Prescription drug prices and spending are hot topics and for good reason. U.S. pharmaceutical prices are 2.56 times higher than prices seen in 32 other nations, according to a report released by the Rand Corporation.[1] For brand-named drugs that number multiple jumps to 3.44.[2] Retail prescription drug spending accounted for 10% of the total health care spend in 2019 and increased to 5.7% to $369.7 billion.[3]
President Biden, as recently as Wednesday, told Congress to permit Medicare to negotiate drug prices this year, but failed to include the measure in his infrastructure proposal despite pressure from Democratic lawmakers. Now it is up to Congress to craft legislation that will reduce the cost of prescription drugs in the U.S.
Will Congress be able to overcome pressure from powerful groups such as Pharmaceutical Research & Manufacturers of America (who spent $29 million lobbying Congress in 2019 and has 47 lobbying firms on retainer)?[4]
Here is the key legislation to watch:
Lower Drug Costs Now Act – H.R. 3 – (reintroduced on April 22, 2021; sponsored by Rep. Pallone (D-NJ))
- The purpose of the Lower Drug Costs Now Act is “[t]o establish a fair price negotiation program, protect the Medicare program from excessive price increases, and establish an out-of-pocket maximum for Medicare part D enrollees, and for other purposes.”
- This is a reintroduction of a bill that was originally introduced in 2019 and was passed by the House. The bill died in the Senate.
- This bill would cap drug prices at 120 percent of a drug’s average price in Australia, Canada, France, Germany, Japan and the United Kingdom.
- It grants the Centers for Medicare and Medicaid Services the authority to negotiate drug prices, particularly those covered by Medicare Part D.
- It would make the negotiated prices available to commercial payers.
- It would also create a $2,000 out-of-pocket limit on prescription drug costs for people on Medicare.
- If manufacturers do not comply with the legislation, they face significant monetary penalties depending on the violation, including 65% of the gross sales of the drug in question during certain noncompliance periods.
Additional legislation to watch:
Lower Costs, More Cures Act of 2021 – H.R. 19 – (reintroduced on April 21, 2021; sponsored by Rep. Rodgers (R-WA))
- H.R. 19 was released by House Republicans to compete with H.R. 3.
- It would place an overall cap on prescription drug spending in Medicare Part D.
- It contains some drug pricing transparency requirements.
Affordable and Safe Prescription Drug Importation Act – S. 920 – (reintroduced on March 23, 2021; sponsored by Sen. Sanders (I-VT))
- S. 920 would allow the importation of prescription drugs by wholesale distributors, pharmacies, and individuals.
Prescription Drug Price Relief Act of 2021 – S. 909 – (introduced on March 23, 2021; sponsored by Sen. Sanders (I-VT))
- S. 909 would end government-granted monopolies for manufacturers who charge drug prices that are higher than the median prices at which the drugs are available in other countries.
H.R. 2891 (introduced on April 28, 2021; sponsored by Rep. Nadler (D-NY))
- H.R. 2891 would prohibit prescription drug companies from compensating other prescription drug companies to delay the entry of a generic drug, biosimilar biological product, or interchangeable biological product into the market.
H.R. 2484 (introduced on April 13, 2021; sponsored by Rep. Porter (D-CA))
- H.R. 2484 would amend the Public Health Service Act and the Social Security Act to require pharmacies to disclose any differential between the cost of a prescription drug based on whether certain individuals use prescription drug coverage to acquire such drug
[1] https://www.rand.org/news/press/2021/01/28.html
[2] Id.
[3] https://www.cms.gov/newsroom/press-releases/cms-office-actuary-releases-2019-national-health-expenditures
[4] https://thehill.com/policy/healthcare/479403-phrma-spent-record-high-29-million-lobbying-congress-trump-administration; https://www.wsj.com/articles/how-the-drug-lobby-lost-its-mojo-in-washington-11582132499