Another day, another attempt to rein in high prescription drug costs in America.
As part of his Build Back Better agenda, President Joe Biden on Thursday will urge Congress to help stymie the drug pricing “crisis” by permitting Medicare to negotiate prescription costs. He's also asking legislators to implement price caps and introduce penalties for companies that mark up their drugs “faster than inflation.”
In a statement Thursday, the White House made it clear that pharma companies do "ground-breaking, life-saving work." Still, the White House said there's a difference between delivering breakthroughs and "driving up prices for the drugs Americans rely on." President Biden will lay out his reform strategy in a speech Thursday morning.
On cost discussions, Biden wants to bless Medicare with the power to negotiate the price “for a subset of expensive drugs” without market competition. Under the plan, negotiators would receive a framework for what amounts to a “fair price” for each drug. Biden also floated the possibility of “powerful incentives” to get drugmakers on board with more “reasonable” pricing.
Biden is far from alone in pushing for lower drug costs. The issue has resonated among American voters for years, and countless politicians have floated their own ideas to address the issue. Still, U.S. drug pricing dynamics haven't changed in years, allowing drugmakers to mostly price at will.
Take Biogen's Aduhelm, for instance. Before the drug's controversial approval, market watchers believed the company would price the drug at $10,000 to $25,000 per year. The drug's actual price? About $56,000 annually.
Meanwhile, under Biden's plan, pharmas that lift their prices faster than inflation “should have to pay a penalty,” and the government should impose a “firm cap” on the amount Medicare patients pay out-of-pocket for their meds each year.
The White House estimates that Americans pay about two to three times as much for prescription drugs as people in other countries, noting in a fact sheet that about one-in-four people in the U.S. struggle to afford their meds.
It’s the latest push by a U.S. president to bring down drug costs. In July, Biden inked an executive order entreating the Department of Health and Human Services to develop a strategy against “the recurrent problem of price gouging,” as well as to “enhance” local drug supply chains. The order also looks to promote lower-cost generic and biosimilar alternatives to brand-name drugs and to allow the U.S. to import certain copycat meds from Canada.
Meanwhile, Biden’s budget plan for fiscal year 2020, unveiled in June, also called for Medicare to negotiate prices on certain high-cost meds. The strategy further backed legislation that would put manufacturers on the hook for rebates when drug prices outstrip inflation. If everything goes to plan, the proposed reforms could translate to “half a trillion in federal savings over the next 10 years,” the White House said at the time.
Not everyone is on board, though, and others aren't yet convinced Biden's reform scheme will amount to much. Industry lobbying group PhRMA last month branded Biden's executive order “an attempt to upend Medicare to help pay for Tesla tax credits and other government programs at seniors’ expense.” The group added that Biden's budget plan "should enrage every senior who relies on Medicare for their life-saving medicines."
Meanwhile, price hikes are alive and well in the COVID-19 pandemic's second year. As of mid-July, pharmas big and small—including Pfizer, Eli Lilly and AstraZeneca—had raised the prices on 65 mostly brand-name drugs by an average of 3.5%, GoodRx reported at the time.
Before Biden, former President Donald Trump looked at imports, eliminating drug rebates, and an international pricing index as potential strategies to lower U.S. prices.