Senate HELP Committee Releases Draft Legislation to Reduce Health Care Costs

31 May 2019

On Thursday, May 23, Senators Lamar Alexander (R-Tenn.) and Patty Murray (D-Wash.), the chair and ranking Democrat of the Health, Education, Labor and Pensions (“HELP”) Committee released bipartisan discussion draft legislation focused on reducing health care costs.  Comments must be submitted to the Senate HELP Committee at LowerHealthCareCosts@help.senate.gov by 5:00 PM on Wednesday, June 5.

The Lower Health Care Costs Act of 2019 (links to legislation at bottom of page) seeks to end surprise medical bills, reduce the cost of prescription drugs, improve transparency in drug prices and health care services in general, improve public health, and improve the exchange of health information technology.   It also includes provisions that would impact pharmacy benefit managers (“PBMs”).  If enacted, the legislation would not have a direct effect on the 340B Program.

The legislation would require PBMs to submit quarterly reports to plan sponsors detailing the costs, fees, and rebate information associated with their PBM contracts.  PBMs would also be prohibited from engaging in “spread pricing,” which occurs when a PBM reimburses a pharmacy less than it charges a health plan, patient, or plan sponsor for a drug  and then keeps the difference.  The legislation would also require PBMs to pass on 100 percent of any rebates or discounts that they negotiate with drug companies to the plan sponsor.

Providers and health plans would also be required to provide the patient with a “good faith estimate” of the patient’s expected out-of-pocket costs for a specific health care service at the time the service is scheduled, or within 48 hours of a patient’s request for such information.  The draft legislation would also mandate the Government Accountability Office to study profit-sharing relationships between hospitals, contract management groups, specialty physicians and specialty physician contractors, as well as study the Federal oversight of these relationships.

If enacted, the draft legislation aims to lower prescription drug costs  by making it easier for generics to get to market and harder for brand-name drugs to maintain exclusive patents for long periods.  The FDA would also be required to establish a website to provide educational materials on biological products and biosimilars and to encourage their use when appropriate.

Category: Congress

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