President Joe Biden urged Congress to pass prescription drug reforms that Democrats have long favored, including allowing Medicare to directly negotiate prices with drugmakers and capping seniors’ out-of-pocket drug costs at about $3,000 a year.
In remarks delivered at the White House Thursday, Biden also called for penalizing drug companies that raise prices faster than inflation, letting states import lower-cost drugs from Canada and improving access to generic and biosimilar medicines. Democrats and Republicans have supported similar policies in the past. President Donald Trump even went so far as to permit states to bring in drugs from Canada.
People who rely on prescription drugs face dire circumstances in the pharmaceutical marketplace, Biden said.
“Prescription drug prices are outrageously expensive in America,” Biden said. “We force people into terrible choices between maintaining their health, paying the rent or the mortgage, putting food on the table.”
Americans pay an average of two-to-three times as much for prescription drugs as people in other countries, and one in four U.S. residents who use prescription medicines struggle to afford them, according to a White House fact sheet.
When Congress and President George W. Bush created the Medicare Part D prescription drug benefit in 2003, they also explicitly forbade HHS from setting prices for pharmaceuticals as it does for provider reimbursements and physician-administered drugs covered under Medicare Part B.
“For every other type of health care service, Medicare works to get the best prices for American seniors. But for prescription drugs—and only prescription drugs—Medicare is prohibited by law from negotiating for the best deal. This needs to change,” White House the fact sheet says.
Biden’s plan for Medicare drug price negotiations is less ambitious other longstanding proposals. Biden previously supported allowing Medicare to negotiate prices for all drugs. Under the platform announced Thursday, HHS would be limited to negotiating over medicines without generic alternatives. Even so, it could significantly lower costs since those drugs are usually the most expensive.
Lower prices from negotiations plus limits on Medicare beneficiaries’ out-of-pocket costs would go a long way toward making pharmaceuticals more affordable, Vanderbilt University professor Stacie Dusetzina wrote in an email.
“For people with very expensive drugs or who take a lot of medications, this could make a big difference in their ability to afford treatment,” Dusetzina said. “Negotiating for lower prices when we lack competition and increasing the use of lower-cost drugs over higher-cost drugs is smart policy.”
Giving Medicare the power to assess the value and fair price of medications would also help generate more evidence about whether the drugs improve patients’ lives, Yale University professor Dr. Joe Ross wrote in an email. “Clinicians will be able to make better decisions for their patients,” he said.
In addition, patients might find it easier to stick to their medication plan and afford their basic necessities, keeping them healthier and out of the hospital.
The pharmaceutical industry has fought tooth and nail against every attempt to give HHS the power to negotiate drug prices. Beneficiaries get prescription drug coverage through private plans that negotiate drug prices on their behalf. But these pharmacy benefit managers have less bargaining power than Medicare, which covers more than 60 million people.
Part D premiums would decline up to 15% by 2029 if the federal government could negotiate prices with drugmakers for the 125 drugs that make up the largest share of Part D spending, according to a new analysis from the Kaiser Family Foundation. The vast majority of those drugs would be single-source, brand-name drugs.
The White House proposes allowing employer-sponsored health plans to adopt the same pricing as Medicare, which could bring lower costs to the almost 50% of U.S. residents who have job-based health coverage.
The White House did not include policies favored by many Democrats, such as curbing drugmakers’ patent protections or tying Medicare’s drug costs to the prices paid in other wealthy countries. Trump began implementing that latter policy last year, but Biden halted it last week.
Biden’s plans for prescription drug “reimportation” from Canada could face legal obstacles. Drugmakers blocked Trump’s importation policy last year, and the Biden administration is continuing the fight.
In the meantime, Biden issued an executive order last month directing the Food and Drug Administration to work with states on importing prescription medicines from Canada and encouraged the Federal Trade Commission to ban “pay-for-delay” tactics brand-name drug companies use to avoid competition from generic manufacturers.
Canada already sets prices for patented, brand-name drugs under its national healthcare system, which also is called Medicare. Canadian prices for single-source, brand-name drugs are about 28% of U.S. prices, according to the Kaiser Family Foundation.
Canada has always opposed U.S. plans to bring their prescription drugs over the border, citing the threat to its pharmaceutical supplies. In response to Trump’s drug importation plan, Canada prohibited bulk exports of prescription medicines if the government determines that could lead to shortages.