Sending Office: Meadows, Mark
State-Based Market-Oriented Prescription Drug Negotiations Act of 2019
I invite you to co-sponsor
H.R. 2038, the State-Based, Market-Oriented, Prescription Drug Negotiations Act of 2019. This bill would lower the costs of prescription drugs by allowing insurers to jointly negotiate prices of prescription drugs purchased from drug manufacturers.[i]
As you know,
pharmacy benefit managers (PBMs) represent health insurers, self-insured employers, union health plans, and government purchasers in the selection, purchase, and distribution of pharmaceuticals and negotiate pharmacy benefits. The more insured customers
represented by a PBM, the more likely that pharmaceutical manufacturers will offer rebates in return for potential market share. This has led to a reliance on size and consolidation in the PBM industry. Today three PBMs – Express Scripts, CVS Caremark, and
OptumRx – manage about 80% of pharmacy benefits for more than 180 million people and dominate the national market.[ii]
Competition and choice are vital for lowering costs and increasing access to prescription drugs for patients. With efforts by some in Congress to require the Secretary of Health and Human Services to negotiate prescription drug prices in Medicare Part D,
in addition to monopolist control of benefit negotiations by less than a handful of companies, a true market-oriented alternative is needed.
Working with the Foundation for Research on Equal Opportunity,[iii] we drafted a bill drawing on Switzerland’s framework to create a safe harbor from antitrust liability for
private health insurers to jointly negotiate with drug manufacturers.[iv] This market-oriented approach will limit further consolidation in the healthcare market and balance out the power of the pharmaceutical
industry. Furthermore, with prescription drug spending rising to nearly 20 percent of health care costs,[v] competitive negotiations involving more players in the market will benefit patients.
Join me and allow state-based, market-oriented negotiations to lower pharmaceutical drug prices, encourage competition, and increase consumer choice and access.
If you have any questions or would like to cosponsor this legislation, please contact Chad Yelinski in my office at 6-7032 or by email at
Mark R. Meadows
Member of Congress
[i] Meadows, Mark, H.R.2038 – the State-Based, Market-Oriented, Prescription Drug Negotiations Act of 2019. (https://www.congress.gov/bill/116th-congress/house-bill/2038/text).
[ii] HealthAffairs, Pharmacy Benefit Managers, (https://www.healthaffairs.org/do/10.1377/hpb20171409.000178/full/).
[iii] Avik Roy, “Competition Prescription,” (https://www.csrxp.org/wp-content/uploads/2017/05/The-Competition-Prescription1.pdf),
[iv] By way of background, “Switzerland has a universal market-based health insurance system, in which every Swiss citizen purchases private coverage on the individual market. The insurance benefit package is
standardized to some degree by the Federal Office of Public Health, though individual regions (cantons) have considerable flexibility in how their insurance markets are structured. The Federal Drug Commission advises the FOPH on then inclusion of prescription
drugs in the standard insurance benefits package; the FOPH regulates the price. In addition, insurers in a given canton can band together to jointly negotiate drug prices with a manufacturer. Switzerland is home to Roche and Novartis, two of the world’s largest
pharmaceutical companies. Most other drug companies base their European headquarters in Switzerland due to the confederation’s low tax rates.” Avik Roy, What Medicare Can Learn From Other Countries on Drug Pricing, (https://freopp.org/what-medicare-can-learn-from-other-countries-on-drug-pricing-bf298d390bc5).
[v] The Campaign for Sustainable Rx Pricing, “The Facts About Rising Prescription Drug Costs,” (https://www.csrxp.org/wp-content/uploads/2016/04/CSRxP_Facts-of-Rising-Rx-Prices.pdf).
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