House Speaker Unveils Drug Price Negotiation Bill

September 20, 2019

House Speaker Nancy Pelosi (D-CA) introduced a measure that would empower the government to annually negotiate with manufacturers the prices for 250 brand-name prescription drugs and require manufacturers to offer the negotiated prices to employer group health plans and individual plans.

A summary of H.R. 3 says the bill would:

  • Enable the HHS Secretary to directly negotiate with drug manufacturers a “maximum fair price” for 250 drugs that do not have two or more generic or biosimilar competitors on the market;

  • Require manufacturers to offer the negotiated price to employer and individual health plans;

  • Limit the price to no more than 120 percent of the volume-weighted average price in six other countries (a.k.a., international index pricing) while indexing future increases to inflation until sufficient competition enters the market;

  • Penalize manufacturers that refuse to negotiate with an excise tax equal to 65 percent of the annual gross sales of the drug in the prior year; and

  • Roll back price increases that have been above inflation since 2016 for all 8,000+ drugs in Medicare Part B and D.

Outlook:  Although the plan may be able to pass the House and some GOP Senators have indicated they would be open to empowering Medicare to negotiate prices, the Trump administration has been supportive of a bipartisan bill that passed the Senate Finance Committee in July.  Moreover, 9 of the 15 GOP committee members in the Senate voted against the bill, which will discourage Senate Majority Leader Mitch McConnell (R-KY) from bringing the bill up for a vote unless substantial changes are made to that legislation.  President Trump, however, indicated support for a bipartisan effort in welcoming Speaker Pelosi's measure via tweet.