Requires the Department of Health and Human Services (HHS) to set a yearly reference price for every prescription drug and caps the retail list price paid by people in certain federal health programs so it cannot exceed that reference price. Drug makers must offer their products at that reference price to all individuals; manufacturers who fail to comply face civil penalties calculated by statute, and penalty revenue is directed to the National Institutes of Health (NIH) for drug research.

The Secretary must use prices from a set of foreign reference countries when available or consider factors like therapeutic benefit and research costs when foreign prices aren’t available. The rule covers brand and generic drugs and certain biologics approved under the FDA and Public Health Service authorities, and creates new administrative duties for HHS and compliance obligations for manufacturers.