Prescription Drug Price Relief Act of 2025
- Sponsor
- Rep. Khanna, Ro [D-CA-17]
- Committees
- Judiciary Committee (primary)
- Last action
- May 21, 2025
Bottom line
The bill seeks to dramatically lower prescription drug costs by eliminating market monopolies for drugs priced higher than international medians or deemed otherwise excessive, facilitating generic competition.
What it actually does
This bill establishes a mechanism for the Secretary of Health and Human Services to identify brand-name prescription drugs with 'excessive prices' based on international comparisons or other factors. If a drug is deemed excessively priced, the bill mandates the waiver of government-granted exclusivities (like patents and data exclusivities) and the issuance of open, non-exclusive licenses to allow other entities to manufacture and sell generic or biosimilar versions of that drug at a reasonable royalty. It also requires extensive reporting from drug manufacturers and prohibits anticompetitive behavior.
Proponents argue
Proponents argue that the bill is a necessary step to combat exorbitant prescription drug prices in the United States, which are often significantly higher than in other developed nations. They contend that ending government-granted monopolies for excessively priced drugs will foster competition, increase patient access to life-saving medications, and reduce the financial burden on individuals and the healthcare system. Supporters believe this approach holds pharmaceutical manufacturers accountable for pricing practices that prioritize profit over public health.
Opponents contend
Opponents contend that this bill would severely undermine the intellectual property rights that incentivize pharmaceutical innovation. They argue that waiving exclusivities and forcing lower prices would drastically reduce the profitability of drug development, leading to less investment in research and development for new cures and treatments. Critics suggest that while the bill aims to lower prices in the short term, it would ultimately stifle innovation, limit the availability of future breakthrough medicines, and harm the U.S. biopharmaceutical industry's global leadership.
The bill is moderately complex, requiring careful reading to understand the new regulatory processes and definitions. The estimated reading time is sufficient for an informed reader to grasp its core provisions.
Section 2
Identification of Excessively Priced Drugs
This section directs the Secretary of Health and Human Services to review all brand-name drugs annually to determine if their prices are excessive. A drug is primarily deemed excessive if its domestic average manufacturing price exceeds the median price in Canada, the United Kingdom, Germany, France, and Japan. If international data is insufficient, or if not excessive by that metric, other factors like patient population, drug value, federal subsidies, development costs, and price increases relative to inflation can be considered.
Supporters argue
Proponents argue that establishing clear criteria for 'excessive price,' especially using international reference pricing, provides an objective and fair mechanism to identify drugs whose prices are out of line with global norms. They contend that this systematic review is essential to address market failures and ensure affordability.
Critics contend
Opponents argue that the criteria for 'excessive price' are arbitrary and do not adequately account for the unique market dynamics, R&D costs, and regulatory environment in the United States. They contend that international reference pricing fails to consider the higher innovation premium often paid in the U.S. market, which funds global drug development, and that the 'other factors' are too subjective, creating regulatory uncertainty.
Section 3
Ending Government-Granted Monopolies
If a drug is determined to have an excessive price, the Secretary must waive or void any government-granted exclusivities (such as patents or data exclusivities) for that drug. Concurrently, the Secretary must grant open, non-exclusive licenses to any person, allowing them to make, use, sell, or import the drug, and to rely on its regulatory test data. This provision aims to immediately introduce competition for excessively priced drugs.
Section 4
Excessive Drug Price License and Royalty Payments
This section outlines the terms for entities receiving an open, non-exclusive license. Licensees must pay a 'reasonable royalty' to the original patent holder. The royalty rate can be a percentage of sales (not exceeding the average pharmaceutical royalty rate from IRS data) or an amount determined by the Secretary based on factors like drug value, federal subsidies, and the manufacturer's recovered investments. Crucially, the royalty rate must ensure the licensed drug is sold at an affordable, reasonable price, and never at an excessive price.
Section 5
Public Excessive Drug Price Database and Annual Reports
This section mandates the Secretary to create and maintain a public, up-to-date database listing all brand-name drugs, their manufacturers, and whether they have been determined to have an excessive price. The database will also track petitions received, licenses granted, and generic/biosimilar applications approved under the new system. Additionally, the Secretary must submit annual reports to Congress summarizing the findings of the excessive drug price reviews, including data on drugs reviewed, excessively priced drugs, licenses granted, and application approval times.
Section 6
Drug Manufacturer Reporting Requirements and Penalties
This section mandates that brand-name drug manufacturers submit annual reports to the Secretary containing extensive data for each drug. This includes average manufacturer price and wholesale acquisition cost in the U.S. and reference countries, global revenues, net sales revenue, detailed R&D expenditures (itemized by research phase, clinical trials, etc.), marketing and advertising costs, and patient population size. Failure to submit timely or accurate information incurs significant civil monetary penalties, calculated as a percentage of gross revenues per day of non-compliance, with funds directed to NIH research grants.
The Secretary shall make an excessive price determination for any brand name drug for which pricing information is available for at least 3 of the 5 reference countries.
Section 2(b)(1)(C)
Why it matters:This is standard legislative practice to ensure the primary mechanism is robust even with incomplete data, rather than an attempt to obscure.
Case for: Proponents would argue this ensures the international reference pricing mechanism cannot be circumvented by manufacturers strategically withholding data for one or two countries, thereby broadening the applicability of the core price assessment.
Case against: Opponents might argue that relying on incomplete data (only 3 of 5 countries) could lead to less accurate or less representative price comparisons, potentially resulting in unfair excessive price determinations.
Estimated impact: Significantly expands the scope of drugs subject to international reference pricing, preventing loopholes.
The Secretary may file a civil action to recover damages from a manufacturer if the price of an excessively priced drug increases during the period between the excessive price determination and the entry of a licensed generic/biosimilar.
Section 3(c)
Why it matters:This is a critical anti-gaming provision, designed to prevent manufacturers from exploiting the transition period. Its placement is logical within the enforcement framework.
Case for: Proponents would highlight this as a crucial safeguard to prevent manufacturers from further inflating prices once an excessive price determination has been made, thereby protecting patients and payers during the period before generic competition can enter the market.
Case against: Opponents might argue this imposes an additional layer of regulatory risk and potential liability on manufacturers, further complicating their operations during a period of significant market disruption, and could be seen as punitive rather than preventative.
Estimated impact: Deters manufacturers from raising prices on drugs already deemed excessive, potentially saving consumers and payers significant amounts during the transition to generic competition.
Under no condition shall a royalty be set at a rate that would cause a product for which an open, non-exclusive license was issued under section 3 to be sold at an excessive price, as determined under section 2.
Section 4(b)(1)
Why it matters:This is a fundamental policy safeguard, ensuring the primary goal of affordability is not undermined by royalty calculations. Its placement is logical within the royalty determination rules.
Case for: Proponents would emphasize this as a non-negotiable principle, ensuring that the entire purpose of the bill—to lower excessive drug prices—is not defeated by setting royalty rates too high. It guarantees that licensed generics will genuinely offer affordable alternatives.
Case against: Opponents might argue that this constraint further limits the potential compensation for intellectual property holders, making the 'reasonable royalty' even less attractive and potentially insufficient to cover R&D costs, thereby exacerbating concerns about innovation incentives.
Estimated impact: Ensures that the ultimate price of licensed generic/biosimilar drugs will be below the threshold of 'excessive,' directly impacting patient affordability.