MEMO: Impact of H.R. 6166 on Massachusetts Economy and Patients
Executive Summary: The newly introduced Lowering Drug Costs for American Families Act is framed as a “win” for patients, but it would provide minimal real savings at the pharmacy counter. Instead, it would stall progress on life-saving new cures, increase long-term health spending, and severely weaken Massachusetts’ world-leading life sciences bioeconomy (1).
While the bill includes helpful out-of-pocket (OOP) caps, it ties them to an expansion of government price-setting that weakens incentives for high-risk medical R&D and harms innovation.
Patient affordability can be improved without damaging innovation, by pursuing reforms that restore new drug R&D incentives and ensure that if a doctor prescribes a treatment and the insurer authorizes it, it is affordable to the patient at low or no OOP cost.
The better path forward: 1) support the ACA Copay CAP Act, 2) support the EPIC Act, 3) support comprehensive PBM reform, 4) modernize prior authorization, and 5) support smart incentives focused on targeted affordability reforms – not price controls.
What H.R. 6166 Does: Introduced by Reps. Pallone Jr. (D-NJ), Neal (D-MA), and Scott (D-V A), the bill claims to lower prescription drug “prices” through two approaches:
Approach #1: Expand Government Price Controls (Harmful)
● Expand Medicare’s arbitrary drug price-setting “negotiation” program to the commercial market, applying government-set prices and inflation rebates to >180M privately insured Americans.
○ Extend the IRA’s “pill penalty” beyond diseases of the aging (2).
○ Increase the number of drugs eligible for price-setting each year from 20 to 50.
○ Direct HHS to import faulty international benchmarks to set drug prices.
○ Restrict orphan drug exemptions.
Approach #2: Cap Patient Out-of-Pocket Drug Costs (Beneficial)
● Establish $2,000 OOP cap on prescription drugs for patients (Medicare, privately insured).
● Extend $35/month insulin cap to patients (Medicare, privately insured).
Real-World Impact:
Catastrophic Impact on Innovation: Price controls reduce future cures for patients. The IRA already triggered a sharp drop in new small-molecule R&D, especially for diseases of the aging (3). Extending price-caps through a “pill penalty” expansion outside of Medicare would extend investment disincentives to diseases and conditions that impact everyone, including for cancer, Parkinson’s, pain, and infectious diseases. The result will be clear and dramatic: fewer investments, fewer trials, and fewer cures.
Empty Promises for Patients: As with the IRA, the bill provides no requirement that savings generated from “negotiations” be passed on to patients and families. Plans would still be legally permitted to charge high OOP costs based on list prices and/or to rely on vertically integrated PBMs to obscure money flows through the system. Proposed caps on OOP costs (Approach #2) would pass savings to patients, but those caps should not be coupled to price controls (Approach #1).
Higher Long-Term Healthcare Costs: The overall negative impact on healthcare costs is three-fold.
1. Drug price “negotiations” will barely make a dent in near-term healthcare spending, as novel medicines represent only 8% of overall healthcare spending.
2. Price restrictions disincentivize two key forms of market-based price reduction: 1) generic entry and 2) post-approval utility/indication expansions (i.e., developing a drug for all the diseases where it can offer a benefit) (4).
3. Finally, reduced drug utility paired with restricted innovation will cause increased spending in other segments of healthcare (i.e., hospitals, physicians, nursing homes). Prescription medications are the only piece of the healthcare system that goes generic, and weakening the American biomedical pipeline will increase American reliance on sectors where high costs only climb (5).
Major Consequences for Massachusetts: Finally, the bill undermines Massachusetts’ state economy. The biopharma industry employs 115,000+ people (representing 23% of the entire U.S. biopharma workforce) and contributes $25.9B in MA-based wages, $42B in direct GDP, and $110B in total economic output (6, 7). If enacted, this critical pillar of the Massachusetts economy – and the livelihoods it sustains – would be put in serious and immediate jeopardy (8).
How to Achieve Patient Affordability and Biopharma Innovation: Five actionable steps to advance biopharma affordability and innovation for patients, society, and the MA bioeconomy include:
1. Cap Out-of-Pocket Costs: Support the ACA Copay CAP Act that offers real relief without gutting innovation: $2,000 individual/$4,000 family OOP caps in ACA plans (9).
2. Eliminate the IRA’s “Pill Penalty”: Champion the EPIC Act to re-align small molecules with biologics at 13-year patent protections, restoring incentives for small-molecule drugs which are often the only tool for reaching certain disease targets (e.g., inside the brain or cells), are often easier to administer (i.e., pills), and are easier to genericize.
