Centrist Democrats in the United States House of Representatives are working on introducing an alternate approach to drug pricing legislation than what is outlined in the wide-ranging H.R. 3 bill. While H.R. 3 in its current form would allow the Health and Human Services Secretary to negotiate lower drug prices, this proposed legislation would allow negotiation in much narrower circumstances.
Establishes a Cap on Senior Drug Costs
The proposed legislation, known as the Reduced Costs and Continued Cures Act, would establish a cap on out-of-pocket drug costs for Medicare beneficiaries. Those with incomes 300% or less of the Federal Poverty Level would have a $1,200 annual out-of-pocket cap; those with incomes between 300% and 400% of the Federal Poverty Level would have a $1,800 annual out-of-pocket cap; and those with incomes above 400% of the Federal Poverty Level would have a $3,100 annual out-of-pocket cap. The legislation also establishes a $50 monthly out-of-pocket cap for insulin in 2022 (would be reviewed and revised annually).
To further ease the burden on seniors, the legislation includes a “smoothing” mechanism that minimizes the impact of prescription drug costs on seniors with fixed incomes by allowing them to pay out-of-pocket expenses throughout the calendar year through monthly installments. For example, a senior who reached his or her $1,200 annual out-of-pocket cap can “smooth” out the costs the following year by making 12 monthly payments of $100 instead of paying the entire $1,200 at once.
As noted above, the legislation also would allow Medicare to negotiate drug prices in Part B for drugs that are outside of the exclusivity period and do not have any competition on the market. The HHS Secretary can negotiate with manufacturers of those products to obtain price concessions somewhere between 25 and 35%.
Transparency Measures
The legislation also has transparency measures included, such as establishing reporting requirements for Pharmacy Benefit Managers (PBMs) so that employers can know the actual cost of prescription drugs and can help ensure discounts are passed on to consumers. The legislation also would require drug manufacturers to explain any significant year-over-year price increases as well as high launch prices.
Focuses on Competition in the Marketplace
The legislation would also focus on preserving innovation, promote more low-cost options for patients by bolstering marketplace competition, and stop drug companies from “gaming the system.” To that end, it would halt “pay for delay” agreements when brand-name manufacturers pay generic manufacturers to keep the generic equivalent of the branded drug off the market. It would also end the practice of manufacturers taking advantage of exclusivity laws and “blocking” generic applications.
The proposed legislation would further allow the Federal Trade Commission (FTC) to prevent “product hopping,” where companies extend their exclusivity on an expiring patent by switching patients from an established drug to a “new” version, which can perpetuate market monopolies and prevent generics from coming – and making headway – in the market.
What’s Next?
The plan is likely to create some waves with House Democratic leadership as they are working on pushing their $3.5 trillion spending bill through the House amidst very narrow voting margins – only three Democrats can vote against the measure in order for it to move through the House.
[…] Still, congressional lawmakers have yet to reach a consensus on whether to include such a provision in the major reconciliation bill aimed at funding President Joe Biden’s domestic policy agenda and enhancing social programs. Republican lawmakers generally oppose efforts to impose price restraints on prescription drugs. Democrats in the House are pushing a bill that would allow changes in Medicare drug policies, including negotiations of prices for some medications. The bill passed the House last year but has run into opposition this fall. A few moderate Democrats have introduced a narrower approach. […]