House passes Lower Drug Costs Now Act

Legislation aimed at lowering the cost of prescription drugs passed in a recent House vote. 

After making its way through committees, H.R.3, or the Elijah E. Cummings Lower Drug Costs Now Act,  passed in the House by a vote of 230 to 192 on December 12th. The bill passed almost entirely on party lines, with only two Republicans voted for the bill while no Democrats voted against it. 

The bill is geared toward Medicare beneficiaries, adding new vision, dental, and hearing benefits to the program, and perhaps most notably, capping out-of-pocket drug expenses at $2,000. Among these provisions, the Secretary of the Department of the Health and Human Services (HHS) would also be permitted to negotiate prices annually for up to 250 prescription drugs on the market, including commonly used drugs such as insulin and lisinopril.   

 

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Since 2003, the Medicare Modernization Act has barred the HHS secretary from negotiating prices for prescription drugs covered by Medicare. As a result, private plans that offer Medicare Part D benefits negotiate drug prices independently. 

Giving Medicare bargaining power, according to the bill’s proponents, is necessary because private plans often do not possess the leverage to lower costs sufficiently. 

The largest consumer group in the world – Medicare – ought to be able to negotiate so that Americans do not pay more than other comparable countries. It is absurd that pharmaceutical companies hold all the cards right now,” said Rep. Kim Schrier, who spoke to State of Reform after the October Ways and Means Committee markup for H.R.3. 

The bill is written to enable the HHS secretary to prioritize drugs most costly to Medicare and the health care system as a whole. These drugs would be identified based on their price and sales volume. For its timeline regarding the negotiations, the bill would require at least 25 drugs to be negotiated in the first year, and at least 50 in the second year. 

Under the legislation, the maximum negotiated prices in the United States would be prevented from exceeding 1.2 times the average prices in similarly developed countries, specifically Australia, Canada, France, Germany, Japan, and the United Kingdom.

Additionally, the bill would extend the negotiated prices to individuals covered in the private market. 

Before the bill’s passage, the Trump Administration released a statement declaring that the president would veto the bill as it’s currently written. 

In its current form, H.R. 3 would likely undermine access to lifesaving medicines. The bill creates a statutory scheme for ‘negotiation’ between the Secretary of Health and Human Services and pharmaceutical manufacturers regarding the price of prescription drugs, but the penalty for failing to reach agreement with the Secretary is so large that the Secretary could effectively impose price controls on manufacturers,” reads an excerpt from the statement released by the Executive Office of the President. 

The opposition to price controls stems primarily from Republican lawmakers, who view them as a slippery slope toward government interference in other private markets.   

When asked about this opposition from her colleagues across the aisle, Rep. Schrier questioned the uniqueness of such an arrangement.  

Look — there’s broad bipartisan support when the Veterans Administration negotiates drug prices to get the best deal possible for veterans, so I don’t see why doing the same for seniors should be any different. Negotiating for lower prices is the definition of capitalism.” 

The Trump Administration also says the bill would “dramatically reduce the incentive to bring innovative therapeutics to the market”.

Protect Our Care, an organization aligned with the Democratic Party, claims that research disproves the idea that H.R. 3 would halt innovation. The organization cites an analysis from STAT News, which found that major drug companies often outsource research and development to third parties, such as universities and academic centers. 

The president likely won’t have the opportunity to veto the bill as the Republican-controlled Senate is unlikely to bring it to the floor. Some have reported, however, that its passage may pressure Senate Majority Leader Mitch McConnel to take up future drug-price legislation with more bi-partisan support.