Will drug pricing reform affect your patients or practice?

| October 11, 2021

Will drug pricing reform affect your patients or practice?

Democrats in Congress are beginning to piece together their $3.5 trillion domestic reform bill called the Build Back Better (BBB) Act. Individual Congressional Committees were delegated different sections of the bill to draft. Many of those Committees recently finished their markups to finalize and advance their sections of the bill.

While there is broad agreement among Democrats on the overall direction of the bill, the markup process revealed some deep divisions over the fine details of many of the policies. Perhaps no disagreement is more notable than what transpired in the House Energy & Commerce (E&C) Committee over the provisions that would address high prices for prescription drugs and biologics.

The committee attempted to include a version of H.R. 3 in their section of the BBB Act. H.R. 3 was previously introduced and passed by the House in the last Congress, but it was never considered by the then Republican-led Senate. The E&C Committee’s version of H.R. 3 would give Medicare the authority to directly negotiate the price of the 250 most expensive drugs and biologics with manufacturers. The Medicare-negotiated price would be available to all commercial health plans.

It also would set a price cap for these products based on their average sales price in six other countries and would cap manufacturer profits based on inflation.

To incentivize manufacturers to negotiate, the bill would impose a 95% tax on these drugs and biologics if the manufacturer failed to reach a price agreement with Medicare.

Three E&C Democrats opposed the inclusion of this provision in the Committee’s bill. Their opposition, combined with every Republican voting against the proposal, meant the committee did not have enough votes to include this drug pricing reform policy in the E&C portion of the bill.

Ultimately, the House Ways & Means (W&M) Committee passed the provision as part of their package of the BBB Act. However, Democrats only have a three-seat majority in the House of Representatives. The same three Democrats who opposed the provision during the E&C markup could oppose it again when the BBB Act comes to the floor and prevent it from passing without Republican support. It is also not clear if there is enough Democratic support in the Senate for the provision.

Democrats still have time to negotiate provision changes and other issues before bringing the full BBB Act to a vote. However, there is significant policy pressure to pass drug pricing reforms. Democrats intend to use the hundreds of millions of dollars in savings generated by drug price reforms to offset the cost of other policies, such as expanding Medicare benefits for hearing, dental and vision and for expanding access to the Affordable Care Act’s premium assistance tax credits. The more ambitious the reform, the more savings available for other priorities.

The Advocacy Council will continue to monitor this issue and provide updates. The Advocacy Council – we have you covered.