Implications of Further Action on the Elijah E. Cummings Lower Drug Costs Now Act - McDermott+Consulting

Implications of Further Action on the Elijah E. Cummings Lower Drug Costs Now Act

As we look to the 2020 election and forecast how prescription pricing drug reform could take shape if there is a Democratic House, US Senate and White House beginning in 2021, the Elijah E. Cummings Lower Drug Costs Now Act (H.R. 3) should be viewed as a starting point for all prescription drug pricing reform discussions. This article explores how a Democratic sweep in the upcoming election could affect policymaking around prescription drug pricing and how H.R. 3 would affect specific drugs’ pricing.

On December 12, 2019, the US House of Representatives passed the Elijah E. Cummings Lower Drug Costs Now Act (H.R. 3) by a 230–192 margin (all present Democrats and two Republicans voted for the bill). The bill would, among other things, authorize Medicare to negotiate prices for certain drugs, use international reference pricing, cap out-of-pocket costs for Part D beneficiaries, require manufacturer rebates if Part B or Part D prices increase faster than inflation, and increase insurer and drug manufacturer responsibility for Part D costs.

In H.R. 3 as currently written, the US Department of Health and Human Services (HHS) must negotiate maximum prices for insulin products and, for fiscal year (FY) 2023, at least 25 single-source, brand-name drugs that do not have generic competition and that are among either the 125 drugs that account for the greatest national spending or the 125 drugs that account for the greatest spending under the Medicare prescription drug benefit and Medicare Advantage. Beginning in FY 2024, HHS also must negotiate maximum prices for at least 50 such single-source, brand-name drugs and newly approved single-source, brand-name drugs that meet or exceed a specified price threshold and which HHS determines are likely to meet the spending criteria. The negotiated prices must be offered under both traditional Medicare and Medicare Advantage and may also be offered under private health insurance unless the insurer opts out. (A drug or biologic is generally considered single-source if there is no generic or biosimilar approved and marketed in the United States. All insulins would be eligible for negotiation regardless of generic or biosimilar availability).

The drugs subject to price negotiation would be identified from:

  • Covered Part D drugs (the drug must be one of the top 125 covered Part D drugs with the estimated greatest net spending under Medicare Parts C and D);
  • Other drugs (the drug must be one of the top 125 drugs for which there was an estimated greatest net spending in the United States); and
  • Insulin.

Based on our interpretation of single-source drugs and biologicals as described in the bill, below we provide a list of the top 125 single source, covered Part D (Table 1) and Part B (Table 2) drugs and all insulins (Table 3) by Total 2018 Medicare Spending . Of note, the highest Medicare spending drugs would not necessarily be subject to price negotiation. Which drugs would actually be subject to price negotiation would depend upon updated data at the time of implementation (if the bill becomes law) and the Centers for Medicare and Medicaid Services’ interpretation of how to select the drugs that will result in the greatest savings as set forth in implementing regulations. The Secretary of HHS appears to have some discretion when selecting drugs under the bill as currently written.

Total Medicare spending does not reflect discounts or rebates, which are a part of net spending. Lists based on net spending may look different. Information on discounts and rebates is not public.

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All lists were derived from data on the Medicare Drug Spending Dashboard. For more information, please contact Jessica Roth or Katie Waldo.