
Manchin strikes again: Reconciliation package surfaces, with drug pricing reforms fully intact — for now
Sen. Joe Manchin (D-WV) once again found himself in the spotlight Wednesday evening, but this time his colleagues seem happy with the results.
Manchin and Senate Majority leader Chuck Schumer (D-NY) struck a $740 billion reconciliation deal that will reduce the deficit by about $300 billion and now includes not only the previously announced CMS drug price negotiation provisions, but also caps seniors’ out of pocket costs at $2,000 per year, and a 15% corporate minimum tax for billion dollar corporations as part of a larger package of climate change and energy security reforms.
President Joe Biden said in a statement last night that he supports the deal, now known as the Inflation Reduction Act of 2022 (read the bill text), which will require every Senate Democrat to remain on board, but won’t require the help of any Republican votes. The goal for Democrats is to have the Senate pass this version before the August recess (i.e. next Friday), and then for the House to return to from its recess sometime in August and seal the deal.
The drug pricing provisions remain identical to the previous Senate bill floated, with CMS negotiations set to begin in 2026 for 10 negotiation-eligible drugs (i.e. after nine years of no competition for small molecule drugs and 13 years for biologics), and building up to 20 drugs by 2029. Companies that don’t comply would be hit with steep penalties.

The Congressional Budget Office said the drug pricing portion of the proposal could lower the federal deficit by about $288 billion through 2031, and reduce drugmakers’ 1,300 total drug approvals by about 15 drugs over the next three decades.
But drugmakers are rallying to defeat or soften the measure, with PhRMA hosting a news conference yesterday in which Eli Lilly CEO David Ricks said he “would be shocked if the impact of this bill doesn’t result in 15 fewer medicines from Eli Lilly and Co. alone.”
Other pharma CEOs have expressed similar sentiments in earnings calls recently, with J&J CEO Joaquin Duato telling investors the negotiations will have “a significant detrimental effect on the ability of the industry of the companies to be able to invest in R&D and to develop new medicines.”
Drug companies also would be required to pay rebates if their drug prices rise faster than inflation for Medicare and private insurance, and it would repeal a Trump-era rebate rule, which has not taken effect, according to the Kaiser Family Foundation.

But others seem less concerned. Novartis CEO Vas Narasimhan said in his earnings call, “I would say in the near to midterm not a significant impact, overall net of the positives we get from the Part D reform and, of course, the impact from inflation caps as well as negotiations.”
The proposed 15% minimum corporate tax may also hit pharma and biotech companies that have shifted profits overseas following 2017 tax reforms.
Sen. Ron Wyden (D-OR) yesterday slammed companies like Merck and Abbott, which have seen their tax rates fall to around 10% in recent years. But Arizona Democrat Sen. Kyrsten Sinema, who has previously opposed any tax increases, said she’s still taking a look at the deal.
What’s next? The Senate parliamentarian has to again (Ds and Rs met last week with the parliamentarian on the drug pricing provisions) review all of the text, and Schumer is aiming for a vote late next week but that may be extended.