This bill makes several major changes to how prescription drug prices are handled in America. The core idea is to expand the government's ability to negotiate drug prices and cap what people pay out of pocket for medications.

First, the bill expands Medicare's drug price negotiation program to include private health insurance plans. Starting in 2027, private insurers will be required to use the same negotiated prices that Medicare secures, which should lower costs for people with employer-based or individual health insurance. Insurance companies can opt out of this program, but if they do, they must publicly disclose that choice before the plan year begins.

Second, the bill creates new caps on what people have to pay for prescription drugs. Beginning in 2027, annual out-of-pocket spending on prescription drugs will be limited to $2,000 for individual coverage (and $4,000 for family coverage), with these limits increasing slightly each year based on premium growth. Additionally, insulin will be capped at no more than 25 percent of the negotiated price per 30-day supply, with no deductible required. These caps apply to Medicare, employer-sponsored plans, and individual market insurance.

The bill also makes technical changes to how drug rebates work in Medicare and adjusts the drug price negotiation program to include international pricing data from countries like the United Kingdom when determining fair prices. Finally, it repeals a recent provision that had limited the government's negotiating power and restores the original, broader negotiation authority.