Ten Charts on Proposals to Lower Medicare Prescription Drug Prices

1. Ten Charts on Proposals to Lower Medicare Prescription Drug Prices A primer on Medicare prescription drug proposals introduced by House Democrats, the Senate Finance Committee, and the Trump Administration

2. Majorities Across Parties Say Lowering Costs for Health Care and Drugs Should Be Top Priorities for Congress Percent who say each of the following should be a top priorityfor Congress: DEMOCRATS INDEPENDENTS REPUBLICANS SOURCE: KFF Health Tracking Poll (conducted September 3-8, 2019). See topline for full question wording and response options.

3. Most Proposals For Lowering Prescription Drug Costs Are Popular Across Parties SOURCE: KFF Health Tracking Poll (conducted October 3-8, 2019). See topline for full question wording and response options.

4. Support For Government Negotiations With Drug Companies Can Shift With Arguments Would you favor or oppose allowing the federal government to negotiate with drug companies for lower prices if you heard…? Favor Oppose SOURCE: KFF Health Tracking Poll (conducted October 3-8, 2019). See topline for full question wording and response options.

5. Overview of MajorMedicare Drug Pricing Proposals • House • H.R.3: Lower Drug Costs Now Act of 2019 • Introduced by Chairmen Pallone, Neal, & Scott September 19, 2019 • Referred to the • Committees of Jurisdiction Trump Administration International Price IndexANPRM Released October 30, 2018 Proposals in FY 2020 Budget Released March 11, 2019 • Senate Finance Committee • S.2543: Prescription Drug Pricing Reduction Act of 2019 • Voted out of Committee • July 25, 2019 • 19 Yays; 9 Nays NOTE: These are drug pricing proposals related to Medicare specifically, rather than broader proposals that are not solely focused on Medicare, such as those related to drug importation, generic drug availability, patents, and price transparency.

6. High-Level Comparison of Medicare Drug Pricing Proposals

7. How Would Proposals Change the Medicare Part D Benefit? 0% Enrollees 0% Enrollees Enrollees 0% Enrollees Enrollees Medicare Plan sponsors Manufacturers

8. How Would the Secretary Negotiate Drug Prices Under H.R. 3?* • Secretary negotiates prices for at least 25 and up to 250 drugs without market competition • Based on 125 drugs with the highest Medicare Part D spending,125 drugs with the highest net spending in the commercial market, and insulin (in year 1) • Maximum fair price not to exceed 120% of average price in up to 6 countries: Australia, Canada, France, Germany, Japan, & UK • If no international price is available, maximum fair price not to exceed 85% of average manufacturer price • Maximum fair price applies to both Medicare & private payers (group and individual) • Drug companies subject to excise tax for not negotiating with the Secretary -- 65% up to 95% of the previous year’s gross sales for a given drug • Civil monetary penalty on drug companies for not offering agreed-upon maximum fair price to private payers = 10x difference between price charged & negotiated price • CBO preliminary and partial estimate: $345 billion in Medicare savings (2023-2029) *Based on H.R.3 prior to any changes made by committees of jurisdiction.

9. How Would Proposals Use Inflation Rate to Limit Drug Price Increases? *Under the proposal, CMS would not pay more for a Part B drug than the inflation-adjusted price, so rebates would not be needed.

10. How Would Drug Proposals Use International Reference Pricing? Trump Administration • International prices used to test new models to pay for Part B drugs • Would apply to geographic areas that comprise 50% of all drug spending • Target prices derived from an international price index (IPI), phased in over 5 years, or ASP, whichever is lower • Medicare Part B drug payments set at 126% of average price paid by up to 16 countries House • International prices used as part of drug negotiations between HHS Secretary and manufacturers to establish an upper limit on negotiated prices • Maximum price would be set at 120% of the average price paid in up to 6 countries Senate Finance • No international reference pricing provisions

11. What is the Status of Trump Administration Drug Proposals? International Price Index (IPI) for Medicare Part B drugs • Advanced Notice of Proposed Rule Making: Released October 2018 Modify Medicare Part D benefit design, including adding an out-of-pocket limit • Proposed in Administration’s FY 2020 Budget Modify methodology for Part B drug payments (e.g., limiting drug prices to rate of inflation) • Proposed in Administration’s FY 2020 Budget Prohibit rebates by removing “safe harbors” that protect rebate payments made by drug manufacturers to pharmacy benefit managers (PBMs) • Withdrawn in July 2019 (CBO estimated rule would increase federal spending by $177 billion) Require pharmaceutical companies to include list prices in TV ads • Blocked by federal court in July 2019