It's official: House Dems to formally vote to pass Prescription Drug bill H.R. 3
Don't ask me why, but for some reason, in the midst of my pushing hard for the major ACA 2.0 bills to be passed (H.R. 1868 and H.R. 1884), I've written nary a word about another important (and actually more impactful if it were to be passed and signed into law) bill: H.R.3, the Lower Drug Costs Now Act of 2019:
This bill establishes several programs and requirements relating to the prices of prescription drugs.
In particular, the bill requires the Centers for Medicare & Medicaid Services (CMS) to negotiate prices for certain drugs (current law prohibits the CMS from doing so). Specifically, the CMS must negotiate maximum prices for (1) insulin products; and (2) at least 25 single source, brand name drugs that do not have generic competition and that are among the 125 drugs that account for the greatest national spending or the 125 drugs that account for the greatest spending under the Medicare prescription drug benefit and Medicare Advantage (MA). The negotiated prices must be offered under Medicare and MA, and may also be offered under private health insurance unless the insurer opts out.
The negotiated maximum price may not exceed (1) 120% of the 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 the bill's negotiation requirements are subject to civil and tax penalties.
The bill also makes a series of additional changes to Medicare prescription drug coverage and pricing. Among other things, the bill (1) requires drug manufacturers to issue rebates to the CMS for covered drugs that cost $100 or more and for which the average manufacturer price increases faster than inflation; and (2) reduces the annual out-of-pocket spending threshold, and eliminates beneficiary cost-sharing above this threshold, under the Medicare prescription drug benefit.
To be perfectly honest, I haven't read up nearly enough about the bill to write my own analysis, and prescription drugs have never been my main focus anyway, so here's an overview from the Commonweatlh Fund, which compares the House bill against a Senate bill on the same issue under consideration:
House Speaker Nancy Pelosi’s (D–Calif.) long-anticipated drug pricing plan — the Lower Drug Costs Now Act of 2019 (H.R. 3) — has shaken up the drug pricing debate. It gives Medicare the ability to negotiate drug prices, further fueling the partisan divide between Democrats and Republicans, but also includes policies similar to those championed by Senate Finance Committee Chair Chuck Grassley (R–Iowa), such as caps on price increases in Medicare Parts B and D, as well as changes to the Part D benefit design. The way the bill approaches drug price negotiation is similar to the Trump administration’s supposedly soon-to-be-released international price index (IPI) proposal, which has been under review at the Office of Management and Budget since June.
The following tables compare H.R. 3 based on the legislative text advanced by key committees of jurisdiction and key provisions of related proposals: the Prescription Drug Pricing Reduction Act of 2019 (S. 2543), advanced by the Senate Finance Committee in July; and the Advanced Notice of Proposed Rulemaking (ANPRM): Medicare Program, IPI Model for Medicare Part B Drugs, issued by the Centers for Medicare and Medicaid Services last October.See the link for details.
If it managed to pass and get signed into law, this would be, to put it in Joe Biden's words about the ACA, a Big F*cking Deal. It's extremely unlikely to go anywhere in the Senate under Mitch McConnell & GOP control, of course, but the House Dems appear to be ready to put that to the test anyway: This press release just came out from House Speaker Nancy Pelosi's office:
Pelosi, Hoyer, Pallone, Neal and Scott Joint Statement Announcing Floor Vote on H.R. 3
Washington, D.C. – Speaker Nancy Pelosi, Majority Leader Steny Hoyer, Energy & Commerce Committee Chairman Frank Pallone Jr., Ways & Means Committee Chairman Richard E. Neal and Education & Labor Committee Chairman Bobby Scott released the following joint statement:
“Next week, the House of Representatives will pass the Elijah E. Cummings Lower Drug Costs Now Act.
“We have now received enough guidance from CBO to bring the Lower Drug Costs Now Act to the Floor and to reinvest its savings in one of the most transformational improvements to Medicare since its creation.
“We are going to give Medicare the power to negotiate lower drug prices, and make those prices available to Americans with private insurance as well as Medicare beneficiaries. American seniors and families shouldn’t have to pay more for their medicines than what Big Pharma charges in other countries for the same drugs.
“Last year, House Democrats promised to lower health care costs by lowering the price of prescription drugs For The People. We are proud to deliver on that promise.”
Needless to say, the pharmaceutical industry is...not happy about this:
House Speaker Nancy Pelosi’s flagship proposal to curb prescription drug prices, the "Lower Drug Costs Now Act" ― H.R. 3 ― could come up for a vote in the chamber this month. The measure would allow Medicare to negotiate prices for a limited number of drugs, cap what seniors pay out-of-pocket at $2,000 and force companies that have raised prices beyond inflation since 2016 to either reverse the price or rebate the amount of the increase to the federal government.
