House committees both advance Pelosi's drug plan with some changes

A major plan from House Speaker Nancy Pelosi to give Medicare the power to negotiate for lower drug prices is one step closer to getting a full House vote, but with some key changes.

The House Energy and Commerce Committee and the Education and Labor Committee advanced in separate hearings the Lower Drug Costs Now Act to the full House. The committees advanced several amendments to the legislation released last month.

Pelosi’s original bill would require the U.S. Department of Health and Human Services (HHS) to select at least 25 brand-name drugs a year that face no competition and negotiate with the manufacturers for a price that is 120 times the average paid by several other countries.

The negotiated price would apply to Medicare Part D and Medicare Advantage plans, but manufacturers must also extend the negotiated rate to commercial insurance plans.

The bill also aims to cap out-of-pocket costs for Part D beneficiaries at no more than $2,000 a year.

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Both committees made changes to the legislation.

Chief among the changes is to increase the number of drugs that HHS must negotiate every year. HHS must first start out by picking 25 brand-name drugs, but that figure increases to 30 in 2028 and 35 in 2033. 

Another change is aimed at boosting generic competition for the selected drugs. In the original bill, a drug may no longer be subjected to HHS negotiations if it has at least one generic competitor.

However, the two committees passed a change that increases the threshold to two generic competitors.

Pelosi's original bill also ensures that any drug selected by HHS for negotiation would be exempt from the 340B drug discount program, which requires drug companies to offer discounts to products for safety-net hospitals in exchange for getting their drugs covered by Medicaid. 

The legislation in Energy and Commerce would strip that exemption.

Other changes include a requirement for drugmakers to submit reports highlighting manufacturing and research costs for a product that is subject to HHS negotiation. If a drug company refuses, they could face a penalty of $75,000 a day.

The House Ways and Means Committee will also hold its own markup of the Pelosi drug plan. Then, the legislation from all three committees will be combined into one package and head to the House floor.

A top Pelosi aide has predicted a full House vote by the end the month.

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But the bill has been derided in the GOP-controlled Senate, making its chances of getting out of Congress slim. Several House Republicans highlighted this issue during the markups Thursday.

“I wasn’t elected to write bills that never go anywhere,” said Rep. Michael Burgess, R-Texas, at the Energy and Commerce markup. “It is very clear [the bill] will never become law.

Republicans also charged that Pelosi’s plan will stifle innovation in pharmaceuticals. They got new ammunition from a Congressional Budget Office (CBO) analysis that estimated the bill could prevent eight to 15 new drugs from entering the market over the next decade.

“One new cure stopped is one too many,” said Rep. Greg Walden, R-Oregon, ranking member of Energy and Commerce.

CBO’s analysis also found that Pelosi’s plan would save $345 billion in Medicare over the next seven years.