Lower Drug Prices Overview

November 12, 2019
Est. Reading: 3 minutes

What is the Lower Drug Costs Now Act of 2019?

H.R. 3, the Elijah E. Cummings Lower Drug Costs Now Act (cited as the Lower Drug Costs Now Act of 2019), is a bill before the House that is intended to make prescription drugs more affordable for those in the Medicare program. The bill also seeks to maintain Medicare’s future viability. H.R. 3 will accomplish this by making it legal and required for the Centers for Medicare and Medicaid Services to negotiate drug prices in the U.S. at levels comparable to those set by pharmaceutical companies for the same drugs sold in foreign industrialized markets.

More formally, H.R. 3 has been introduced “to establish a fair price negotiation program, protect the Medicare program from excessive price increases, and establish an out-of-pocket maximum for Medicare part D enrollees, and for other purposes.”

What does this bill have to do with the American pharmaceutical industry?

If H.R. 3 becomes law:

  • It will become legal and required for the Centers for Medicare & Medicaid Services (CMS) to negotiate prices for drugs meeting specific criteria and including insulin. The negotiated prices must be offered under Medicare and Medicare Advantage (MA). Private insurers may also be offered the negotiated price.
  • The negotiated maximum price may not be higher than 120% of the average price in specific other industrialized companies. Drug companies failing to comply will face civil and tax penalties.
  • The bill also includes rebates from drug manufacturers to CMS for covered drugs that have prices that rise more rapidly than the increase in inflation and reduces the annual out-of-pocket spending threshold.

Note: Changes to the original bill were made before approval by two Committees: Specifically, Energy and Commerceintroduced a price cap for new negotiated drugs until at least two or more generic competitors exist, as well as a phased-in increase in the minimum number of drugs Medicare must negotiate from 25 to 35. Education and Labor chiefly introduced clarification of the out-of-pocket cost limit and the requirement for GAO to conduct a study on the implementation of the Fair Price Negotiation Program, etc.

What’s happened in the House so far?

To date in 2019:

  • Sep 19th – The bill was introduced in the House (116th Congress 2019-2020) by Democratic Messrs. Pallone of New Jersey for himself, Neal of Massachusetts, and Scott of Virginia. The bill was then referred to three committees: Energy and Commerce; Ways and Means; Education and Labor, “in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
  • Sep 20th – The Committee on Energy and Commerce refer the bill to its Subcommittee on Health, with Hearings held on the 25th.
  • Oct 17th – A Committee Consideration and Mark-up Session held, leading to a roll call vote that was carried by the ayes with a vote of 27-21.
  • Oct 22nd – The bill, with changes noted above, reaches the Ways and Means Committee for a Consideration and Mark-up Session where it passes with a vote of 30-22.

What happens next?

H.R. 3 will go before the full House in mid-November. The bill, having passed in each committee, is expected to receive approval by the House. However, the process will not be without conflict between progressives and moderates in the Democratic party. Disagreement over the bill with Republicans is also anticipated, given that they have a measure of their own to propose in the Senate.

More Coverage to Come:

Positions Taken by Major Stakeholders

The Lead-Up to the House Vote

The Anticipated Benefits of the Act

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