WASHINGTON — The Biden administration on Thursday unveiled a long-awaited plan to lower prescription drug prices that included a number of aggressive proposals but largely tread over ideas that Democrats have pushed for years.
The plan would allow Medicare to negotiate drug prices with manufacturers, a longstanding pledge from Biden, Democratic lawmakers, and every Democratic presidential candidate in 2020. It also would limit yearly price increases, allow the importation of drugs from Canada, and place a cap on out-of-pocket spending for Medicare beneficiaries.
“Life-saving prescription medication should not cost anyone their life savings,” Xavier Becerra, Biden’s health secretary, said in a statement. “Yet too often, many low-income families cannot take their prescription medications because of cost concerns.”
The plan, authored by the Department of Health and Human Services, follows through on a Biden executive order demanding a new report on strategies to lower prescription drug prices. None of it is binding, however, and it’s not clear whether the proposal will have any impact at all: Most of the plan relies on action from Capitol Hill, where Democrats are independently negotiating a number of drug pricing proposals.
The pharmaceutical industry has long warned that aggressive new plans to limit drug prices, particularly Medicare negotiation, could lead companies to reduce their research investment and, therefore, develop fewer new medicines. In particular, drug companies have cited the record-setting development of Covid-19 vaccines as evidence that the industry is better off without limits on revenue or profit.
The new plan provides new insight into the Biden administration’s stance on drug prices, a key issue for American voters. Notably, though, it includes few new proposals, instead relying on a number of standard-issue Democratic planks.
The plan would allow Medicare to negotiate the prices of drugs provided by two of its major programs: Part B, which covers drugs administered in hospitals, and Part D, which typically covers prescriptions filled in pharmacies.
The new prices would also be available to commercial plans, the White House said, effectively creating a nationwide price ceiling.
The plan also expresses support for bills aimed at bringing generic and biosimilar drugs to market more quickly, like shortening exclusivity periods, creating incentives for doctors to prescribe biosimilars instead of brand-name drugs, and imposing a ban on “pay-for-delay” schemes.
Notably, the plan makes no mention of a scheme to peg U.S. prices to what foreign governments pay for the same drugs. International reference pricing proposals, which the drug industry staunchly opposes, were central to recent drug pricing proposals from major political figures ranging from President Trump, Sen. Bernie Sanders (I-Vt.), and House Speaker Nancy Pelosi.
The report also steers clear of a controversial proposal from progressive Democrats to strip companies of exclusivity to brand-name drugs if the government determines they’re priced unreasonably. It acknowledges that such authority exists under a law known as Bayh-Dole, though, writing that “HHS will continue to give such petitions due consideration.”
The Biden administration plan also cites a new mechanism to speed the development of new cures: The new research agency known as ARPA-H, for which Biden has proposed $6.5 billion in new spending. The report argues that like other government scientific agencies, including the National Institutes of Health, “ARPA-H will help bring more new cures and treatments to patients.”