Issue Brief
  1. Some examples of this approach introduced in the 116th Congress are H.R.275, "Medicare Prescription Drug Price Negotiation Act of 2019," available at https://www.congress.gov/116/bills/hr275/BILLS-116hr275ih.pdf; S.62 “Empowering Medicare Seniors to Negotiate Drug Prices Act of 2019,” available at https://www.congress.gov/116/bills/s62/BILLS-116s62is.pdf; S.470, “Medicare at 50 Act,” available at https://www.congress.gov/116/bills/s470/BILLS-116s470is.pdf; and H.R. 1346, “Medicare Buy-In and Health Care Stabilization Act of 2019,” available at https://www.congress.gov/116/bills/hr1346/BILLS-116hr1346ih.pdf

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  2. An example of this approach introduced in the 116th Congress is S.99/H.R.448, “Medicare Drug Price Negotiation Act,” available at https://www.congress.gov/116/bills/s99/BILLS-116s99is.pdf and https://www.congress.gov/116/bills/hr448/BILLS-116hr448ih.pdf

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  3. Some examples of these approaches introduced in the 116th Congress are S.3, “Keeping Health Insurance Affordable Act of 2019,” available at https://www.congress.gov/116/bills/s3/BILLS-116s3is.pdf; S.99/H.R.448, “Medicare Drug Price Negotiation Act,” available at https://www.congress.gov/116/bills/s99/BILLS-116s99is.pdf and https://www.congress.gov/116/bills/hr448/BILLS-116hr448ih.pdf; S.1129, “Medicare for All Act of 2019,’’ available at: https://www.congress.gov/116/bills/s1129/BILLS-116s1129is.pdf

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  4. Kapczynski, A., and Kesselheim, A.S. ‘Government patent use’: A legal approach to reducing drug spending. Health Affairs, 35(5), 2016; Rizvi, Z., Kapczynski, A., and Kesselheim, A.S. “A simple way for the government to curb inflated drug prices.” The Washington Post, May 12, 2016; Zaitchik, A. “How the government can bring down drug prices,” American Prospect, June 29, 2017; Lee, J. “Can an obscure, 100-year-old patent law take on big pharma?” Bloomberg, May 21, 2018; “How the government can lower drug prices [Editorial]” The New York Times, June 20, 2018.

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  5. When the government authorizes compulsory licensing in other, non-pharmaceutical contexts, compensation to the patent holder is typically set at around 10 percent, however the uniqueness of the pharmaceutical market may challenge the adaptability of royalties applicable to other areas. See Kapczynski and Kesselheim, 2016.

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  6. An example of this approach introduced in the 116th Congress is S.99/H.R.448, “Medicare Drug Price Negotiation Act,” available at https://www.congress.gov/116/bills/s99/BILLS-116s99is.pdf and https://www.congress.gov/116/bills/hr448/BILLS-116hr448ih.pdf

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  7. Binding arbitration is not included in any of the current Congressional proposals. A variation of this approach as proposed by Richard Frank and Joseph Newhouse would establish a system of binding arbitration between the federal government and pharmaceutical companies to determine a set of temporary administered prices for unique drugs, until such time when competitor products became available; see Richard Frank and Joe Newhouse, "Should Drug Prices Be Negotiated Under Part D of Medicare?" Health Affairs 2008; Richard Frank, "Prescription Drug Procurement and the Federal Budget," Kaiser Family Foundation, May 2012, available at http://kff.org/health-costs/issue-brief/prescription-drug-procurement-and-the-federal-budget/. The Medicare Payment Advisory Commission (MedPAC) has also suggested the use of binding arbitration but their recommendations specifically relate to negotiation for Part B drugs, not Part D.

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  8. Martin Wenzl and Valérie Paris, “Pharmaceutical Reimbursement and Pricing in Germany,” OECD, June 2018, available at http://www.oecd.org/els/health-systems/Pharmaceutical-Reimbursement-and-Pricing-in-Germany.pdf; See also James C. Robinson, Patricia Ex, and Dimitra Panteli, “Single-Payer Drug Pricing In A Multipayer Health System: Does Germany Offer A Model For The US?” Health Affairs blog, March 2019, available at https://www.healthaffairs.org/do/10.1377/hblog20190318.475434/full/.

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  9. MedPAC outlines some considerations for structuring an arbitration process; see http://medpac.gov/docs/default-source/reports/jun17_ch2.pdf, page 61.

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  10. Another tax-related proposal that is not directly connected to Medicare drug price negotiation would be to impose a windfall profits tax on drug companies that charge list prices higher than an assessed price based on value; see Topher Spiro, “The Simple Solution to Lower Drug Prices for All Americans,” Center for American Progress, June 2019, available at https://www.americanprogress.org/issues/healthcare/news/2019/06/21/471344/simple-solution-lower-drug-prices-americans/.

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  11. Other approaches not addressed here but also proposed as ways to control drug costs include: greater drug price transparency, getting more generic drugs and biosimilars to market, reference pricing for Part B drugs, reducing drug companies' market exclusivity period, establishing a new rebate under Part D when drug prices increase faster than inflation, and extending the Medicaid drug price rebate to low-income Part D enrollees.

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Appendix
  1. Kapczynski and Kesselheim, 2016; Rizvi, Kapczynski, and Kesselheim, 2016; Zaitchik, 2017; Lee, 2018; How the government can lower drug prices [Editorial]. The New York Times, June 20, 2018.

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  2. Kapczynski and Kesselheim, 2016; Zaitchik, 2017.

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  3. Brennan, H., Kapczynski, A., and Monahan, C.H. “A prescription for excessive drug pricing: Leveraging government patent use for health.” Yale Journal of Law and Technology, 18(1), 275-354, 2017; Bruns, B.S. The Pharmaceutical Access Act: An administrative eminent domain solution to high drug prices. California Law Review, 106(6), 2023-2066, 2018; KEIWashDC. (2017, April 19). Feb. 24, 2017 compulsory licensing workshop - panel discussion, 28 U.S.C. 1498 [Video file], available at http://www.youtube.com/watch?v=Za9RbL0jtds.

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  4. How the government can lower drug prices [Editorial]. The New York Times, June 20, 2018.

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  5. Lee, 2018; How the government can lower drug prices [Editorial]. The New York Times, June 20, 2018.

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  6. Kapczynski and Kesselheim, 2016; Rizvi, Kapczynski, and Kesselheim, 2016; Zaitchik, 2017; Hepatitis C: Louisiana’s plan to increase access to treatment [Amicus]. Harvard Civil Rights-Liberties Law Review, 2017.

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  7. Hepatitis C: Louisiana’s plan to increase access to treatment [Amicus], 2017; Johnson, C.Y. “Louisiana considers radical step to counter high drug prices: Federal intervention.” The Washington Post, July 3, 2017.

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  8. Thomas, J.R. March-in rights under the Bayh-Dole Act, CRS Report No. R44597, Congressional Research Service, 2016.

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