Prescription drug costs are a major concern for consumers and a fiscal challenge for public and private payers. In response, lawmakers are considering a broad range of policy options, including allowing the federal government to negotiate the price of prescription drugs on behalf of people enrolled in Medicare Part D drug plans, which is prohibited under current law. Members of the 116th Congress have introduced bills to change the law and allow government drug price negotiation--a change which is also supported by some 2020 presidential candidates--and House Speaker Nancy Pelosi is reportedly working on a related proposal. Recent public opinion polls show strong and bipartisan support for allowing the federal government to negotiate drug prices in Medicare (Figure 1). This issue brief begins with a brief description of the statutory prohibition on government negotiations and its history and reviews assessments made by the Congressional Budget Office (CBO) on the potential for government negotiations to achieve savings for Medicare and beneficiaries. The brief also describes the various legislative proposals introduced in the current Congressional session that would give the Health and Human Services Secretary authority to negotiate drug prices on behalf of Medicare beneficiaries. A number of questions arise in evaluating proposals to allow the HHS Secretary to negotiate drug prices, such as: Would the Secretary negotiate prices for all drugs or a subset of drugs? What process would be used in settling on a negotiated price, and what would be the fallback if the negotiation process is unsuccessful? Would the negotiated price apply to Part D only or more broadly to other payers as well? How the various legislative proposals address these and other questions would have a significant effect on how many people could be affected and the magnitude of savings that could be achieved by Medicare drug price negotiation.
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