Oct. 15, 2019

The Honorable Nancy Pelosi
H-232, The Capitol
Washington, DC 20515

The Honorable Frank Pallone
House Committee on Energy & Commerce
2125 Rayburn House Office Building
Washington, DC 20515

Dear Speaker Pelosi and Chairman Pallone,

On behalf of our millions of members and supporters, I write to endorse H.R. 3, the Lower Drug Costs Now Act of 2019. This bill would take important steps toward lowering costs for seniors.
H.R. 3 includes provisions the National Committee has long supported:

  • A $2,000 cap on seniors’ Medicare out-of-pocket costs for prescription drug spending
  • A mechanism for the Medicare program to negotiate drug prices with manufacturers with a strong enforcement penalty to compel manufacturers to offer fair prices
  • An inflation cap on drug reimbursement to curb excessive and unwarranted drug price escalation

We encourage you to improve the bill to make more drugs eligible for negotiation. Currently, the bill only requires a minimum of 25 drugs to negotiate. While we understand there are bandwidth concerns regarding The Department of Health & Human Services’ (HHS) ability to negotiate more drugs, we would encourage adding language that progressively increases the number of drugs that HHS is required to negotiate over time.

Further we remain concerned that the bill doesn’t address inordinately high launch prices. In fact, without explicitly addressing launch prices, manufacturers may well respond to H.R. 3’s provisions by further inflating drugs at launch with the aim of securing a higher final negotiated price and to offset limitations on future price increases under H.R. 3’s inflation cap.

Finally, we are concerned that H.R. 3’s criteria for a drug’s eligibility for negotiation is too restrictive, excluding drugs that have limited competition. H.R. 3 makes a drug eligible for negotiation it is without competition from at least one generic or biosimilar on the market. According to research conducted by the Food and Drug Administration (FDA), typically the entry of one generic competitor produces only a slight reduction in prices. It is the entry of a second generic competitor that really drives down a drug’s cost — to nearly half the brand name price. Additional generic manufacturers further reduce costs, but more slowly. FDA found that products with a lot of generic competitors saw price declines on average of 20% of the cost of the branded drug. By excluding drugs that have one competitor — with the notable exception of insulin products — H.R. 3 precludes many high-priced drugs from negotiation.

Further, because of the complexity and expense associated with their development, biosimilar drugs do not reduce prices as much as generic products. By limiting negotiation to drugs with only one competitor, H.R. 3 will exclude many high-priced drugs, including biologics, from negotiation. For these reasons, we urge you to focus the negotiation process on drugs that are overly expensive without regard to the number of competitors on the market.

On balance, the Lower Drug Costs Now Act of 2019 takes a significant step toward lowering drug costs for seniors. The National Committee looks forward to working with you to further improve it and see it enacted.


Max Richtman
President and CEO