- The House Energy and Commerce, Ways and Means, and Education and Labor Committees have reintroduced the Elijah J. Cummings Lower Drug Costs Now Act (HR 3) to leverage the negotiating power of Medicare and make these prices available to all commercial plans as well, while, in response, Republican leaders have released the Lower Costs, More Cures Act to lower drug costs for Americans without limiting access to cures
- Most notably under HR 3, Medicare—specifically the Department of Health and Human Services (HHS) Secretary—would be empowered to negotiate drug prices directly with pharmaceutical companies, these negotiated drug prices being made available to Americans with private insurance, too, and a maximum price would be applied, based on the drug’s average price (dubbed the “Average International Market (AIM) price”) among Australia, Canada, France, Germany, Japan, and the United Kingdom
- While the House and Senate seem favorably poised to oversee the passage of HR 3, the pharmaceutical industry remains opposed to such legislation, finding these efforts aimed at drug prices to be misguided; instead, PhRMA President and CEO Stephen J. Ubl put forth a three-step approach to building a better healthcare system in the future that ensures scientific advances are both accessible and affordable
WASHINGTON, D.C., United States – The House Energy and Commerce, Ways and Means, and Education and Labor Committees have reintroduced the Elijah J. Cummings Lower Drug Costs Now Act (HR 3) to leverage the negotiating power of Medicare and make these prices available to all commercial plans as well.
HR 3 was previously stalled in the Senate after passing the House of Representatives in 2019, but at an event hosted by healthcare advocacy coalition Protect Our Care at the end of March, U.S. Speaker of the House Nancy Pelosi said that Democrats would renew their efforts to pass HR 3—for Pelosi, excluding this legislation either at large or in the upcoming infrastructure bill would be a “missed opportunity.”
The Act was reintroduced this past week, unveiled separately from U.S. President Joe Biden’s American Families Plan—in fact, Democrats are urging Biden to include some provisions in this plan. HR 3 is essentially the same as before, with a focus on benchmarking drug prices to those found abroad and ensuring these prices are available to commercial insurance plans, too.
HR 3 Empowers Medicare, Bases Drug Prices on “Average International Market” Price
Under HR 3, Medicare—specifically the Department of Health and Human Services (HHS) Secretary —would be empowered to negotiate drug prices directly with pharmaceutical companies, and these negotiated drug prices would be made available to Americans with private insurance. A maximum price would be applied, based on the drug’s average price (dubbed the “Average International Market (AIM) price”) among Australia, Canada, France, Germany, Japan, and the United Kingdom.
Any savings reaped from lowering drug prices would be reinvested in innovation and the search for new cures and treatments at the National Institutes of Health (NIH) and the Food and Drug Administration (FDA). Further, Medicare beneficiaries would have a $2,000 out-of-pocket (OOP) limit on prescription drug spending, and companies that have raised their drug prices in Medicare Parts B and D above the rate of inflation since 2016, have the option to either lower their prices or pay the entire price above inflation in a rebate back to the U.S. Treasury.
A press release from Pelosi’s office reads: “The Elijah E. Cummings Lower Drug Costs Now Act is essential legislation that will make a transformative difference in the lives of hard-working American families, millions of whom cannot afford their medicines, especially in this time of pandemic. It is unacceptable that Americans have to pay three times more for their prescriptions than what Big Pharma charges in other countries for the same medicine, all while Big Pharma rakes in massive profits.”
When HR 3 was first introduced, Pricentric Analysts found it would significantly impact the pharmaceutical industry: it would lead to major price reductions of the costliest drugs for Medicare – Celgene’s Revlimid (lenalidomide), Sanofi’s Lantus (insulin glargine), AbbVie’s Humira (adalimumab), and EMD Serono’s Januvia (sitagliptin), for example – ranging between 62% and almost 89%.
The push to peg drug prices in the States on those found elsewhere isn’t new. Former U.S. President Donald Trump signed his four Executive Orders toward the end of his incumbency, the most radical of which, the Most-Favored Nation (MFN) rule, sought to benchmark U.S. prescription drug prices based on the lowest cost found among similar economic countries. And recently, Senator Bernie Sanders introduced a package of bills aimed at “drastically” reducing prescription drug prices in the U.S.—as with HR 3, Sanders’ “Prescription Drug Price Relief Act” sought to make sure Americans pay no more for patented, brand name prescription drugs than the median price of the drug in Canada, France, Germany, Japan, and the United Kingdom.
