US House of Representatives Passes Drug-Pricing Plan
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The US House of Representatives has passed a proposed drug-pricing plan (H.R.3, Elijah E. Cummings Lower Drug Costs Now Act).

The bill, which was first introduced in the House in September 2019, would establish a fair price negotiation program, put in protections from excessive price increases under the Medicare program (the US healthcare program for people over the age of 65), and establish an out-of-pocket maximum for enrollees of Medicare Part D (the prescription drug program under Medicare). The plan has been criticized by industry trade groups, such as the Pharmaceutical Research and Manufacturers of America (PhRMA) and the Biotechnology Innovation Organization (BIO), which say the bill among other things, would reduce pharmaceutical innovation.

Under the bill, the US Health and Human Services Secretary would be required to select and negotiate the prices of at least 25 negotiation-eligible drugs per year and would be authorized to negotiate prices for up to 250 negotiation-eligible drugs branded drugs per year by directly negotiating with manufacturers to establish a maximum price. Those branded negotiation-eligible drugs would be those that have been identified by the US federal government as costing the most to the federal government and for which there is no generic or biosimilar competition. The maximum negotiated price would be capped at 120% based on international pricing from the average price paid by Australia, Canada, France, Germany, Japan and the UK. If there is no international price, which is often the case with a new drug, under the bill the maximum fair price negotiated for a selected drug would generally be 85% of the average manufacturer price. The negotiated prices would be available to all purchasers not just Medicare beneficiaries.

The proposed legislation would also impose non-compliance fees on companies that do not enter into negotiations by implementing a tax on the manufacturer’s annual gross sales beginning with 65%, plus an additional 10% for every quarter the manufacturer does not comply, to a maximum of 95%.

Meanwhile, the US Senate has its own drug-pricing plans. One such measure is the Prescription Drug Pricing Reduction Act (S. 2543), initially cosponsored by Senators Chuck Grassley (R-IA), the Senate Finance Committee Chairman, and Ron Wyden (D-OR), the Ranking Member of the Senate Finance Committee. The bill, which was introduced earlier this year, seeks to lower prescription drug prices in the Medicare and Medicaid programs, improve transparency related to pharmaceutical prices and transactions, lower patients’ out-of-pocket costs, and ensure taxpayer accountability.

Source: US House of Representatives

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