The cost of prescription drugs is a serious problem for consumers and a tax challenge for public and private payers. Can Medicare negotiate drug prices?
A brief history of Medicare drug price negotiations
Even before the benefits of Part D Medicare became effective in 2006, some policy makers proposed a change to the law that would allow the HHS Secretary to negotiate prescription drug prices with drug manufacturers on behalf of Medicare beneficiaries. The Medicare Modernization Act 2003 (MMA), the law that established a benefit under Part D, includes a provision known as a “non-interference” clause, which states that the HHS secretary “cannot interfere in negotiations between drug manufacturers and pharmacies and PDP sponsors and may not require specific wording or price structure for refunds covered by Part D. “In fact, this provision means that the government cannot play a direct role in negotiating or pricing Part D medications. Medicare
What are the current approaches that allow Medicare to negotiate drug prices?
Lawmakers at the 116th Congress introduced various bills to allow the federal government to negotiate the price of Medicare Part D medications, to reduce spending on the Part D program and raise additional registration costs. Some are self-contained bills, while others are included in broader legislation to expand the scope of health insurance. This discussion focuses on five accounts whose main (or only) purpose is to enable the Secretary to negotiate drug prices:
- HR 3, Act on Lower Drug Costs Now from 2019, Introduced by Marshal Pelosi and sponsored by representatives of Frank Pallone (D-NJ), Richard Neal (D-MA) and Bobby Scott (D-VA), relevant presidents Parliamentary committees Energy and trade, ways and means as well as education and work (amended October 16, 2019)
- HR 1046 / S. 377, Medicare Negotiation and Competitive Licensing Act of 2019, sponsored by the representative of Lloyd Doggett (D-TX) at home and Senator Sherrod Brown (D-OH) in the Senate
- HR 448 / S. 99, Act on Negotiating Medicare Drug Prices, sponsored by the representative of Elijah Cummings (D-MD) at home and Senator Bernie Sanders (I-VT) in the Senate
- S. 62, Act on Empowering Medicare Seniors to Negotiate Drug Prices in 2019, Sponsored by Senator Amy Klobuchar (D-MN) 2
- HR 275, Act on Negotiation of Medicare Prescription Drug Prices of 2019, Sponsored by Peter Welch’s representative (D-VT)
The position of the national committee
The National Committee supports allowing Medicare to directly negotiate medicines and provide the program with useful tools to encourage manufacturers to fairly pricing products. We also supported the proposal to apply inflation ceilings in Medicare. The National Committee is assessing reference price proposals and has not taken a position.