Sec. 2. Findings

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Congress finds the following: In addition to spurring economic growth, the National Institutes of Health supports some of the most significant breakthroughs in biomedical innovation, including some that are commercialized into new pharmaceutical products. The National Institutes of Health funding contributed, either directly or indirectly, to the development of all 210 new molecular entities approved by the Food and Drug Administration between 2010 and 2016, according to an analysis published in the Proceedings of the National Academy of Sciences.

In fiscal year 2019, Congress provided $39,100,000,000 in funding for the National Institutes of Health. According to a Kaiser Family Foundation health tracking poll in February 2019— nearly 80 percent of people in the United States say that the cost of prescription drugs is unreasonable and only 25 percent trust pharmaceutical companies to price their products fairly; and one-fourth of people in the United States say it is difficult to afford their prescription drugs, and 3 in 10 say they have not taken their medications as prescribed due to costs.

According to a September 2018 report from the AARP— between 2016 and 2017, retail prices for 267 widely used brand name prescription drugs increased by 8.4 percent after 5 straight years of double-digit average annual price increases; brand name drug prices increased 4 times faster than general inflation in 2017; and retail prices increased in 2017 for 87 percent (231 of 267) of the widely used brand name prescription drugs reviewed, and all but 5 such increases exceeded the rate of inflation.

In 2016, prescription drug spending in the United States was $477,000,000,000, according to an estimate from the Assistant Secretary for Planning and Evaluation of the Department of Health and Human Services. Prescription drugs account for nearly $1 out of every $5 in overall spending under the Medicare program, as well as 21 percent of Medicare beneficiaries’ out-of-pocket health spending, not including premiums. A drug’s list price has a significant impact on what payors and patients pay to purchase prescription drugs.

In prescription drug plans under Medicare part D, and a growing number of commercial health plans, seniors’ and other beneficiaries’ cost-sharing is based on a percentage of a drug’s list price. As a result, higher drug list prices mean higher out-of-pocket costs for Medicare beneficiaries for their retail prescriptions. For prescription drugs covered under Medicare part B, beneficiaries are responsible for paying 20 percent of the Medicare-approved amount for the drug, and the part B deductible also applies.

This can be a significant burden for high-cost part B drugs. A drug’s list price is a factor in determining the amount of the rebate paid to State Medicaid plans by the drug’s manufacturer under the Medicaid Drug Rebate Program, and an increase in the drug’s list price may result in increased Medicaid costs. In the private health insurance market, pharmacy benefit manager and wholesaler fees are based on a percentage of the list price. Higher list prices increase costs in this part of the distribution chain.

From 2007 through 2017, enrollment in high-deductible health plans with a health savings account (4.2 percent to 18.9 percent) and without a health savings account (10.6 percent to 24.5 percent) increased among adults between ages 18 and 64 with employment-based coverage, while enrollment in traditional plans decreased, according to the Centers for Disease Control and Prevention. Individuals with high-deductible health plans pay more out of pocket for medical expenses until their deductible is met, making high-cost drugs challenging to afford.

A larger share of prescription drug plans under Medicare part D charged a deductible in 2019 than in 2018 (71 percent in 2019, and 63 percent in 2018), according to the Kaiser Family Foundation. Fifty-two percent of prescription drug plans will require enrollees to satisfy the standard deductible of $415 in 2019.