December 13, 2019

The House on Thursday voted 230-291 to pass House Speaker Nancy Pelosi's (D-Calif.) bill (HR 3) intended to lower prescription drug prices in the United States, while rejecting a competing bill introduced this week by House Republicans.

All House Democrats and two Republicans—Reps. Jaime Herrera Beutler (R-Wash.) and Brian Fitzpatrick (R-Pa.)—voted in favor of the measure, while the remaining Republicans voted against the bill. The bill now moves to the Senate, but Senate Majority Leader Mitch McConnell (R-Ky.) has said the chamber will not take up the measure, Modern Healthcare reports. In addition, President Trump has said he would veto the bill if it passes through Congress.

Bill details

Pelosi's bill, called the Elijah E. Cummings Lower Drug Costs Now Act, would allow the HHS secretary to negotiate prices for a minimum of 50 and a maximum of 250 high-cost drugs each year.

The bill would establish a drug price ceiling for the negotiations based on the prices paid for the drugs in other countries—which is somewhat similar to a White House proposal that would tie payments for drugs covered by Medicare Part B to certain international prices. According to STAT News, that ceiling would be set at 120% of the average prices paid in Australia, Canada, France, Germany, Japan, and the United Kingdom.

Pharmaceutical companies that refuse to negotiate prices with HHS would face a 65% tax on the drug's annual gross sales from the previous year. That penalty would increase by 10 percentage points for every quarter that a deal remains unstruck, with the penalty maxing out at 95%. If a drugmaker negotiates a price with HHS but then overcharges Medicare or does not provide other payers the negotiated price, HHS could levy a civil penalty equivalent to 10 times the difference between the negotiated price and the offered price.

The bill also would set limits on prescription drug price increases, requiring pharmaceutical companies to either lower prices if the drugs have experienced price hikes at rates above inflation since 2016, or pay a rebate worth the entire difference in the price above inflation to the Department of the Treasury. The price limits would apply to drugs covered by Medicare Parts B and D, as well as those covered by employer-sponsored health plans.

Further, the bill would create an out-of-pocket maximum of $2,000 for prescription drugs covered by Medicare Part D and alter the percentages of beneficiaries' drug costs that insurers and drugmakers must cover.

In addition, the bill would require that the copayment for a drug under participating employer-sponsored health plans not exceed the negotiated price, require federal investigators to examine the effects of price negotiation and extending the inflation cap to employer-sponsored plans, and ensure data collected under the bill is not duplicative.

The bill also would increase Medicare Part B reimbursements for biosimilars for five years. Under current rules, Medicare Part B reimburses providers a 6% markup of a biosimilar's average sales price, but the bill would increase that rate to an 8% markup of the drug's average sales price.

The bill also includes new price transparency requirements for drugmakers and expanded eligibility for the low-income subsidies offered in Part D. In addition, the bill would invest savings generated from the bill into expanded Medicare benefits, including dental, hearing, and vision coverage.

Further, the bill would increase NIH funding for biomedical research and allocate $10 billion for efforts to combat the U.S. opioid epidemic, and includes funding for community health centers.

The bill also includes amendments approved Thursday that would:

  • Apply government-negotiated drug prices to Veterans Affairs and federal employee health plans;
  • Create a grant program to help rural hospitals cover the start-up costs for a Graduate Medical Education (GME) program or partnering with hospitals that having existing GME programs;
  • Create a grant program to help states reduce barriers associated with administrative work in health care and require HHS to reduce administrative costs by 50% over 10 years;
  • Establish a pilot program intended to aid small biopharmaceutical companies;
  • Include access to biosimilars as a quality metric for Medicare Advantage and Part D star ratings;
  • Require HHS to identify and suggest incentives to help develop critical and life-threatening conditions that do not have treatments;
  • Increase NIH funding for clinical trials;
  • Prohibit spread pricing by pharmacy benefit managers in Medicaid plans;
  • Require HHS to substitute another department official in for the HHS secretary on drug pricing negotiations during instances in which the HHS secretary might have a conflict of interest; and
  • Require pharmaceutical companies to disclose prices in TV ads for their products.

Reaction

Pelosi applauded the bill's passage, saying, "Prescription drug prices are out of control."

Rep. Max Rose (D-N.Y.) said, "This bill does not cater to a base, this bill does not cater to big pharma, but this bill does cater to that family tonight that has to choose between paying for prescription drugs or putting food on the table."

But Republicans said Pelosi's bill was purposefully intended to undermine support for a bipartisan measure to lower prescription drug prices that the Senate Finance Committee approved earlier this year, the Journal reports.

House Minority Leader Kevin McCarthy (R-Calif.) dismissed the bill as "political posturing." He said, "It won't become law. It will be another talking point."

Pharmaceutical companies and some business groups have raised concerns that Pelosi's bill could harm drug development. For example, the U.S. Chamber of Commerce in a letter sent Wednesday to House lawmakers wrote, "This legislation's government price controls on prescription drugs would threaten to cut critical medical research dollars."

The Congressional Budget Office this week projected that the bill would result in drugmakers bringing eight fewer drugs to market over 2020-2029—down from the 30 new drugs FDA approves annually on average under the current law—with the figure growing to 30 fewer drugs from 2030-2039.

Holly Campbell, a spokesperson for Pharmaceutical Research and Manufacturers of America, said, "With [Thursday's] vote, the House prioritized politics at the expense of innovation, American jobs and hope for patients. The bill is unprecedented in size and scope and just one part of the legislation would reduce revenue to the biopharmaceutical industry by $1 trillion."

But John Arnold, a billionaire who has financed several groups and efforts advocating for reducing prescription drug prices, said the bill could help patients, Modern Healthcare reports. "It takes courage to stand up to Big Pharma and to resist the industry's scare tactics. We are pleased to see lawmakers stepping up and putting their constituents' needs first," he said.

Pelosi's bill could play key role in 2020 elections

According to the Wall Street Journal, Democrats said the bill's approval in the House shows that the Democratic party can follow through on campaign promises to lower prescription drug prices.

The measure likely "will be a key plank in Democratic efforts to maintain control of the House of Representatives in 2020," with the Democratic Congressional Campaign Committee planning to target voters in swing states with ads regarding the bill, the Post reports.

In addition, the bill serves as an indication of House Democrats might look to lower prescription drug prices if they gain control of the White House and both chambers of Congress in 2020, according to the Post.

House rejects GOP alternative

The House on Thursday also voted 201-223 to reject a bill introduced Monday by House Republicans that was intended to serve as an alternative to Pelosi's measure. The GOP House measure had several provisions in common with the Senate Finance Committee's bill. All Republicans and eight Democrats in the House voted to approve the bill, but it did not gain the votes needed to advance.

Pelosi said the House GOP bill did not go far enough to lower prescription drug prices (Armour, Wall Street Journal, 12/12; Cohrs, Modern Healthcare, 12/12; Abutaleb, Washington Post, 12/12; Facher, STAT News, 12/12; Wilkerson, Inside Health Policy, [subscription required]).

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