3. Pass Through Rebates to Patients (10): Urge Congress to reintroduce the PBM Reform Package from the 2024 year-end budget bill, requiring that PBMs pass through rebates to patients when charging patients out-of-pocket (11, 12).
4. Modernize Prior Authorization: Require real-time, electronic prior authorizations to reduce delays while maintaining clinical appropriateness.
5. Support Smart Incentives: Restore incentives for pediatric studies and other meaningful scientific upgrades such as new R&D for new indications and patient-friendly formulation upgrades by delaying IRA’s price controls by 6 months.
The Bottom Line: Imposing arbitrary price controls, as proposed in H.R. 6166, will not save Americans from the cost of disease — from escalating acute care expenses or from the profound losses in quality of life. Expanding price controls will slow the development of new and better cures, raise long-term healthcare costs for consumers and employers, and weaken Massachusetts’ bioeconomy and its global competitiveness.
Patients can afford today’s medicines while protecting investment in tomorrow’s, by enacting patient protections that cap what insurance plans can charge premium-paying Americans out-of-pocket, stop rebate abuse, and reduce unnecessary access restrictions without dismantling the innovation engine that makes cures possible.
Footnotes:
1. Link to full bill text is here.
2. The “pill penalty” imposed government price-setting at 9 years for small-molecule drugs and 13 years for biologics, disincentivizing investments in small-molecule drug development immediately following the passage of the IRA.
3. Small molecule R&D investments have dropped by nearly 70% since the passing of the IRA. Further, diseases of the aging (i.e., Alzheimer’s, heart failure, cancers) saw a median investment decline of 74% (Schulthess et al., 2035).
4. Industry-sponsored trials of post-approval drugs decreased by 38.4% following the passage of the IRA. Further, there was a larger decline in post-approval industry-sponsored trials for small vs. large molecules (47.3% and 32.9%, respectively) (Zheng et al., 2025).
5. Take HIV. ~1.2 million Americans are HIV+. We spend roughly $12B a year on treatment, and that will drop as drugs go generic. Without those drugs, we’d be facing the horrors of AIDS again, plus we’d need the equivalent of ~200 more hospitals to manage untreated HIV/AIDS patients, tens of thousands more doctors and nurses, and we’d lose about $70B of productivity from the challenge of working while fighting AIDS. All told, that’s roughly a $100B-a-year loss avoided because we chose to invest in treatment. Spending $12B to avoid losing $100B is a great deal.
6. MassBio: 2025 Industry Snapshot. MassBio. (n.d.). https://www.massbio.org/wp-content/uploads/2025/08/FINAL-2025_IndustrySnapshot.pdf
7. The Economic Impact of the U.S. Biopharmaceutical Industry. (2024, May).
8. Note: This one point would not be appropriate to mention if the biopharmaceutical industry were harming society, but these jobs offer the world great societal value beyond only their significance to the statewide economy. This win-win of the biopharmaceutical industry should encourage MA’s representatives to defend the industry rather than work to undermine it.
9. Note: The logic of OOP costs as “skin in the game” doesn’t apply to most conditions (i.e., asthma, cancer, diabetes). No one fakes these conditions to get free inhalers, chemo, or insulin. OOP costs often lead to under-utilization and increased medical costs down the road. Even lower caps would be better, as would extending those caps to all insurance plans, but the CAP Act offers a meaningful place to start.
10. PBM reforms pass through rebates to patients so that they pay based on a drug’s net cost, not list; this would eliminate the injustice of “reverse insurance” whereby PBMs and plans charge sick people for more out-of-pocket than medicines actually cost so as to generate a rebate profit stream ostensibly used to reduce premiums (i.e., the sick subsidize the healthy).
11. Draft language for the initial 2024 end-of-year budget bill including a PBM Reform Package is linked here. The PBM reform language was eventually pulled from the bill before passing, as discussed here. A 2026 reintroduction of the PBM Reform Package from the 2024 bill would implement a widespread, broad PBM Reform Package spanning Medicare Part D, Medicaid, and segments of privately insured patients.
12. Alternatively, the PBM Reform Act of 2025, introduced in July 2025, advances a more targeted set of PBM reforms, applying to a narrower segment of the market and notably excluding Medicaid and the privately insured. While less comprehensive than the PBM Reform Package included in the 2024 year-end budget bill, it has attracted bipartisan support and incorporates similar patient-centered savings pass-through provisions — suggesting it could serve as a constructive foundation for future PBM reform efforts.