U.S. Looks to Introduce European-Style Drug Price Controls

Meena Datta examines proposed new legislation that would authorise the Health and Human Services Secretary to negotiate prices directly with prescription drug manufacturers.

Democrats are currently attempting to pass the Build Back Better Act, which amalgamates President Biden’s first-term domestic policies and runs to 2,465 pages, through the budgetary process of reconciliation.

It may not pass, at least not immediately. But whatever the outcome of the current legislative process, the pharmaceutical industry knows that H.R. 3 — the component of the reconciliation bill which aimed at addressing a perception that prescription drug prices are too high — is unlikely to drop off the agenda.

H.R. 3, also known as the Elijah E. Cummings Lower Drug Costs Now Act, looks to introduce European-style drug price controls to the U.S. The House of Representatives approved H.R. 3 in December 2019, but the bill died in the Senate. It was then reintroduced on April 22, 2021.

Of particularly pressing relevance to the pharma industry has been the first section of the draft legislation, which sets out a new proposed process of drug price negotiation. This ‘Fair Price Negotiation Program’ would authorise the Health and Human Services Secretary to negotiate directly with prescription drug manufacturers, something which is not permitted under the current law.

It would also require the Department of Health and Human Services (HHS) to identify and publish a list of the negotiation-eligible drugs that present the greatest total cost to Medicare and the U.S. health system. These would include single-source, brand-name drugs that lack certain generics and that are among either the 125 drugs that account for the greatest national spending or the 125 drugs that account for the greatest Medicare spending.

If the legislation passes, it is contemplated that HHS would enter into agreements with the manufacturers of the drugs on the list in order to negotiate maximum fair prices. It would then, the bill contemplates, become compulsory to offer the negotiated prices under Medicare and Medicare Advantage, and they might also be offered under private health insurance, in certain circumstances.