stop anti-competitive practices by drug companies.

But on the all-important issue of Medicare negotiation with drug companies, the Peters bill only allows negotiation on drugs that have gone off-patent but have no generic competition. This preserves the patent monopolies that keep drug prices exorbitantly high in the United States, since there is no current check on costs. Restricting negotiation to off-patent drugs and restricting the inflation cap to Medicare just allows drug companies to keep excess profits.

It also reduces the amount of money available to offset spending in the bill. Incredibly, in a public statement yesterday, Rice said that “I do not support advancing policies that are not fiscally responsible.” Weakening drug price reform is a demonstrably fiscally irresponsible policy, on those terms. It’s also deeply unpopular with her own constituents.

There was already a battle between the House and Senate over the scope of drug price reform. The revolt in Energy and Commerce weakens the House negotiating position and could damage what Democrats can deliver on drug prices, typically seen as among the top concerns for voters.

And it wouldn’t have been as much of an issue, were it not for that fateful Steering Committee vote last December.

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