End Price Gouging for Medications Act
- Bill Number
- S. 1753
- Origin Chamber
- Senate
- Congress
- 119th Congress, Session 1
- Policy Area
- Health
- Status
- Introduced
- Latest Action
- 2025-05-14: Read twice and referred to the Committee on Health, Education, Labor, and Pensions.
- Last Updated
- 2025-12-05T21:45:57Z
AI-Generated Summary
Purpose
The "End Price Gouging for Medications Act" aims to lower prescription drug costs by requiring the Secretary of Health and Human Services (HHS) to set annual "reference prices" based on international benchmarks. These prices would cap what federal health programs and other buyers pay, preventing excessive pricing (often called "price gouging") for medications.
Key Provisions
- Establishing Reference Prices: HHS must annually determine a reference price for each prescription drug. This is typically the lowest retail list price (the publicly advertised price before discounts) from a list of 12 "reference countries" (Australia, Austria, Belgium, Canada, France, Germany, Italy, Japan, the Netherlands, Sweden, Switzerland, and the United Kingdom) where the drug is sold, if pricing data is available from at least three of them. If not, HHS uses factors like the drug's therapeutic benefits (how much it helps patients), overall value, patient access, research and development costs, and other relevant considerations to set an "appropriate" price.
- Application to Federal Health Programs: The reference price becomes the maximum retail list price for covered drugs (both inpatient and outpatient) in major federal programs, including:
- Medicare (health insurance for seniors and certain disabled people).
- Medicaid (health coverage for low-income individuals).
- Children's Health Insurance Program (CHIP, for low-income children).
- TRICARE (military health benefits).
- Veterans Affairs (VA) health services.
- Federal Employees Health Benefits Program (FEHB, for government workers).
- Indian Health Care programs (for Native American communities).
- Extension to Other Buyers: Drug manufacturers must offer drugs at or below the reference price to everyone, including uninsured individuals and those with private insurance. For insured people, this means the total cost (insurance payment plus out-of-pocket expenses like copays) cannot exceed the reference price.
- Enforcement and Penalties: Non-compliant manufacturers face civil penalties (fines) equal to five times the difference between what they actually received for drug sales in federal programs and what they would have received if priced at the reference level. Collected fines are transferred to the National Institutes of Health (NIH) to fund drug research and development.
- Scope: Applies to both brand-name drugs (new, patented medications) and generic drugs (lower-cost versions of off-patent drugs), as approved by the Food and Drug Administration (FDA).
Significant Changes to Existing Law
- Introduces a new federal price-capping system that overrides other laws, forcing drug prices in federal programs to align with lower international rates rather than allowing unrestricted U.S. pricing.
- Mandates pricing transparency and affordability for non-federal buyers (e.g., private insurers and uninsured individuals), which is a major shift from the current market-driven system where U.S. drug prices are often higher than in other countries.
- Redirects penalty revenues to NIH research, creating a new funding mechanism tied directly to enforcement.
Potential Impacts
- On Government Agencies: Federal health programs like Medicare and Medicaid could save billions by paying lower prices, reducing taxpayer costs. HHS gains new administrative duties to set and monitor prices annually. NIH receives additional funding for research, potentially accelerating new drug development.
- On Citizens: Patients in federal programs and beyond would face lower out-of-pocket costs and better access to affordable medications, especially for expensive treatments. Uninsured individuals benefit directly from capped prices.
- On International Relations: By basing prices on foreign markets, the law could pressure reference countries to share pricing data more openly, but it might strain relations with pharmaceutical companies operating globally if it disrupts their pricing strategies.
Main Stakeholders Affected
- Drug Manufacturers: Face revenue losses from mandatory price caps and penalties for non-compliance; must adjust global pricing strategies.
- Federal Health Programs and Agencies: Including HHS, Centers for Medicare & Medicaid Services (CMS), VA, and Department of Defense (for TRICARE); they enforce caps and benefit from cost savings.
- Patients and Enrollees: Millions in Medicare, Medicaid, CHIP, VA, FEHB, TRICARE, and Indian Health programs, plus uninsured and privately insured individuals, gain from reduced costs.
- NIH and Researchers: Receive penalty funds to support drug innovation.
- Private Insurers and Employers: Indirectly affected as they must ensure total costs do not exceed reference prices for covered members.
Notable Legal, Constitutional, or Political Implications
- Legal: The bill's override of existing laws could lead to lawsuits from drug companies claiming it violates their rights to set prices or constitutes an unconstitutional "taking" of property (seizure without compensation). Enforcement relies on civil penalties, which are administrative fines rather than criminal charges.
- Constitutional: Potential challenges under the Commerce Clause (regulating interstate trade) or Fifth Amendment (due process and property rights), as it imposes nationwide price controls on private entities.
- Political: Introduced by Senators Merkley, Welch, Sanders, and Durbin (Democrats focused on affordability), it reflects ongoing debates on drug pricing reform. If passed, it could set a precedent for international price indexing but face opposition from industry lobbying groups arguing it stifles innovation. Referred to the Senate Committee on Health, Education, Labor, and Pensions for review.
This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.
Sponsor
Cosponsors (3)
Sen. Welch, Peter [D-VT], Sen. Sanders, Bernard [I-VT], Sen. Durbin, Richard J. [D-IL]
Recent Actions
- 2025-05-14: Read twice and referred to the Committee on Health, Education, Labor, and Pensions.
- 2025-05-14: Introduced in Senate
Bill Versions
- End Price Gouging for Medications Act — issued 2025-05-14 — PDF (6 pages)