House Democrats have unveiled the broad details of a long-anticipated plan to lower prescription drug costs, and insulin is the only drug singled out in the summary of the proposed legislation.
The legislation, H.R. 3, would require the U.S. government to aggressively and directly negotiate drug prices with manufacturers, according to the summary. The bill aims to align U.S. prescription drug costs for some of the most expensive and widely-utilized medications with the price of these drugs in six other industrialized nations, and to keep annual price increases from outpacing the rate of inflation.
Specifically, the legislation would empower the Secretary of the Department of Health and Human Services (HHS) to draw up a list of 250 brand-name drugs that lack competition because there is no generic or biosimilar versions of the drugs on the market. The HHS Secretary would include drugs on the list which, if negotiated, would provide the chance for the greatest overall savings to “taxpayers, patients, and all payers”.
The criteria listed above technically would not include insulin, but the summary specifically states that insulin would also be included for negotiation. It is the only drug singled out in the summary, which was obtained by Politico.
The legislation instructs the HHS Secretary to negotiate a “maximum fair price” for a minimum of 25 drugs each year. The price reached in negotiation would not be more than 1.2 times what Australia, Canada, France, Germany, Japan, and the United Kingdom pay, on average and collectively, for the drug.
If a drug manufacturer refuses to negotiate, or fails to make a deal with the HHS Secretary, that manufacturer will pay a steep excise tax on its annual gross sales. The rate of the tax will start at 65% and escalate 10% (with a maximum rate of 95%) for every quarter that the drug price is not in compliance.
These measures would apply for both Medicare and private insurance plans.
There also are provisions in this proposed legislation that would focus specifically on Medicare Part B and Medicare Part D, and these also have the potential to have a profound impact on people with diabetes. For example, if a drug’s price has been raised faster than the rate of inflation since 2016, that drug’s manufacturer would be required to either lower the price or pay the amount paid above the rate of inflation to the Department of the Treasury. Also, there would be a $2,000 annual cap for out-of-pocket costs for those enrolled in the Medicare Part D drug program.
Any drug-pricing reform legislation must have the votes to pass a divided Congress before it gets to the president’s desk. This legislation, which may pass the Democrat-controlled House of Representatives, would likely have a tougher time in the Republican-controlled Senate because of the bill’s price-control aspects. There are several bipartisan bills being considered in the Senate, including a bill that specifically focuses on insulin pricing.
The House bill provision which would tie some drug pricing to the pricing of drugs in other industrialized countries is one provision that the Trump Administration has publicly favored.
T1D Exchange Glu will continue to follow the progress of all bills in Congress which might affect diabetes drug pricing. T1D Exchange, which publishes T1D Exchange Glu, is nonpartisan and takes no position on any of the bills mentioned.
Photo credit: @SpeakerPelosi