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.

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TABLE OF CONTENTS

  1. Highlights of Drug Pricing Proposals
  2. Outlook