WASHINGTON (CN) – The House of Representatives passed a bill Thursday that aims to lower the cost of prescription drugs by allowing the federal government to negotiate prices with pharmaceutical companies and capping the amount companies can charge for their products.
The bill, which passed in a 230-192 vote along party lines, would allow the Secretary of Health and Human Services to negotiate the prices of as many as 250 prescription drugs per year. The drugs marked for negotiation would be those on a list of the most costly in the United States that do not have a generic alternative in the market.
The government would be aided in the negotiation by a statutory cap on how much companies can charge for their drugs. For drugs that are also sold in other countries, companies could not charge more than 120% of the average of what they bill in Australia, Canada, France, Germany, Japan and the United Kingdom.
For those drugs where that information cannot be calculated, companies could not charge more than 85% of the average manufacturer price in the United States. The negotiated prices would be available to both the private and public health insurance markets.
To incentivize drug companies to come to the table, the bill would hit them with an excise tax of as much as 95% if they do not negotiate or reach an agreement within a certain time.
The Congressional Budget Office estimates the bill would save $345 billion in Medicare spending from 2023 to 2029 and would lead to lower drug prices and improved health. The savings would be used to expand Medicare benefits to dental, vision and hearing, as well as to fund research initiatives.
“This should not be a partisan issue. The president articulated the desire to achieve the objective of bringing prices down,” House Majority Leader Steny Hoyer, D-Md., said on the House floor Thursday. “That’s what this bill does.”
Democrats dubbed the bill the Elijah E. Cummings Lower Drug Costs Now Act, naming it after the late representative from Maryland who pushed for bills to lower drug prices throughout his career in Congress.
The bill is unlikely to come up to a vote in the Senate, as Senator Majority Leader Mitch McConnell has been critical of the legislation as establishing “socialist price controls.” The White House has also threatened a veto.
Critics say the bill would cut into the money drug companies invest in research and development efforts, leading to less innovation in the market. The CBO report says the bill would cut drug revenues by between $500 billion and $1 trillion over the next 10 years and could prevent as many as 15 drugs from coming to market over the same time period.
Oregon Representative Greg Walden, the top Republican on the House Energy and Commerce Committee, said the bill Democrats have advanced is too heavy-handed and ignores Republican plans for bringing down drug costs.
“Here’s part of the problem with [the bill]: It hands the government a club,” Walden said on the House floor. “There’s no negotiation in here. If you don’t agree to what the government says the price should be, the government in Washington comes after your revenues and up to 95% of your revenues for selling that drug they can just come and take.”
Republicans attempted to amend the bill on the floor by replacing it with their own drug pricing measures, but did not get enough votes to adopt it.