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To amend titles XVIII and XIX of the Social Security Act to provide that priority research drugs shall not be treated as line extensions of existing drugs for purposes of calculating manufacturer rebates under the Medicare and Medicaid programs, and for other purposes.
4/3/2025, 1:57 PM
Summary of Bill HR 2542
The main goal of this legislation is to incentivize pharmaceutical companies to invest in research and development of new drugs that could significantly improve patient outcomes and quality of life. By excluding priority research drugs from the rebate calculations, manufacturers would be more likely to focus on developing cutting-edge treatments rather than simply modifying existing medications.
Overall, Bill 119 hr 2542 aims to promote innovation in the pharmaceutical industry and ensure that patients have access to the most advanced and effective medications available. This bill could have a significant impact on the healthcare system by encouraging the development of groundbreaking treatments that could potentially save lives and improve overall public health.
Congressional Summary of HR 2542
Old Drugs, New Cures Act
This bill exempts manufacturers of certain long-standing drugs from paying specialized rebates under the Medicaid Drug Rebate Program and the Medicare Prescription Drug Inflation Rebate Program. (Under these programs, drug manufacturers pay rebates to state Medicaid programs for certain drugs covered under Medicaid and to the Centers for Medicare & Medicaid Services for certain drugs covered under Medicare.)
Specifically, manufacturers may request that a drug that would otherwise be considered a line extension under the Medicaid and Medicare rebate programs to instead be designated as a priority research drug. (A line extension refers to an oral dose of a new formulation of an existing drug, such as an extended release formulation, that would subject the drug to specialized rebates under the Medicaid and Medicare drug rebate programs.)
Under the bill, a drug qualifies as a priority research drug if (1) at least 10 years have elapsed since the drug was first approved, (2) the manufacturer is investigating a new use of the drug that would address a significant unmet need, and (3) the new use addresses a disease or condition that has a high prevalence among beneficiaries of Medicaid, Medicare, or other federal health care programs.
