Reject H.R. 3 as an Existential Threat to Millions of Americans

Last week, a memo highlighting key elements of House Speaker Nancy Pelosi’s long-awaited drug price negotiation bill (“H.R. 3”) was leaked through Bloomberg Law. The bill might be changed before official introduction, but its draft form is extreme. We have the following concerns about the memo we reviewed: 

·      Import Foreign Price Controls: The memo empowers HHS to directly negotiate with manufacturers over drug prices for 250 medications per year. This “negotiation” is nothing more than ‘IPI lite’ as prices would be set by the HHS Secretary based on what six foreign countries (Australia, Canada, France, Germany, Japan, and the United Kingdom) pay.

·      Pummel Industry with Coercive Strong-Arm Tactics: Even more worrisome, if manufacturers refuse to abide by this price-fixing scheme, the medication’s price would be hit with a steep fine equal to 75% of that medication’s sales from the previous year.

·      Reduce Patient Quality and Access: The bill does not appear to guarantee any access improvements for patients in the plans that obtain medicines at new, highly discounted prices. This is most troubling because, where price controls exist, supply shortages are likely, and thus access will be reduced.

·      Chill Investment and Erode American Medical Innovation: The bill appears to require large manufacturer discount premium increases and governmental costs. H.R. 3 has the potential to increase manufacturer liability substantially. This will incentivize manufacturers to pull back from the market and to forego research into new medicines and therapies, thereby limiting doctors’ treatment choices and putting patients at risk. 

·      Eliminate Private Sector Negotiation and Create Market Distortions: The bill would subject all Medicare Part B and Part D drugs to a 100% inflation rebate that uses 2016 as a base date and requires manufacturers to pay the entire price increase above inflation back to the Treasury. With the inflation rebate going to the government instead of to plans, premiums would likely increase because privately negotiated rebates are currently being used to subsidize premiums.

The bottom line: H.R. 3 as currently conceived would warp the market, limit doctors’ choices, restrict patient care, threaten new-drug R&D, and jeopardize people’s health. Because of its potential impact on the healthcare industry and on the health care of millions of individual Americans, we urge Congress to reject H.R. 3 as an existential threat.