Biden Signs Bill Aimed at Lowering Drug Costs, Boosting Renewable Energy

President Biden signed into law sweeping legislation to lower prescription drug prices, boost the renewable energy sector and impose new taxes on large corporations.

The Democrat-backed package is one of Mr. Biden’s most consequential accomplishments since taking office, the latest in a string of legislative victories that the president’s aides hope will improve his standing heading into November’s midterm election. Republicans have criticized the measure, casting it as government overreach and arguing that it would do little to tamp down high inflation, despite its name, the Inflation Reduction Act.

The law falls short of the ambitious vision Mr. Biden laid out during his presidential campaign and in the early months of his time in office. But it nonetheless marks a hard-fought win for the president, who less than a month ago was facing the prospect that a signature piece of his governing agenda was dead in the Senate.

“The American people won and the special interests lost,” Mr. Biden said at the White House. “Today offers further proof that the soul of America is vibrant, the future of America is bright and the promise of America is real and just beginning.”

Now, the president and his party face a crucial test: whether they can sell the public on the law even though many of its benefits won’t go into effect for years.

Mr. Biden signed the bill at the White House on Tuesday alongside staff and a small group of lawmakers, briefly returning to Washington following a vacation in South Carolina. After the signing, he will travel to Delaware, where he will continue his vacation. The president’s wife, first lady Jill Biden, tested positive for Covid-19 and will isolate in South Carolina.

Mr. Biden is planning to hold an event with a larger group of lawmakers on Sept. 6 to celebrate the enactment of the package.

The White House this week laid out plans for the president, cabinet secretaries and other senior administration officials to travel the country in the coming weeks to promote the law. Two of Mr. Biden’s top advisers, Jen O’Malley Dillon and Anita Dunn, said in a memo that their internal polling shows the package is popular with the public when it is framed in terms of lowering the cost of healthcare, prescription drugs and utility bills.

It remains to be seen whether the law can break through the noise of the election season. News of the House passing the legislation last week, for example, was drowned out by the FBI’s search of former President Donald Trump’s Mar-a-Lago home in Palm Beach, Fla. Some Democratic strategists privately expressed frustration that some in the party are putting so much emphasis on the investigations into Mr. Trump, worrying that it is shifting attention away from Mr. Biden’s agenda.

“We are giving Trump way too much oxygen and it really bothers me,” Democratic strategist Hilary Rosen said during a panel discussion on CNN on Sunday. “We have a lot to talk about. I just want to stop talking about Donald Trump. Because it is in his interest to have us keep talking about him.”

Congress in recent weeks also has passed legislation on other top priorities for Mr. Biden, including a bipartisan law to ratchet up investments in semiconductors and the first significant gun-violence measure in decades.

Mr. Biden has struggled at times to hold the public’s attention amid the controversies surrounding Mr. Trump and polling that shows many voters are focused on their dissatisfaction with the economy, the top issue for most Americans. Despite the administration’s efforts to sell the public on the roughly $1 trillion infrastructure package to repair the nation’s aging roads and bridges, for example, a recent poll found that the majority of voters don’t know the measure had been signed into law.

Like the infrastructure law, many of the provisions in the climate, healthcare and tax law won’t go into effect right away, presenting a challenge for Democrats to explain how the measure will benefit voters demanding quick fixes to their economic woes.

On healthcare, the law’s most immediate effects will start next year, when people on Medicare will see their insulin costs capped at $35 a month, seniors will be eligible to receive certain vaccines free and people who received Affordable Care Act subsidies through the 2021 American Rescue Plan will be able to count on another three years of those benefits. Other consumer-friendly benefits won’t start for years, with a $2,000 cap on out-of-pocket drug costs for Medicare enrollees starting in 2025 and the ability of Medicare officials to negotiate prices on a narrow set of 10 drugs starting in 2026, potentially expanding to 20 medicines in 2029.

The package includes hundreds of billions of dollars in subsidies for investing in renewable-energy projects and producing energy from renewable sources—and includes credits to help factories retool to turn out electric vehicles or other products needed in a low-carbon economy. It also includes tax credits to help homeowners upgrade their homes with more energy-efficient products. It gives a $7,500 tax credit for purchasing electric vehicles, although with conditions that could make it hard to qualify.

The climate bill recently passed by the senate could knock thousands of dollars off the sticker price of electric vehicles, but it’s also redefining which cars are eligible. WSJ’s George Downs breaks down the new rules and what it means for the EV industry. Illustration: George Downs

The law creates a new 15% corporate minimum tax and a 1% excise tax on companies’ stock buybacks and sets aside roughly $300 billion for reducing the deficit. And it spends $80 billion over a decade on new workers and technology at the Internal Revenue Service.

Mr. Biden’s approval ratings have been dragged down by months of high inflation, driving expectations that Democrats will face losses in the coming election. But there were signs that high inflation is easing. The consumer-price index, a measure of what consumers pay for goods and services, was flat in July after rising for 25 consecutive months, as energy prices dropped. Last week, the average price of a gallon of unleaded gasoline in the U.S. fell below $4 for the first time since March.

The law is the product of a year of halting negotiations on Capitol Hill. Mr. Biden initially laid out a $3.5 trillion package, which was then whittled down to roughly $2 trillion. But after the bill, dubbed Build Back Better, was passed by the House, it was blocked in the Senate by centrist Sen. Joe Manchin (D., W.Va.). The negotiations on reviving the package appeared to have gone stale, but Mr. Manchin and Senate Majority Leader Chuck Schumer (D., N.Y.) announced a surprise deal last month after a series of closely held discussions that many senior Biden administration officials weren’t aware of.

The House and Senate both passed the legislation on party-line votes earlier this month without support from a single Republican lawmaker.