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Senate Finance Committee unveils bipartisan bill to lower prescription drug prices for seniors

Key Points
  • The Senate Finance Committee unveiled its long-anticipated bipartisan bill to lower prescription drug prices.
  • The bill would make changes to Medicare by adding an out-of-pocket maximum for beneficiaries.
  • It would also penalize pharmaceutical companies if the price of their drugs rise faster than inflation.
Chairman Charles Grassley, R-Iowa, right, and ranking member Sen. Ron Wyden, D-Ore., are seen before a Senate Finance Committee hearing in Dirksen Building titled 'Drug Pricing in America: A Prescription for Change, Part II,' on February 26, 2019.
Tom Williams | CQ-Roll Call Group | Getty Images

The Senate Finance Committee on Tuesday unveiled its long-anticipated bipartisan bill to lower prescription drug prices for seniors and save the federal government billions in health-care costs.

Chairman Chuck Grassley, R-Iowa., and Ron Wyden, D-Ore., the committee's ranking member, have been working for several months on a bill to reduce drug prices. The Trump administration and Congress are both trying to bring more transparency to drug prices and, ultimately, lower costs for consumers.

The bill, "Prescription Drug Pricing Reduction Act of 2019," would make changes to Medicare, the federal government's health insurance plan for the elderly, by adding an out-of-pocket maximum for beneficiaries at $3,100 starting in 2022. It would also penalize pharmaceutical companies if the price of their drugs rise faster than inflation.

"The cost of many prescription drugs is too high," Grassley and Wyden said in a joint statement Tuesday. "Without action, we're on an unsustainable path for taxpayers, seniors and all Americans. A working class family shouldn't have to pick between making their rent or mortgage payment and being able to afford their kids' medications."

Other provisions in the bill include:

  • Forcing pharmacy benefit managers to disclose information on the discounts they are negotiating.
  • Requiring drug manufacturers to report to the Health and Human Services Department information and supporting documentation needed to justify price increases for prescription drugs.

Spending on Medicare Part D drugs totaled $137 billion in 2015, according to the Kaiser Family Foundation. Total health-care spending in the U.S. represented 18% of gross domestic product, according to Medicare, and is expected to continue to rise. The nonpartisan Congressional Budget Office estimates the bill will save U.S. taxpayers $85 billion over a 10-year period. It's also estimated to save beneficiaries $27 billion in out-of pocket costs.

The Pharmaceutical Research and Manufacturers of America, the industry's main trade group, said it opposes the package, arguing it "fails to meet the fundamental test of providing meaningful relief at the pharmacy counter for the vast majority of seniors."

"We are committed to working with the Committee on a bipartisan basis on a better solution that balances cost savings with benefit to seniors," PhRMA President and CEO Stephen J. Ublsaid in a statement.

In a conference call with reporters, Grassley's office said the senators have been in discussions with the Trump administration and the Department of Health and Human Services about the legislation. The office declined to say whether they expected the White House to support the bill as it currently stands.

In a statement on Twitter on Tuesday afternoon, White House spokesman Judd Deere said the administration is "encouraged by the bipartisan work" of Grassley and Wyden.

"We will work with Senators to ensure this proposal moves forward and advances the President's priority of lowering drug prices even further and increasing transparency in healthcare for the benefit of all," Deere added.

High prescription drug costs have become a rare bipartisan issue, with lawmakers on both sides of the aisle demanding changes.

House Speaker Nancy Pelosi's latest draft of drug price legislation would allow Medicare to negotiate lower drug prices and also apply those discounts to private health plans across the U.S. While Democrats support letting the government negotiate with drugmakers directly, opposition is strong among Republicans who say they want prices negotiated in a free market.

The Trump administration has had a few roadblocks in its attempt to lower drug costs. Earlier this month, the White House said it had withdrawn its plan to ban rebates that drugmakers pay to pharmacy benefit managers. That news came three days after a federal judge in Washington, D.C., dealt a blow to the Trump administration by striking down a rule that would have forced pharmaceutical companies to disclose the list price of their drugs in television ads.

Health policy analysts speculate the administration could next push for a proposal announced last year that would allow Medicare to create an "international pricing index " to bring drug prices in line with what other nations pay. Pharmaceutical companies fiercely oppose that legislation.

Americans are increasingly in favor of more federal regulation to bring down high prescription drug prices, including letting the government negotiate directly with drugmakers, according to a survey from Kaiser.