On April 22, 2021, leadership from the United States House of Representatives reintroduced H.R. 3, the Elijah E. Cummings Lower Drug Costs Now Act. The legislation aims to lower the cost of prescription drugs for American patients, though there is some disagreement among political parties as to whether the methods will actually reach that end goal.
The legislation proposes a new process that would allow the Secretary of Health and Human Services (HHS) to negotiate drug prices in Medicare and make those same negotiated prices available to commercial health insurance plans. The HHS Secretary would select and publish a list of drugs that are eligible for negotiation (to begin with at least 25 in 2024 to be followed by at least 50 in 2025 and annually thereafter) and then enter into manufacturer agreements for a “maximum fair price” for those drugs. The maximum fair prices would then be published in the Federal Register and manufacturers who do not provide the applicable maximum fair price to “fair price eligible” individuals would be subject to civil monetary penalties of ten times the difference between the price charged and the maximum fair price and an additional civil monetary penalty not to exceed $1 million per violation.
It also includes a provision that would cap Medicare beneficiaries’ out-of-pocket spending on prescription drugs at $2,000 per year. If passed, the legislation would also require drug manufacturers to pay a rebate back to the federal government if they increase the price of their prescription drugs faster than inflation.
The bill also has a transparency component, which would require manufacturers to report certain price increases to HHS. HHS would then in turn post those increases to its website.
PhRMA Reaction
Pharmaceutical Research and Manufacturers of America (PhRMA) President and CEO Steve Ubl, released a statement after the proposal was released by House leadership, saying, “The American people want to end the pandemic, get the economy back on track and make health care more affordable and predictable. Instead, House leaders have introduced the same old divisive drug pricing proposal that will put more barriers between patients and their medicines. It will also destroy an estimated one million American jobs, cede our leadership in life sciences, and stifle the development of new treatments, while failing to address the broader challenges facing patients. It’s unfortunate House leaders are reintroducing this partisan bill, particularly as we continue to fight a pandemic. The American people deserve a better approach, and that’s why we put forward a set of ideas that will lower what patients pay at the pharmacy and protect access to medicines and future innovation. The status quo isn’t working, and we’re willing to do our part to deliver the kind of responsible solutions all patients need.”
PhRMA also notes that in releasing their bill, House leaders pointed to a Kaiser Family Foundation poll that shows strong support for government negotiations in Medicare. However, it’s important to note that in the exact same poll, Kaiser Family Foundation found, “… the share in favor drops sharply when supporters hear opponents’ potential arguments that it could lead to less research and development of new drugs (31% still favor while 66% oppose) or that Medicare might not cover some prescription drugs (29% still favor while 67% oppose).”
A hearing has been scheduled on this bill and several others for Tuesday, May 4, 2021.