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H.R. 3, Lower Drug Costs Now Act, Officially Introduced

House Speaker Nancy Pelosi (D-Calif.) released her long-awaited proposal to lower prescription drug prices last week. The Lower Drug Costs Now Act (H.R. 3) would allow the U.S. Department of Health and Human Services (HHS) Secretary to negotiate the price of a minimum of 25 drugs, up to a maximum of 250 drugs, each year - targeting those products without generic or biosimilar competition that cost the most to the health care system. The bill would set a “maximum fair price” of 120 percent of the average price across Australia, Canada, France, Germany, Japan, and the U.K. The negotiated prices would apply to both private insurance and the Medicare program. If a manufacturer refuses to negotiate, or is unable to reach an agreement with HHS, the company would be penalized by a 65 percent tax on the drug’s gross sales. This penalty would increase by 10 percent each quarter of noncompliance until a maximum of 95 percent. Savings from the bill would be used to cap out-of-pocket drug costs for Medicare beneficiaries at $2,000.

Before her official release of the bill, Pelosi held meetings with the Congressional Progressive Caucus and the more centrist Blue Dog Coalition and New Democrat Coalition. Progressive House Democrats offered cautious praise for the bill but have objected to the fact that it does not allow for the Secretary to negotiate the price of all drugs. The Speaker has appeared open to making changes to the measure as it goes through the committee process. Such changes could include increasing resources for HHS to raise the negotiating floor to more than 25 drugs.

The plan is unlikely to pass the Republican-controlled Senate. Senate Majority Leader Mitch McConnell (R-Ky.) has already ruled out any action on the bill and stated that the Senate’s path forward on drug pricing is still under discussion. House leadership, who have spent months negotiating with the White House on drug prices, had hoped that the President’s support would pressure Senate Republicans to consider the measure. President Trump praised the release of Pelosi’s bill but did not go so far as to offer an official endorsement. The President called for bipartisan action on drug pricing and commended the legislation advanced by Sen. Chuck Grassley (R-Iowa) and the Senate Finance Committee. HHS Secretary Alex Azar also met with various groups of lawmakers last week and encouraged them to reach a bipartisan agreement to lower drug prices. He did not offer an opinion on the Lower Drug Costs Now Act, stating that he needed additional time to review it.

The House Energy and Commerce Subcommittee on Health will hold a hearing on H.R. 3 this Wednesday. The Ways and Means and Education and Labor committees are also expected to schedule hearings on the legislation this fall. Speaker Pelosi reportedly hopes to vote on the bill by the end of October or early November.

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