Advocacy Briefs

Democrats Reintroduce H.R.3., their Lower Drug Pricing Act - April 2021

In essence, H.R.3 would allow the federal government to negotiate directly with drug companies as a way of lowering certain Medicare drug prices; and would give the Secretary of Health and Human Services (HHS) broad authority in determining the price of those particular drugs (250 of them). H.R.3 also includes a provision that private insurance marketplaces also get similar price accommodations. 

But, in order to satisfy the “Byrd Rule” and get written into the (budget) reconciliation package, lawmakers must further show that it won’t increase the federal budget deficit in any way. The Congressional Budget Office (or CBO) scored the drug negotiation maneuver favorably, with an estimating savings of almost $450 billion—provided that it also includes capping negotiated prices at 1.2 times the cost of what selected foreign countries pay for the same drugs (in the UK, Canada, Australia, France, Germany and Japan).

Yet, with so much variability in prescribing practices and patient needs, using what’s known as Quality-Adjusted Life Years (QALY) as a benchmark metric for the wholesale revision of lowering drug prices doesn’t necessarily work, especially when chronic disease populations and seniors are involved. 

While motivated by the principle of maximizing population health together with cost affordability, the use of imported QALYs seem to express patient value less essentially against those individuals whose lives aren’t impacted on a daily basis by a chronic (albeit costly) disease. 

And for medications that don’t extend a full year of life on the QALY scale—or offer less, “payer perceived” full quality of life—they get rated lower. But the true impact and value for those individuals, whose lives those “costlier” yet equally efficacious treatments may depend, QALYs interpret their health outcomes quite differently. They view them as less than. 

But QALYs are becoming increasingly popular, not just as theoretical or philosophical tools on some whiteboard in the classroom, but in legislation, like H.R. 3, without having that vital real-world conversation about what really is the metric of a life’s worth? And it underscores the disparate way in which QALYs are often used to measure or “comparison shop” someone’s life relative to the cost of other clinically efficacious (or often medically necessitous) care and treatments. An apples-to-oranges comparison in many ways.

In general, imported QALYs disadvantage communities with cancer, HIV, disabilities, and seniors so much so, that in 2010, Congress even made limitations on certain uses of comparative clinical effectiveness tools across the Medicare system, but these tools keep coming back—no doubt due to the mounting fiscal debt associated with COVID-19. 

As proposed, H.R. 3 is expected to: reduce beneficiaries’ out-of-pocket (OOP) at $2,000 per year; reverse price hikes above inflation across thousands of drugs in Medicare; and affects the federal government’s reinsurance costs the least, relative to other congressional proposals.


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