HR3391-119

What This Bill Does

The End Price Gouging for Medications Act directs the HHS Secretary to establish annual reference prices for prescription drugs. When price information exists in at least three reference countries, the reference price is the lowest retail list price among Australia, Austria, Belgium, Canada, France, Germany, Italy, Japan, the Netherlands, Sweden, Switzerland, and the United Kingdom. If sufficient foreign price or dosage-equivalent information is unavailable, HHS sets an appropriate price based on added therapeutic effect, drug value, patient access, research and development costs, and other factors. Retail list prices may not exceed the reference price for drugs covered by Medicare, Medicaid, CHIP, TRICARE, VA care, FEHB, and Indian Health Care Improvement Act programs. Manufacturers also must offer prescription drugs at the reference price to all individuals, including uninsured people and privately insured people, with insured plan payments plus cost-sharing not exceeding the reference price. Noncompliant manufacturers owe a civil penalty for each drug and year equal to five times the difference between actual federal-program receipts and what they would have received at the reference price. Treasury transfers collected penalties to NIH, and NIH must use the money for drug research and development.

Who Benefits and How

Medicare beneficiaries benefit because covered drug retail list prices cannot exceed HHS reference prices. Uninsured patients benefit because manufacturers must offer prescription drugs at the reference price to all individuals. Privately insured patients benefit because plan payments plus cost sharing cannot exceed the reference price. Federal health programs benefit from drug-price caps across Medicare, Medicaid, CHIP, TRICARE, VA care, FEHB, and Indian Health Service-funded care. NIH drug researchers benefit because manufacturer penalties are transferred to NIH for drug research and development.

Who Bears the Burden and How

Drug manufacturers must cap prices at HHS reference prices across federal programs, uninsured individuals, and privately insured individuals. HHS drug pricing staff must calculate annual reference prices using foreign prices or therapeutic-value fallback factors. Treasury penalty staff must collect and transfer civil penalties based on five times excess federal-program receipts. Group health plans and insurers must ensure covered amounts plus cost sharing do not exceed reference prices. Pharmaceutical investors bear revenue risk if U.S. list prices are pulled down to foreign reference levels.

Key Provisions

• Requires HHS to establish annual reference prices for each prescription drug.
• Uses the lowest retail list price among twelve reference countries when sufficient foreign price data exists.
• Caps retail list prices for Medicare, Medicaid, CHIP, TRICARE, VA, FEHB, Indian health programs, uninsured people, and privately insured people.
• Creates manufacturer penalties equal to five times excess federal-program receipts for each drug and year.
• Transfers collected penalties to NIH for drug research and development.