Speaker Pelosi Releases Draft Drug Pricing Legislation, Embracing International Pricing Index

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On September 10, 2019, House Speaker Nancy Pelosi released draft legislation that combines several different approaches for addressing the cost of prescription drugs. Interestingly, the legislation includes an international pricing mechanism that would require the federal government to negotiate prices for the 250 most expensive medications. This price negotiation would incorporate prices paid by other countries, which is an approach that was proposed by the Trump Administration last year, known as the International Pricing Index (IPI). The model included in Pelosi’s bill would set pharmaceutical prices for all payers, and the government would negotiate prices for the Medicare program, using the international price as a ceiling. Pelosi’s bill also includes an inflationary rebate for all medications covered by Medicare Part B and Part D, which was originally included in a drug pricing bill that the Senate Finance Committee passed in July. This inflationary rebate would require pharmaceutical manufacturers to pay a rebate to the federal government if the prices for their products rise faster than inflation. Importantly for seniors, the draft legislation would set a maximum out-of-pocket cost for Medicare beneficiaries. This would bring the Medicare program in line with commercial plans, which are required to include a limit on beneficiaries’ out-of-pocket spending by the Patient Protection and Affordable Care Act (ACA).

Some analysts have deemed Pelosi’s plan as “aggressive and unpassable,” but it has received support from the Trump Administration. This has caused some tensions in Congress, as both parties are looking to pass health care legislation in advance of the 2020 election to gain confidence with voters. Shifting political headwinds and an unpredictable administration make it hard to forecast which proposal will reach the President’s desk first.

Aimed Alliance will continue to provide updates as these bills advance through Congress.

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