Lower Drug Costs Now Act - H.R.3

The cost of health care in the United States has become a dominant issue in the political arena, something that all elected officials agree needs to be addressed. One specific aspect of that problem is the cost of prescription medication.

    A Kaiser Family Foundation poll conducted in February found that one in four Americans cannot afford their prescription medicines. Instead, people resort to skipping doses, cutting pills in half and rationing insulin. Even drugs that have been on the market for decades, such as insulin, or drugs that have generic competition, such as Epi-Pens, are exorbitantly priced, and drug prices increase year over year at a rate that exceeds inflation. A vial of insulin that cost $25 in 2011 increased in price to $80 in 2018. Some patients without insurance are currently being charged $1,300 per month for insulin.

A report by the Institute for Clinical and Economic Review found that in 2017 and 2018 the prices of seven popular drugs went up without any evidence of the drugs having been improved. The increases resulted in $5 billion of increased costs that were borne by patients and health insurance plans. The drug prices increased at more than twice the rate of inflation.

According to a 2017 report by the Commonwealth Fund, the U.S. pays 30% to 190% more for prescription drugs than nine other developed countries.

There is a bipartisan desire to reduce drug prices. The Trump administration in May 2018 issued a "blueprint" for addressing drug prices, some of which it has attempted to implement through administrative actions. President Donald Trump has also spoken favorably of allowing the federal government to negotiate drug prices directly with drug manufacturers, as is done in other countries.

    And since assuming the majority in the House at the start of 2019 for the 116th Congress, Democrats have made reducing health care costs and the cost of prescription drugs a pillar of their "For the People" agenda. The House during the year has passed numerous bills that seek to reduce drug prices, but because many include provisions opposed by Republicans they have not advanced in the GOP Senate.

    The primary Democratic bill to reduce prescription drug costs is HR 3, which is formally named the Elijah E. Cummings Lower Drug Costs Now Act in honor of the 13-term Baltimore Democrat who chaired the House Oversight and Reform Committee, and who died in October.

    Republicans oppose the bill, saying it amounts to government price control and that the long-term result will be the loss of new drugs because drug companies will no longer have the resources to invest in research and development of new drugs.

SUMMARY: The Rules Committee is expected to make in order a modified version of the bill, the text of which was posted late Friday. Following is a very brief summary of the version of the bill expected to be considered. 

    This bill takes numerous actions to reduce the price of prescription drugs for Americans, and it uses the federal savings from those lower costs to expand Medicare benefits.

    The measure allows the Health and Human Services Department (HHS) to negotiate some drug prices, and it imposes mandatory rebates on drugs whose prices increase more than the rate of inflation. It modifies Medicare Part D to reduce out-of-pocket expenses for beneficiaries, and expands access to the low-income subsidy program in Medicare Part D.

    It expands Medicare to include vision, hearing and dental benefits, and makes other modifications to the program that are intended to lower beneficiary costs and expand access.

    It also includes provisions that address other aspects of health care, such as: Expanding the Health Profession Opportunity Grant Program; increasing funding for the Maternal, Infant, and Early childhood Home Visiting program; increasing funding for biomedical research at the National Institutes of Health (NIH); expanding activities at the Food and Drug Administration (FDA); authorizing funding to combat the opioid crisis; and authorizing funding for Community Health Centers.

Drug Price Provisions

    The bill establishes a Fair Price Negotiation Program, under which HHS would be authorized to negotiate the price of certain brand name drugs for Medicare directly with the manufacturers — prices which private health care insurance providers could also apply for their enrollees for savings.

    Specifically, it allows HHS to negotiate the prices of up to 250 drugs each year: 125 that represent the greatest cost to Medicare Part D; and 125 that represent the greatest net spending to the U.S. public at large.

    It also requires drug companies that have raised the price of Medicare Parts B or D drugs by more than the rate of inflation since 2016 to either lower the price of the drug, or pay as a rebate to the U.S. Treasury the entire price that was paid above inflation to the drug companies.

    Drug manufacturers would be required to report to HHS whenever they increase the price of certain drugs by 10% or more over a 12-month period or by 25% or more over 36 months.

Medicare Part D Costs

    Using the savings from reduced federal spending for drugs under Medicare, the bill reduces costs for beneficiaries under Medicare Part D — Medicare's prescription drug program.

    Starting in 2022, the bill caps annual out-of-pocket expenses for Medicare Part D beneficiaries at $2,000, and it eliminates the current coverage gap (known as the "donut hole") where beneficiaries are responsible for paying the full cost of their drugs. The cap would increase annually, using a formula in current law that applies to Medicare Part D cost thresholds.

    It also modifies the payment responsibilities of Medicare Part D beneficiaries to further reduce their costs, and shifts payment responsibilities among Medicare Part D insurance plans, drug manufacturers and Medicare.

    The measure modifies eligibility requirements and the enrollment process for the low-income subsidy (LIS) program in Medicare Part D. It expands the income eligibility threshold from 135% to 150% of the federal poverty level for full LIS program benefits.

Medicare Expansion

    Using the savings from reduce federal spending for drugs under Medicare, the bill adds comprehensive dental, vision and hearing coverage to Medicare Part B.

    Currently Medicare Part B only covers certain eye diseases such as glaucoma or diabetic retinopathy under vision care, but does not pay for prescription glasses. It does cover hearing and balance exams, but does not pay for hearing aids, and it does not cover most dental services, including preventive dental care.

    The measure adds routine eye exams and glasses or contact lenses to vision care under Medicare Part B, and it adds hearing aids through Medicare's competitive bidding program for orthotics and prosthetics. For dental services, it would cover preventive and screening services, basic and major treatment services, and dentures.

    It also modifies policies governing Medigap plans to increase patient protections, makes it easier to switch from Medicare Advantage to traditional Medicare, provides coverage for polyp removal during colonoscopies, and covers compression therapy for lymphedema.