Policy & Advocacy

President Biden Calls on Congress to Reduce Rx Prices

In August of 2021, President Biden called on Congress to pass legislation to reduce Rx prices. President Biden’s prompt follows a July Executive Order which seeks to reduce Rx prices by increasing competition.

August 20, 2021

In mid-August of 2021, President Joe Biden (D) issued a statement calling on Congress to take action to reduce prescription drug prices.

Specifically, President Biden called for:

Allowing Medicare to negotiate the price of prescription drugs where there is a lack of competition;
Restricting the growth of prescription drug prices to inflation or requiring drug manufacturers to pay an unspecified penalty; and
Capping Medicare beneficiaries out-of-pocket (OOP) expenses for prescription drugs.

President Biden’s statement follows a July Executive Order calling on federal agencies to improve competition in the U.S. with a section pertaining to drug pricing. The highlights of those proposals and other leading drug pricing proposals are listed in Table 1 below.

The Business Group is monitoring drug pricing proposals and their potential impact on members. The Business Group urges policymakers to address prescription drug pricing by reforming the entire pharmaceutical supply chain as outlined in recently published multistakeholder recommendations.

Table 1: Highlights of Drug Pricing Proposals

	President Biden - (Statement, Executive Order)	House E&C Chair Rep. Pallone (D-NJ)	House E&C Ranking Member Rep. McMorris Rodgers (R-WA)	Senate Finance Committee Chair Wyden (D-OR)
Permitting Medicare to negotiate prices of Rx where competition is lacking	Supports	Supports	Opposes	Supports
Extending Medicare Rx pricing to private sector	Unclear	Supports	Opposes	Supports
Restricting Rx price growth to inflation	Supports	Supports	Opposes	Supports
Capping Medicare beneficiaries OOP expenses for Rx	Supports	Supports	Unclear	Unclear
Rx importation	Supports	Unclear, but likely	Unclear	Unclear
Tying Rx pricing to international standards	Supports	Supports	Opposes	Unclear
Increasing price transparency of Rx	Supports	Supports	Supports	Unclear
Banning pay-for-delay	Supports	Unclear	Supports	Supports
Promoting innovation by reforming Rx patents	Supports	Unclear	Supports under narrow circumstances (e.g., evergreening*)	Supports
Modify Part B payments for specialty pharmacy	Unclear	Unclear	Supports	Unclear
Permits CDHP plans to cover insulin delivering devices prior to the deductible	Unclear	Unclear	Supprts	Unclear
Modifying Rx rebates	Unclear	Unclear	Unclear	Supprts
Increase transparency of PBMs	Unclear	Unclear	Supports	Unclear

*Evergreening is a practice in which a pharmaceutical company producing a brand-name drug makes minor or modest formulation changes that provide little to no therapeutic advantage to a drug’s formulation. This is done for the purpose of extending the life of both patent protection and FDA exclusivity.

Outlook

It’s unclear whether Congress and the Administration can reconcile diverging views to pass bipartisan prescription drug pricing legislation. Congressional Democrats, with the backing of the Administration, may attempt to move some of the above provisions using reconciliation which requires a simple majority vote in the Senate. Under this scenario, their legislative options would be limited to provisions that impact federal spending or revenue.

We provide this material for informational purposes only; it is not a substitute for legal advice.