And drug manufacturers are in full attack mode.
Take a recent Pharmaceutical Research and Manufacturers of America advertising message embedded in the popular, inside-the-Beltway “Politico Playbook PM” newsletter.
“Speaker Pelosi’s drug pricing plan would siphon $1 trillion or more from biopharmaceutical innovators over the next 10 years,” read the ad. “CBO’s preliminary estimate found this bill ‘would result in lower spending on research and development and thus reduce the introduction of new drugs.’”
The trade group’s statement represents a core drug-industry argument, deployed whenever lawmakers propose reining in drug prices: Efforts to limit what drug companies can charge means they won’t have the means or incentive to develop lifesaving medications. The argument also appears in ads like this one ― from America’s Biopharmaceutical Companies ― that highlight patients who say they depend on new medications to keep chronic conditions at bay.
But many experts contest the link between drug prices and pharmaceutical R&D. So PhRMA’s citation of the Congressional Budget Office ― an influential nonpartisan government agency ― caught our attention. We decided to look deeper.
As you'd probably expect, the bulk of PhRMA's fearmongering doesn't hold water:
In its advertisement, PhRMA cites a CBO analysis of the Pelosi-backed drug-pricing bill, H.R. 3. The ad suggests that the bill would “siphon $1 trillion or more from biopharmaceutical innovators over the next 10 years” and “reduce the introduction of new drugs.”
This claim misses lots of important context. The CBO’s analysis is preliminary, and it could change. The $1 trillion in forgone revenue is the upper limit of what that preliminary analysis predicts.
And even if you assume drug companies would lose this much in revenue, the number of drugs that wouldn’t make it to market would constitute a small fraction of what pharmaceutical companies typically produce, said experts. It’s further unclear that the forgone drugs would have major clinical value ― little evidence suggests they necessarily would.
Other analyses PhRMA pointed us to ― which might ostensibly support their claim ― don’t stand up to scrutiny.
This statement has some truth to it but omits crucial context that would give a radically different impression. We rate it Mostly False.
A left-leaning health care group is doubling its seven-figure advertising push for the passage of House Democrats’ drug pricing bill in an effort to counter industry and conservative opposition to the proposal, according to information shared exclusively with CQ Roll Call.
The effort, which will be paired with additional spending from other left-leaning health groups, comes as Speaker Nancy Pelosi of California announced the House will vote next week on legislation that would allow Medicare to negotiate prices for up to 250 prescription drugs a year.
Lowering drug prices is a bipartisan priority and polls show it is a top issue for voters. But nearly all Republicans oppose the House measure, saying it could harm innovation.
The groups will build on an ad push supporting the House bill earlier this year by the group Protect Our Care that focused on districts where freshmen Democrats were elected last year and won by President Donald Trump in 2016.
The campaign will double Protect Our Care's investment from $2 million to $4 million and expand the number of districts from 10 to 20. The ads will run on YouTube, which can be watched on televisions, phones and computers; Facebook; and Instagram, at least through the spring.
“We are doing our level best with the resources that we have to make sure that they know that we have their back,” said Brad Woodhouse, the executive director of Protect Our Care.
Setting aside the savings from private insurers, a preliminary cost analysis by the CBO from October put the savings in federal spending at $345 billion over a decade...
Title I of H.R. 3 would require manufacturers of certain prescription drugs to negotiate prices with the Secretary of Health and Human Services (HHS). Prices for those drugs could not exceed 120 percent of the average price in certain other countries. Other provisions also would affect prices for drugs, including limits on prices of drugs for which international prices are not available. If manufacturers did not enter into negotiations or agree to prices by specified dates or if they did not meet other conditions, they would be subject to an excise tax of up to 95 percent of the sales of those drugs.
CBO estimates that applying the provisions in title I to prescription drugs covered under Part D of Medicare would reduce federal direct spending for Medicare by $345 billion over the 2023-2029 period (see Table 1). JCT estimates that revenue collections from the excise tax in title I would not be significant. The largest savings would come from lower prices for existing drugs that are sold internationally, for which the price ceiling would be binding in most but not all cases, CBO estimates.
...but it sounds like the CBO has since completed their analysis and are putting the total federal spending savings even higher:
House Democratic leaders say the new CBO score puts the Pelosi drug pricing bill at $500 billion in savings over a decade, up from the initial scoring of $345 billion.
— Kimberly Leonard (@leonardkl) December 5, 2019