The House Energy and Commerce Committee approved the comprehensive drug pricing bill by Speaker Nancy Pelosi on Thursday.
The Lower Drug Costs Now Act of 2019 establishes a fair price negotiation program and protects the Medicare program from excessive price increases. The legislation also sets an out-of-pocket maximum for Medicare part D enrollees.
Members of the House panel passed the drug pricing bill with 30-22 votes, making it a step closer for a vote on the House floor later this year.
Lowering drug prices is one of the primary goals of Speaker Pelosi and his fellow Democratic lawmakers in the Congress. With the legislation, pharmaceutical companies will no longer be able to continue their practice of selling prescription drugs to Americans at significantly higher prices than what they are charging in other countries.
Key provisions of the drug pricing bill
Under the bill, Medicare will have the ability to negotiate with pharmaceutical companies to reduce drug prices for all Americans including those with private insurance coverage. Pharmaceutical companies will face a penalty if they refuse to negotiate or fail to reach an agreement with the U.S. government to lower drug prices. It limits the out-of-pocket costs on prescription drugs to $2,000 a year for Medicare beneficiaries.
In his opening remarks at the Full Committee markup on the drug pricing bill, Energy and Commerce Chairman Frank Pallone, Jr. (D-NJ), said, “We have made some key changes to the bill since our legislative hearing based on feedback from members that will provide even more relief to Americans struggling with skyrocketing drug prices. These changes include:
- a phased-in increase of the minimum number of drugs the HHS Secretary must negotiate;
- a guarantee that a negotiated drug price will remain in place until there are two or more generic competitors;
- a new provision to negotiate prices for newly launched drugs;
- And a new title on drug transparency that is based on Rep. Schakowsky’s FAIR Drug Pricing Act.
He added, “This transformative legislation will level the playing for American patients and taxpayers, while ensuring seniors never lose access to the prescriptions they need.”
Drug pricing bill saves taxpayers $345 billion in Medicare Part D spending
A preliminary analysis of the legislation by the nonpartisan Congressional Budget Office (CBO) showed that American taxpayers will save $345 billion in Medicare Part D spending over 10 years.
According to the CBO, Americans will obtain the biggest savings from the provision allowing Medicare to negotiate with pharmaceutical companies to lower prices for as many as 250 of the most expensive drugs every year. That provision also allows Medicare to apply those discounts to private health insurance plans nationwide.
If the drug pricing bill is signed into law before the end of this year, the savings will start to kick in by 2023, according to the CBO.