New Legislation to Control Drug Prices: How Do House and Senate Bills Compare?

House Speaker Nancy Pelosi’s (D–Calif.) long-anticipated drug pricing plan — the Lower Drug Costs Now Act of 2019 (H.R. 3) — has shaken up the drug pricing debate. It gives Medicare the ability to negotiate drug prices, further fueling the partisan divide between Democrats and Republicans, but also includes policies similar to those championed by Senate Finance Committee Chair Chuck Grassley (R–Iowa), such as caps on price increases in Medicare Parts B and D, as well as changes to the Part D benefit design. The way the bill approaches drug price negotiation is similar to the Trump administration’s supposedly soon-to-be-released international price index (IPI) proposal, which has been under review at the Office of Management and Budget since June.

The following tables compare H.R. 3 based on the legislative text advanced by key committees of jurisdiction and key provisions of related proposals: the Prescription Drug Pricing Reduction Act of 2019 (S. 2543), advanced by the Senate Finance Committee in July; and the Advanced Notice of Proposed Rulemaking (ANPRM): Medicare Program, IPI Model for Medicare Part B Drugs, issued by the Centers for Medicare and Medicaid Services last October.

Despite the poor prospects of H.R. 3 as currently drafted gaining traction in the Republican-controlled Senate, House Democratic leaders are moving full-steam ahead. The House Energy and Commerce, Education and Labor, and Ways and Means committees recently advanced similarly amended versions of H.R. 3 that will need to be reconciled before a floor vote that will likely occur after the recess in early November. The advanced bills raise the minimum number of drugs subject to negotiation from 25 to 35; retain drugs on the negotiation list until two generic or biosimilar products are available; and require price negotiation of drugs with launch prices in excess of the median household income, among other policy changes.

Even with these new revisions, House progressives are pushing for policies that would go further. The Ways and Means committee rejected a series of amendments offered by Health Subcommittee Chair Rep. Lloyd Doggett (D–Texas) that included extending government-negotiated prices to uninsured individuals and increasing the minimum number of drugs subject to negotiation to 50 after five years and to 100 after 10 years. In contrast, moderate Democrats are calling for a vote on stand-alone drug pricing legislation that can pass muster in the Senate — a talking point reiterated by Republicans throughout the markups. Despite cracks in Democratic support, House leadership is expected to continue backing Medicare negotiation, especially with the initial analysis from the Congressional Budget Office (CBO) — projecting $345 billion in savings over 2023–29 — further bolstering their position.

In the face of the ongoing impeachment inquiry, President Trump remains open to drug pricing talks with the Speaker, emphasizing his desire to pass drug pricing legislation. Notably, he endorsed government negotiations on drug pricing prior to taking office. Viewing the president’s interest in H.R. 3 as a viable threat, Chairman Grassley pushed his Republican colleagues to support what Grassley calls the “less aggressive, but strongly pharma-opposed drug pricing bill passed by the Senate Finance Committee.” Taxpayer savings of $100 billion, preliminarily projected by CBO, makes S. 2543 an attractive offset for other health care policy priorities. However, the chairman has already signaled the possibility of delaying floor action on drug pricing until early next year, giving him more time to win Republican support but perhaps also lowering the odds of ultimately passing significant legislation in an election year.

Both parties are intent on getting something done on drug pricing ahead of the 2020 elections. Amid escalating partisan tensions, the competing yet overlapping proposals from House Democrats and the Senate Finance Committee may create a scenario in which bipartisan, bicameral compromise may still be possible.