Old Drugs, New Cures Act

Bill Number

H.R. 2542

Origin Chamber

House

Congress

119th Congress, Session 1

Policy Area

Health

Status

Introduced

Latest Action

2025-04-01: Referred to the Committee on Energy and Commerce, and in addition to the Committee on Ways and Means, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.

Last Updated

2026-05-04T15:17:50Z

AI-Generated Summary

Purpose

The "Old Drugs, New Cures Act" (H.R. 2542) aims to promote research into new uses for existing drugs by exempting certain "priority research drugs" from rules that treat them as "line extensions" of older drugs. Line extensions are new formulations or versions of a drug that can trigger higher manufacturer rebates to Medicare and Medicaid. By excluding these priority drugs from such treatment, the bill seeks to reduce financial disincentives for manufacturers to develop new indications (approved uses) for older drugs, potentially leading to more treatments for unmet medical needs, especially among federal health program beneficiaries.

Key Provisions

• Designation Process for Priority Research Drugs:
• Within 90 days of enactment, the Secretary of Health and Human Services (HHS) must create a process for drug manufacturers to request designation of a covered outpatient drug as a "priority research drug."
• HHS must decide on requests within 60 days and grant the designation if the drug meets three criteria:
• At least 10 years have passed since the drug's initial approval by the Food and Drug Administration (FDA) under the Federal Food, Drug, and Cosmetic Act or the Public Health Service Act.
• The manufacturer is actively investigating the drug for a new indication (use) that addresses a "significant unmet medical need," meaning no other approved drug exists for that specific disease or condition at the time of the request.
• The new indication targets a disease or condition with "high prevalence" among federal health care beneficiaries, defined as at least 33% of relevant claims in the prior year being covered by Medicaid, subsidized Medicare Part D, the 340B drug discount program (which provides discounted drugs to safety-net providers), or Department of Veterans Affairs (VA) programs.

• Exclusions from Rebate Calculations:
• Priority research drugs are not considered line extensions when calculating "best prices" and manufacturer rebates under Medicaid (Section 1927 of the Social Security Act).
• They are also excluded from special rebate rules for selected drugs in Medicaid and from line extension definitions in Medicare Part D (under Section 1860D-14B).
• This applies during the period the drug is under investigation for the new indication.

Significant Changes to Existing Law

• Amends Section 1927(c)(2)(C) of the Social Security Act (Medicaid drug rebate rules) to define and exclude priority research drugs from line extension status, preventing them from being grouped with existing drugs for rebate purposes.
• Modifies Section 1927(c)(1)(C)(ii)(V) to exempt these drugs from enhanced rebate calculations for certain selected drugs.
• Updates Section 1860D-14B(b)(5)(B)(ii) (Medicare coverage gap discount program) to similarly exclude priority research drugs from line extension definitions.
• These changes create a new pathway for older drugs (over 10 years old) to avoid rebate penalties when repurposed, which was not previously available under current law that broadly treats new versions or indications as line extensions to ensure consistent rebate obligations.

Potential Impacts

• On Government Agencies: The Centers for Medicare & Medicaid Services (CMS) and HHS will need to implement a new designation process, potentially increasing administrative workload but possibly reducing long-term rebate payments if fewer drugs qualify as line extensions. This could affect federal budgets for Medicare and Medicaid drug spending.
• On Citizens: Beneficiaries of Medicare, Medicaid, and other federal programs (e.g., low-income seniors, children, veterans) may gain access to new treatments for high-prevalence conditions without alternative options, improving health outcomes for underserved populations. However, it might indirectly influence drug prices through altered rebate structures.
• On International Relations: Minimal direct impact, though it could encourage U.S. pharmaceutical innovation in drug repurposing, potentially influencing global drug development trends or trade in pharmaceuticals.

Main Stakeholders Affected

• Drug Manufacturers: Primary beneficiaries, as the exemptions reduce rebate liabilities, incentivizing investment in research for new indications of older drugs.
• Federal Health Program Beneficiaries: Medicare Part D enrollees (especially those eligible for low-income subsidies), Medicaid recipients, 340B-eligible patients (e.g., at community health centers), and VA patients, particularly those with prevalent conditions lacking treatments.
• Government Entities: HHS, CMS, and VA, which administer these programs and will handle designations and rebate adjustments.
• Healthcare Providers and Safety-Net Organizations: Entities using 340B discounts may see more affordable access to repurposed drugs for high-need patients.
• Patients and Advocacy Groups: Those with unmet medical needs for common conditions among federal beneficiaries could benefit from faster innovation.

Notable Legal, Constitutional, or Political Implications

• Legal Implications: Introduces a time-bound administrative process (60-day decisions) that could lead to challenges if HHS designations are perceived as arbitrary; relies on FDA approval frameworks without altering them, maintaining separation of powers in drug regulation. The 33% prevalence threshold provides a clear, data-driven criterion to avoid overly broad exemptions.
• Constitutional Implications: None significant, as it operates within Congress's authority under the Spending Clause to regulate federal health programs and commerce in pharmaceuticals.
• Political Implications: Supports bipartisan goals of drug innovation and cost control (introduced by Reps. Davis and Pfluger), but could spark debate over reduced rebates potentially increasing taxpayer costs for drugs. It aligns with efforts to repurpose existing drugs amid rising new drug prices, though critics might argue it favors pharmaceutical companies over direct price negotiations in Medicare (e.g., under the Inflation Reduction Act). Referred to Energy and Commerce and Ways and Means Committees, indicating focus on health policy and fiscal impacts.

This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.

Sponsor

Rep. Davis, Donald G. [D-NC-1]

Cosponsors (1)

Rep. Pfluger, August [R-TX-11]

Recent Actions

• 2025-04-01: Referred to the Committee on Energy and Commerce, and in addition to the Committee on Ways and Means, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
• 2025-04-01: Referred to the Committee on Energy and Commerce, and in addition to the Committee on Ways and Means, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
• 2025-04-01: Introduced in House
• 2025-04-01: Introduced in House

Bill Versions

• Old Drugs, New Cures Act — issued 2025-04-01 — PDF (5 pages)