On December 12, 2019, the U.S. House of Representatives passed a major Democratic drug-pricing bill, H.R. 3, or the “Elijah E. Cummings Lower Drug Costs Now Act.” If enacted, HHS would be allowed to negotiate the prices of up to 250 drugs: 125 drugs covered by Medicare Part D that account for the greatest spending under the Medicare prescription drug benefit and Medicare Advantage plans, and 125 representing greatest net spending to the U.S. public at large.

H.R. 3 would require HHS to negotiate prices for certain drugs, including maximum prices for insulin products and at least 25 single source, brand-name drugs in 2023, followed by at least 50 drugs each year, beginning in 2024. For drugs selected for negotiation, prices would remain at negotiated levels until two or more generic or biosimilar versions of the drug are available. Medicare and Medicare Advantage plans would be required to offer the negotiated prices, although Medicare Advantage and Part D prescription drug plans would be authorized to negotiate an even lower drug price. The HHS-negotiated price would also be available to commercial payers as well as to employer and individual health plans.

The negotiated maximum price may not exceed (1) 120% of the weighted average price in Australia, Canada, France, Germany, Japan, and the United Kingdom; or (2) if such information is not available, 85% of the U.S. average manufacturer price. Drug manufacturers that fail to comply with H.R. 3’s negotiation requirements would be subject to an escalating tax penalty based on the annual gross sales of the drug selected for negotiation, as well as a civil monetary penalty.

H.R. 3 makes a series of additional changes to Medicare prescription drug coverage and pricing. H.R. 3 would, for example, require drug manufacturers to issue rebates to HHS for covered drugs that cost $100 or more and for which the average manufacturer price increases faster than inflation. H.R. 3 would also restructure the Medicare Part D benefit by establishing an annual out-of-pocket drug spending cap of $2,000 and eliminating the requirement that beneficiaries cover 5% of prescription costs after exceeding the “catastrophic” range.

H.R. 3 is unlikely to move through the Senate, but certain elements of the Elijah E. Cummings Lower Drug Costs Now Act are included in a bipartisan bill, S. 2543, the Prescription Drug Pricing Reduction Act (PDPRA), approved by the Senate Finance Committee this summer and revised earlier this month. The PDPRA includes the Lower Drug Costs Now Act’s drug manufacturer rebate requirements and the Medicare Part D annual out-of-pocket drug spending cap (set at $3,100 under the PDPRA). House Republicans have also introduced an alternative bill, called the “Lower Costs, More Cures Act.” The Lower Costs, More Cures Act would include a Medicare Part D spending cap of $3,100, requirements that drug manufacturers disclose pricing discounts, and a cap on insulin costs for seniors, among other drug pricing provisions that are summarized here.

The full text of H.R. 3 is available here, the PDPRA is available here (with a December 2019 updated version available here), and the Lower Costs, More Cures Act is available here.