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H.R. 448 (116th): Medicare Drug Price Negotiation Act

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The summary below was written by the Congressional Research Service, which is a nonpartisan division of the Library of Congress, and was published on Jul 25, 2019.

Medicare Drug Price Negotiation Act

This bill makes a series of changes relating to the prices of prescription drugs under the Medicare prescription drug benefit and Medicare Advantage (MA) prescription drug plans (PDPs).

Under current law, the Centers for Medicare & Medicaid Services (CMS) may neither negotiate the prices of covered drugs nor establish a formulary. The bill repeals these restrictions and instead specifically requires the CMS to (1) negotiate the prices of covered drugs; and (2) either establish a formulary for covered drugs, or require changes to PDP formularies that take into account CMS negotiations.

If the CMS is unable to negotiate an appropriate price for a drug in accordance with certain criteria, the price must be the lowest of three specified options (e.g., the average price in other countries). The CMS must identify drugs that are subject to negotiation, with priority given to certain categories of drugs based on usage and cost.

Additionally, drug manufacturers must issue rebates to the CMS for drugs dispensed to eligible low-income individuals. Subject to civil monetary penalties, a Medicare or MA PDP sponsor must report, both to drug manufacturers and to the CMS, specified information related to the determination and payment of such rebates.