Michmutters

Yet the plan will now move forward without a provision that would have penalized drugmakers for hiking costs faster than inflation in private insurance plans as well as Medicare.

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. Democrats are still waiting on a separate parliamentarian ruling on their policy to cap the cost of insulin both inside and outside of Medicare.

The decision also means tens of billions less in federal savings in the bill overall, a potential threat to Democrats’ hopes of offsetting the cost for shoring up Obamacare’s subsidies.

Still, Democrats argue that the bill will move forward in the coming weeks with its most important provision intact: a repeal of the longstanding ban on the federal government directly negotiating drug prices with pharmaceutical companies.

Senate Majority Leader Chuck Schumer called the parliamentarian’s ruling “good news” in a statement Saturday.

“Medicare will finally be allowed to negotiate prescription drug prices, seniors will have free vaccines and their costs capped, and much more,” he said.

Rep. Peter Welch (D-Vt.), a key negotiator on the House version of the bill, said the provision “would break the iron curtain Big Pharma has maintained against negotiating drug prices, and that’s game-changing. If it passes, Pharma won’t be able to continually stick it to the consumer at their will and whim. And that’s especially important with inflation hammering folks at the pump and the grocery store.”

But Welch, who is running to replace the retiring Sen. patrick leahy (D-Vt.), acknowledged the parliamentarian’s ruling is still a big win for the drug industry.

“It would essentially mean that pharma companies could raise price increases well beyond inflation,” he said in an interview in the days leading up to the vote.

Drug companies and Senate Republicans had planned for months to target the inflation caps provision — through a process known on Capitol Hill as a “Byrd bath.” Sen. mike krapo (R-Idaho), the top Republican on the Senate Finance Committee, told reporters that they went through the bill “line by line” in an effort to bring every challenge they could find.

Democrats who have pushed the policy for years had been confident it could pass under the Senate’s strict reconciliation rules, which limit what kinds of bills can pass with a simple majority. Only proposals that are primarily related to federal spending or revenue can fly, but not those that make major policy changes and only have an “incidental” impact on the federal budget.

Democrats argued that the bill needs inflation caps for drug prices across the board in order to function, warning that failing to do so will mean that pharmaceutical companies can hike prices even higher for people with private insurance to make up for what they lose from the cost controls the bill still imposes on Medicare.

Sen. Chris Murphy (D-Conn.) said such points are “normally the kind of argument that is persuasive with the parliamentarian.”

“You can’t untangle the private sector from the public sector — one doesn’t work without the other,” he said.

Backers of the provision also pointed to the Congressional Budget Office’s finding last year that the inflation caps provision would save the government around $80 billion over a decade to argue that it should be allowed to remain in the bill.

Yet reconciliation experts and industry insiders were equally certain that the provision would get knocked out of the package.

“A lot of people think that if something gets a significant CBO score, it can’t be considered incidental — but it’s more about whether the policy implications outweigh the budgetary ones,” said Stephen Northrup, a lobbyist who previously worked as the health policy director for the Senate Committee on Health, Education, Labor & Pensions. “If the inflation cap were limited to Medicare, you could draw a very direct relationship between the policy and the score. But when you extend it to the commercial market, the relationship becomes more tenuous. It looks less like you’re trying to save money than you’re trying to extend a policy that has impact beyond the federal budget.”

Democrats do not currently have a backup plan for the policy, though some advocates are now pushing to try to apply inflation caps to other federal insurance programs such as Medicaid and the insurance for federal employees.

Even if they are able to do so, progressives who originally pushed for much more sweeping drug price controls are disappointed that their already watered-down plan has become even weaker over the past year.

Senate Finance Chair Ron Wyden (D-Ore.), who worked for months on crafting the drug pricing language and wrangling the votes to pass it, blamed the pharmaceutical industry’s influence on Capitol Hill for the inflation cap provision’s demise.

“The special interests always work against us getting relief to hard-hit Americans, particularly seniors,” he told POLITICO ahead of the parliamentarian’s ruling. “So what a surprise that the special interests — and you’ve seen the numbers on how many lobbyists they have — are trying to protect their profits.”

WAUKESHA – Former President Donald Trump looked to boost his chosen candidate for Wisconsin governor in Milwaukee’s Republican suburbs during a rally Friday, adding pressure to a contentious primary that will be decided on Tuesday.

Here are five takeaways from the rally held at the Waukesha County Fairgrounds:

Tim Michels was fired up

Governor hopeful Tim Michels gave one of his most energetic speeches yet, buoyed by Trump’s late-stage appearance. The construction executive, who entered the race late and shot up in the polls after Trump’s endorsement, is hoping to capitalize off the momentum, particularly in the Milwaukee suburbs on Kleefisch’s home turf. Election integrity, Michels said, is his No. 1 priority.

