Weekly Policy Update: House Speaker Nancy Pelosi Releases Proposal on Prescription Drug Pricing

On September 19, House Speaker Nancy Pelosi released a long-anticipated proposal intended to reduce prescription drug prices. H.R. 3, the Lower Drug Costs Now Act of 2019, includes the following provisions:

  • Allows Medicare to negotiate prescription drug prices for 25 – 250 brand-named drugs per year. The price cap negotiated by Medicare would be no more than 1.2 times the volume-weighted average price of six other countries and would also apply to the commercial insurance market. If a manufacturer refuses to negotiate with Medicare or leaves the negotiation before agreeing to a “maximum fair price,” they will be assessed an escalating excise tax levied on their annual gross sales – starting at 65% and increasing by 10% every quarter the manufacturer is out of compliance, until they reach 95%.
  • Imposes an inflation rebate on all drugs in Medicare Part B and Part D. This means if a manufacturer raises the price of a drug above the rate of inflation since 2016, they can either lower the price or pay the entire price over inflation in the form of a rebate back to the U.S. Treasury.
  • Creates a cap on the costs for prescription drugs for Medicare Part D beneficiaries by setting an annual out-of-pocket limit of $2,000.
  • Restructures the liability in the coverage phases of Medicare Part D. Manufacturers would be required to pay 10% of the cost in the initial coverage phase and 30% of the costs in the catastrophic coverage phase.

Over the past few months, CBSA has expressed opposition to a number of these provisions that we’ve seen included in other legislative proposals, including allowing government negotiation in Medicare and imposing inflation rebates in Medicare Part B and D. Such proposals would destabilize the market-based system that determines the value of medicines and deter investment in life sciences innovation.

We will continue coordinate with members and industry partners to voice our strong concerns about these proposals and educate lawmakers about how these policies will limit patient access and stifle medical innovation.

A legislative hearing on the bill is set for Wednesday, September 25 in the House Energy and Commerce Committee’s Subcommittee on Health. More information can be found here.

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