House Passes Drug Pricing Bill

On a near party-line 230-192 vote with only two Republicans joining all Democrats, the House approved 12/12 H.R. 3, the Elijah E. Cummings Lower Drug Costs Now Act. It now goes to the Senate where it will face significant opposition. President Donald Trump has already said he would veto it if it came to him.

Key elements in the 450-page bill include: 

•          Authorizing the HHS secretary to negotiate with drug companies on the price of their drugs for Medicare. Only 250 select drugs would be eligible for negotiation and the secretary would have to negotiate a minimum of a few dozen drugs each year. The costs of certain drugs in certain other countries would be used as a reference in the negotiations.
•          Limiting out-of-pocket costs for Medicare enrollees to $2,000 annually. Patients would pay nothing after they hit the cap, drug companies would pay 30%, and Medicare and health plans would cover the remainder.
•          Holding drug price increases to the rate of inflation by forcing companies to give rebates to the government if they raise prices for drugs in Medicare faster than inflation.

The Congressional Budget Office (CBO) found the bill would lower prices by about 50% for drugs subject to negotiation and save $456 billion over 10 years. The bill then invests those savings in expanding Medicare benefits to include hearing, dental, and vision care. On the other hand, the CBO also found the bill would result in eight fewer drugs being developed over a decade, out of about 300 usually introduced in that time period.

Pharmaceutical Research and Manufacturers of America (PhRMA) president Stephen Ubl says that by approving H.R. 3, the House “prioritized politics at the expense of innovation, American jobs, and hope for patients. This bill is unprecedented in size and scope and just one part of the legislation would reduce revenue to the biopharmaceutical industry by $1 trillion. This would lead to the loss of anywhere from 30 to 100 or more new medicines over the next 10 years, leaving patients with some of the serious diseases like Alzheimer’s, ALS, and cancer without hope for the treatments and cures they need.”

PhRMA says a better approach would be to work on policy solutions that have bipartisan support such as capping out-of-pocket Medicare costs, establishing lower and more predictable cost-sharing for patients, reforming the rebate system and requiring insurers to share negotiated savings with patients, and promoting value-based payment for medicines.