Republicans Remain Against HR 3, Introduce Alternative Plan
While the House and Senate seem favorably poised to oversee the passage of HR 3, Republicans remain against the bill, and Energy and Commerce Committee Republican Leader Cathy McMorris Rodgers, Ways and Means Committee Republican Leader Kevin Brady, and Education and Labor Committee Republican Leader Virginia Foxx in response released legislation—the Lower Costs, More Cures Act—to lower drug costs for Americans without limiting access to cures.
In a letter to fellow Republicans, the Leaders stated: “As you know, [Pelosi] introduced H.R. 3 in the previous Congress—before the COVID-19 pandemic. It was bad policy then, and it’s even worse policy today for the hardworking people of this country who are seeking normalcy and an improved quality of life. The pandemic has further proven we can’t let the Speaker’s government price control scheme stop the development of lifesaving cures and treatments.”
According to the Leaders, the Lower Costs, More Cures Act would lower costs without jeopardizing cures; leads to lifesaving new cures and innovation, promote more low-cost options for patients who need them, and stop drug companies from gaming the system; doesn’t make America more reliant on China; provides first-ever out-of-pocket cap for seniors in the Medicare Part D program; caps the cost of insulin for seniors in the Medicare Part D program; empowers patients with more drug price transparency and removes uncertainty at the pharmacy counter; cuts the cost of cancer treatment and other drug administration for Medicare beneficiaries by as much as half; and enables strong, pro-America trade agreements to end American subsidizing of other developed countries’ healthcare.
PhRMA Says “Draconian” Price Setting Policies Not the Answer for US
The pharmaceutical industry still remains opposed to such legislation, finding these efforts aimed at drug prices to be misguided.
Considering the rapidity with which the industry responded to the coronavirus, Pharmaceutical Research and Manufacturers of America (PhRMA) President and CEO Stephen J. Ubl put forth a three-step approach to building a better healthcare system in the future that ensures scientific advances are both accessible and affordable.
The three key pillars of Ubl’s policy proposal are: ending the pandemic and building a more resilient system, making medicines more affordable, and building a more just, equitable healthcare system. PhRMA’s proposals include preserving public and private partnerships to boost the biopharmaceutical ecosystem, focusing on public health issues, making medicines more affordable by honing in on insurers who don’t pass along savings to patients, changing Medicare Part D practices, and ensuring a more just, equitable healthcare system.
For PhRMA, “draconian” price-setting policies from abroad aren’t the answer for the U.S.; rather, there needs “responsible solutions” to help lower healthcare costs, including prescription drugs. Such “common-sense” proposals include capping seniors’ OOP costs in Medicare Part D, allowing Medicare beneficiaries to spread their medicine OOP costs through the year, and making sure savings negotiated in the supply chain are shared with patients at the pharmacy counter.
The industry group has urged policymakers to interrogate the supply chain to find better ways to generate savings that neither hinder access to the best treatments for Americans nor negatively impact biomedical innovation. In a series of recent reports, PhRMA has sought to shed light on hospital and pharmacy benefit manager (PBM) practices that have led to profits not savings.
Ubl commented, “Many actors – including hospitals, insurers and other middlemen – influence what patients pay out of pocket for prescription medicines. In recent years, nearly half of spending on brand medicines went to someone other than the research companies that developed the medicines. This new report brings transparency to the role hospitals often play in determining the cost of medicines and ultimately what patients pay out of their own pockets.”
Even further, PhRMA has taken aim at “perverse” market incentives that have driven up insulin prices in the U.S., challenging the narrative that insulin prices are spiking. PhRMA argued that the net prices for the most used classes of insulin have gone down by 40%-50%, on average, since 2014, making insulins less expensive today than in 2017. Further, PhRMA said that the net price of insulin was lowered by 83%, on average, last year through market dynamics. The problem is, patients are not sharing in on any of these savings, said PhRMA.
EVERSANA uniquely has the people, methods, and tools to assist businesses in navigating any changing pharmaceutical policies, even in such unsure times. This expertise is built on our combined decades of experience solving problems in and building tools for global pricing intelligence, global visibility, and product launch expertise, which puts us in a trusted position to advise clients on how to handle these changes.
At the same time, Pricentric Insights strives to deliver accurate, comprehensive insights on major policy and regulatory changes, as well as HTA decisions and drug approvals, in over 100+ markets around the world. Our team of researchers checks a database of over 700+ reliable sources, including everything from government databases to local newspapers, to provide readers with in-depth updates on the ever-changing pricing and reimbursement landscape. In addition, we provide conference coverage and utilize our team of consultants to detail how major policy changes, such as HR 3, can impact market access and the global pricing landscape.