“We are going to stop the Zuckerbucks, out-of-state billionaires coming into our state and taking control of our election process. It won’t happen anymore.” Michels was referring to grants to Wisconsin municipalities funded by Facebook founder Mark Zuckerberg and his wife, Priscilla Chan. Courts have upheld the private grants, most of which went to larger cities where Democratic voters are concentrated.

There’s already a playbook for getting around geographic sourcing requirements: A decades-long program called “Buy America,” intended to ensure road and transit projects are made from American-made materials. The requirements, especially for things like steel, which is produced more cheaply overseas, have been difficult to meet since its inception — and that’s exactly why they’re sometimes waived.

For instance, though Congress enacted stringent new Buy America rules in last year’s massive infrastructure law, they were immediately waived temporarily to give states and cities more time to adapt.

And the new sourcing requirements for electric vehicles that at the moment seem out of reach could go down the Buy America path, too. In fact, automakers and electric vehicle interest groups are already asking for more time before they’re enforced.

The Zero Emission Transportation Association isn’t looking for waivers, but Executive Director Joe Britton said the association and its members have been on Capitol Hill asking Congress to extend the compliance deadlines in the bill by 12 to 18 months.

“We want as much time as we can get,” Britton said. “My view is that every six months we can get as an extension is materially beneficial.”

Where the rubber meets the road

In order to receive a tax credit for buying an electric vehicle, the budget deal Democrats are working to enact requires battery minerals to be at least 40 percent sourced from North America or a US trading partner starting in 2024 and rising from there. And by 2029, battery components would have to be 100 percent made in North America.

Perhaps the most difficult bar, though, considering China’s dominance when it comes to lithium-ion batteries and other minerals and components the vehicles need, is the deal’s stipulation that the credit won’t apply to a vehicle that has any battery components made from an “entity of concern,” such as China, by 2024, and no critical minerals from those sources by 2025.

Not a single electric vehicle currently on the market would qualify. It’s not surprising, considering that the United States accounts for just 8 percent of global lithium-ion battery production, compared to China’s 76 percent.

In some cases, companies may not even be able to trace the source of minerals or subcomponents of their own products.

“We’re an American company that makes American products and we believe that we comply with Buy America,” said Desmond Wheatley, CEO and president of electric vehicle infrastructure company Beam Global. “However, it’s actually very, very difficult to actually know the provenance of the components and raw materials that you’re using.”

“It’s a minefield,” I added. “We’re terrified that we might state that we comply and that somebody down the road may argue that we don’t, because three or four levels of provenance upstream, it turns out that some things come from overseas and we didn’t even know it.”

How those requirements could be waived, eased or fudged

The reconciliation bill does not expressly outline any waivers. But how the requirements are defined and applied by the Treasury Department and IRS could provide some wiggle room.

Britton of ZETA said that while “the law is the law,” Treasury has authority over determining how US businesses are allowed to interact with “entities of concern,” for instance — and the IRS will decide how and when to calculate how much of a battery is foreign-made.

One infrastructure trade executive suggested that there may be even more need for exemptions for the electric vehicle credits than there is for Buy America.

“Maybe it’s not apples to apples but it’s comparing fruit,” said AASHTO executive director Jim Tymon, whose organization represents state Departments of Transportation, including those pushing for Buy America waivers. “With a vehicle or a battery it’s a much more detailed analysis to figure out where those materials are coming from.”

That’s because there are notable differences between Buy America requirements for infrastructure projects and materials like steel, where the requirements have existed for years and the supply chain is well understood, and requirements for private automobile companies to source their battery components from a supply chain that currently doesn’t exist.

Tymon said the temporary waiver DOT put into place allowed infrastructure projects that were in the planning process for years to proceed this summer. Without it, some projects faced delays.

“We understand there’s kind of a chicken or egg situation here,” Tymon said. “If we’re not able to prove to America and Congress that we can get dollars out there in the community, that doesn’t bode well for us when we have to go back to Congress and push for a similar level of investment.”

GM CEO Mary Barra acknowledged on Thursday that while the domestic sourcing language in the reconciliation bill “will help drive further investments in American manufacturing and sustainable, scalable and secure supply chains,” those goals “cannot be achieved overnight.”

Republicans who do not support the reconciliation bill are attempting to make the mineral sourcing requirements even stricter.

Sen. blond frame (R-Fla.) plans to file an amendment to the bill that would require electric vehicles to source 100 percent of their battery and battery components from the US or a country where the US has a free trade agreement immediately, rather than allowing for a transition period. Rubio’s amendment, if adopted, would make electric vehicle tax credits unattainable for years.

But no Republicans are likely to vote for the bill, and the bill language is unlikely to change significantly, given the delicate balancing act it’s taken to get all 50 Democratic senators to sign on.