Biden Hits Drug Prices For Boosting Healthcare Costs

As expected, President Joe Biden used his annual State of the Union address to Congress this week to highlight the importance of efforts to lower the price of insulin and other prescription drugs to help seniors and all patients access needed care and to curb government spending. With the waning pandemic no longer controlling Americans’ lives, Biden outlined a host of priorities for improving healthcare and building the economy, and protecting Americans from excessive outlays for medicines was a prime strategy.¹

A main proposal is to extend the $35-a month cap on insulin spending for Medicare beneficiaries to all Americans. Biden noted that the Inflation Reduction Act (IRA) enacted last year also capped annual out-of-pocket drug costs for Medicare patients at $2,000 a year and predicted that the drug price negotiation provision in that legislation will further reduce Medicare outlays for medicines.

The President also called on policymakers to support extended Medicaid coverage for some two million people in states that have not expanded that program on their own. And he hinted at further White House efforts to challenge high launch prices for new drugs, particularly for life-saving but costly new gene and biotech thereapies. At the same time, Biden highlighted the importance of extending funding for his cancer moonshot initiative to reduce deaths from cancer, and he praised the President’s Emergency Plan for AIDS Relief, or PEPFAR, a program launched 20 years ago by the Bush administration to combat HIV/AIDS around the world.

The focus on drug costs in this major national address indicates how important the issue is for advancing Democratic policies. And while Republicans in the House are not expected to approve any measure that further limits drug prices, Biden’s emphasis aims to fend off any efforts to roll back IRA provisions on this topic. Industry executives have proposed modifications in the terms governing the Medicare drug price negotiation program, but Senate leaders already are warning against such tactics. And Biden stated loudly that he would veto any measure likely to raise the cost of prescription drugs.

Industry’s main argument against drug cost-cutting measures is that price controls will dry up investment in R&D and reduce the range of important new therapies available to patients. Biopharma executives describe the Medicare drug price negotiation process as basically enforced price fixing on certain established medicines and that it will affect how companies allocate capital and force hard decisions on investments in the very costly process of drug testing and production. The Pharmaceutical Research and Manufacturers of America (PhRMA) emphasized industry’s contributions to advancing health, but predicted that Medicare price setting will limit incentives for developing new thereapies in certain areas and discourage further research on approved medicines.²

PhRMA, however, has additional issues to worry about on the drug pricing front. A notable setback came a few days ago when a federal judge dismissed the drugmakers’ claim that a plan to expand the import of less expensive drugs from Canada established by the Trump administration would bring unsafe products into the US. The federal district court in Washington, DC issued a decision stating that “such alleged harms” were not likely to materialize under the import proposal.³

References

1. https://www.whitehouse.gov/briefing-room/speeches-remarks/2023/02/07/remarks-by-president-biden-in-state-of-the-union-address-2/
2. https://phrma.org/resource-center/Topics/Medicare/PhRMA-Statement-on-the-State-of-the-Union-Address
3. https://ecf.dcd.uscourts.gov/cgi-bin/show_public_doc?2020cv3402-46