The War on New Drugs: Understanding House Bill HR3, the Lower Drug Costs Now Act

written by Skye Sherman - Oct 4, 2021
medically reviewed by Dr. Tolulope Olabintan, MD - Oct 5, 2021

Photo Credit: by Volodymyr Hryshchenko,
Photo Credit: by Volodymyr Hryshchenko,

Have you heard of House Bill HR3? Many people haven’t. Most Americans don’t follow every congressional report and proposed budget that passes through the upper levels of government. However, even the average American will want to take note of House Bill HR3.

It’s summarized by Congress this way: “This bill establishes several programs and requirements relating to the prices of prescription drugs, health care coverage and costs, and public health.”

Sounds simple, right? We all want the same thing when it comes to our health care: comprehensive coverage and low prices on the prescription drugs we need.

The New York Times calls it “a measure that would link the prices of certain prescription drugs to those paid overseas” and says the bill “was devised to save the government enough money to offset the costs of other priorities.” Some of these priorities, the proposed goals of the bill, are new coverage for Americans without insurance, extra subsidies for people who buy their own coverage, and new Medicare benefits for older Americans.

Translation? With this bill, the government wants to save money in some areas in order to have more money to spend on its other health-related goals. But how will they do this?

Part of this new bill, also called the Lower Drug Costs Now Act, would set limits on the prices that drug companies can sell their medications for. “The House approach … could save the government around $500 billion over a decade, with that money coming out of the pockets of the pharmaceutical industry,” the article explains.

While it seems like lower drug prices could only be a good thing, “it’s risky to bet against the drug companies,” the article goes on. It also states, “Health industries are large and powerful lobbies, and they do not enjoy having their revenues cut. As with measures that might reduce payments to hospitals, doctors and insurance companies, the House’s attempt to take a bite out of drug companies has generated a backlash.”

Confused yet? There’s a lot to consider here. Let’s take a look at both sides of the story.

Understanding House Bill HR3: the cons and downsides

Conservative news outlet The Daily Signal shares their view: “The $3.5 trillion spending orgy supported by President Joe Biden, House Speaker Nancy Pelosi, and Sen. Bernie Sanders includes a poison pill—almost literally. The Congressional Budget Office estimates that HR 3, called the Lower Drug Costs Now Act, would help ‘pay for’ this fiscal incontinence by squeezing $581.6 billion from the pharmaceutical industry over the next 10 years. More than just a tax on ‘evil drug companies,’ this measure would blackmail this sector, chop into its bottom line, and torpedo research and development. This would mean more ailments and earlier deaths for everyday Americans.”

The outlet further explains that HR3 would force pharmaceutical manufacturers to “haggle over prices with federal functionaries.” However, this is not simply bargaining between buyers and sellers; instead, the negotiations in this case factor in overseas drug prices from countries with socialized healthcare systems. The fixed prices set in other countries would regulate and affect all drug sales.

What if these drug companies refuse to honor the prices they are being forced to set? That option is not really realistic in this scenario because this bill says that drug companies who will not sell their drugs to distributors at the mandated prices will face an excise tax starting at 65% and going up all the way to 95%.

These are the cons of the Lower Drug Costs Now Act, which is being dubbed by some as the War on New Drugs. If you tie the hands of drug companies, they are less able to do what they do best, which is study and discover new and better drug treatments for various conditions.

It’s true that the bill would help stop Big Pharma from extorting patients with exorbitantly high drug prices, but the flip side is that these same companies also have less to spend on research and development of new drugs that would help more people. There’s a big trade-off, but some see it as worth it in order to enable more Americans to safely get the drugs they need at more affordable, reasonable prices.

The potential benefits of the Lower Drug Costs Now Act

While some may consider the Lower Drug Costs Now Act a war on new drugs, there are obviously some huge potential gains, otherwise it wouldn’t have been introduced in the first place.

The biggest and most obvious intended benefit of the Lower Drug Costs Now Act is that more Americans would have better access to the drugs they need at prices they can afford. Access to life-saving therapies and everyday medications that people depend on would be available to more people.

Under House Bill HR3, the Department of Health and Human Services would be required to negotiate maximum prices for certain drugs, including insulin products. The bill states that “the negotiated maximum price may not exceed (1) 120% of the average price in Australia, Canada, France, Germany, Japan, and the United Kingdom; or (2) if such information is not available, 85% of the U.S. average manufacturer price.”

This bill would majorly benefit many Americans who take prescription medications, especially diabetics who need insulin to survive. The price of insulin has increased dramatically over the years and according to the Mayo Clinic, “the most commonly used forms of analog insulin cost 10 times more in the United States than in any other developed country.”

They also state that one of the reasons behind the outrageous price is the fact that it’s a lifesaving drug that millions of people depend on to survive. “The desperate need for a lifesaving product allows insulin to be priced at high levels because it is not a luxury item that one can forego. The manufacturers of insulin know that patients who need it will spend whatever it takes to acquire it, regardless of price. It is a matter of life and death.” Diabetic medications and products are not a luxury but a necessity for the patients who rely on them.

However, the Lower Drug Costs Now Act would put a stop to this kind of extortion, at least in the case of insulin. The act puts a limit on America’s sky-high drug prices and stops the extortion faced by many Americans who cannot get affordable, reliable access to the drugs they need.

The complications of lowering drug prices

While the situation seems simple, the reality is a bit more complicated, as The Daily Signal points out. If drugmakers cannot charge what they want or need to charge because their prices are regulated or capped by the government, it seems like the only fallout will be the fact that the Big Pharma CEOs might have to take slightly less expensive vacations. The ones at the top of the pharmaceutical industry would have less so everyone else can have more.

However, that’s not the whole truth or the full picture. The mega-wealthy might feel the effects of the new bill on their wallets, but they won’t suffer. The ones who are in a position to truly suffer are the everyday patients who rely on the innovation and research that comes from these drug companies.

As The Daily Signal puts it, “Punching the drug industry in the mouth gives regular patients bloody lips. If HR 3 slices drug companies’ incomes, they will have less money to create new and better drugs.”

The article’s view is that the ones who will most feel the burn of the new bill are the patients who rely on the steady development of new and better drugs and therapies for diseases.

And this is a valid point. According to STAT News, a recent report from the Congressional Budget Office “concluded that limiting prices — as envisioned in a controversial House bill known as H.R. 3 — would lead to 59 fewer new drugs over the next three decades.”

For better or for worse, this new bill would have a major impact on the development of new drugs. Is it worth it to cap the incomes of big drug companies by mandating what they can charge and thus provide better drug access to the average American, even if that means we will see less medical innovation over time as a result?

It’s a conundrum to consider. Regardless of your stance, if you rely on prescription drugs in your everyday life, you likely will want to keep an eye on the progress of House Bill HR3.



Leave your comment:

Your email address will not be published. Required fields are marked with *.

Enter Code:
not case-sensitive

While the above article is based on thorough research, we do not claim to offer a substitute for medical advice from a qualified healthcare provider. The article was written for information and educational purposes only. We aim to provide helpful information to our readers, but cannot provide a treatment, diagnosis, or consultation of any sort, and we are in no way indicating that any particular drug is safe or appropriate for you and your individual needs. To receive professional medical attention, you must see a doctor.