Biden Presses Congress to Drive Down Drug Prices

Biden Presses Congress to Drive Down Drug Prices

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Plus - 'Terrifying' unemployment fraud
Thursday, August 12, 2021

The dog days of summer are finally here, with Congress out of town and President Biden departing Washington for a break in Delaware. The Census Bureau is keeping busy, though, reporting that the U.S. is more multiracial and diverse than ever ... and that the country has a new fifth largest city, Phoenix, which passes Philadelphia in size. Here’s what else you need to know.

Biden Gives Drug Pricing Effort a Jolt

President Biden on Thursday called on Congress to lower prescription drug prices by enacting a number of reforms, including allowing Medicare to negotiate with pharmaceutical companies.

“There aren’t a lot of things that almost every American can agree on, but I think it’s safe to say that all of us, whatever our background, our age or where we live, can agree that prescription drug prices are outrageously expensive in America,” Biden said.

He later added: “These prices have put the squeeze on too many families and stripped them of their dignity. We force people into terrible choices, between maintaining their health, paying the rent or the mortgage, putting food on the table.”

As Democrats look to include a number of health-care reforms and drug-pricing measures in their $3.5 trillion budget package, Biden and the White House outlined proposals that will sound familiar to anyone who’s been following the policy debate.

Biden wants Medicare to be able to negotiate certain drug prices and wants those Medicare prices to apply to private insurers as well. Biden also called for drugmakers to face penalties if they hike prices faster than inflation and for a cap on how much Medicare beneficiaries pay out-of-pocket for drugs each year. Those policies largely match what Democratic lawmakers are working on. Biden also endorsed a provision in drug-pricing legislation spearheaded by House Speaker Nancy Pelosi (D-CA) that would impose an excise tax of up to 95% on drug companies that back out of negotiations with Medicare.

Biden last month signed a sweeping executive order that sought to facilitate the importation of prescription drugs from Canada and boost less expensive generic drugs. It also ordered the Department of Health and Human Services to create a "comprehensive plan” to lower prescription drug prices and combat price gouging by August 23.

“These thing by themselves will be a great help,” Biden said Thursday. “But to really solve the problem, we need Congress to act.”

Drug companies push back: Unsurprisingly, the drug lobby panned Biden’s proposals. “Unfortunately, the policies the president outlined today would undermine access to life-saving medicines and fails to address an insurance system that shifts the cost of treatments onto vulnerable patients,” PhRMA president and CEO Steve Ubl said in a statement. “Many in Congress know that access to medicine is critical for millions of patients and Medicare is not a piggy bank to be raided to fund other, unrelated government programs. This is a misguided approach.”

PhRMA also pointed to a Kaiser Family Foundation poll that found that 65% of Americans oppose allowing Medicare to negotiate with pharmaceutical companies if it could lead to less research and development of new drugs or limit access to newer drugs.

Progressives may be disappointed, too: “While Biden struck a firmer tone and offered more specifics than he has before, his proposals still didn’t go as far as some progressives would have liked,” STAT News’s Rachel Cohrs and Lev Facher note. “When compared to his longstanding calls to allow Medicare negotiation, Biden’s proposal is limited in scope. It appears to apply only to drugs that don’t face generic competition. Those are likely the medications that account for the lion’s share of government and patient spending, but potentially a smaller list than previous proposals from progressive lawmakers.”

Biden said Thursday that drug companies should still be able to make a “significant profit” from negotiated prices and acknowledged that many pharmaceutical companies are doing “groundbreaking and lifesaving work.” But, he said, “We can make a distinction between developing these breakthroughs and jacking up prices on a range of medications for a range of everyday diseases and conditions.”

Why it matters: While the policies may not be new, Biden’s speech put some more presidential muscle behind them. “There had been some doubts as to Biden's commitment to drug pricing earlier this year when he left it out of his American Families Plan,” The Hill’s Peter Sullivan writes, “but the speech on Thursday provided a new jolt of energy to the issue.” Whether that energy is enough to get the proposals through Congress remains the key question.

Labor Department Targets ‘Terrifying’ Level of Unemployment Fraud

The U.S. Department of Labor is spending hundreds of millions of dollars to combat fraud in the benefits system for unemployed workers – fraud that experts fear skyrocketed in the wake of the Covid-19 pandemic.

The department is making $140 million in grants available to “support states with fraud detection and prevention, including identity verification and overpayment recovery activities” in unemployment compensation programs, according to a letter released Wednesday. An additional $100 million is now available to help states detect and reduce fraud in the temporary Pandemic Unemployment Assistance and Pandemic Emergency Unemployment Compensation programs, which Congress established to provide additional aid to the jobless during the Covid crisis.

The money to fight fraud was provided by the $1.9 trillion American Rescue Plan Act, which was signed into law in March. The law allocated as much as $2 billion to help states improve their unemployment systems.

A big part of the problem, analysts say, is the fractured nature of the U.S. unemployment system, with each state running its own, often underfunded and poorly constructed version. In addition to cash, the federal government is reportedly sending “tiger teams” of experts to state offices to help improve those systems.

“The pandemic underscored the need for modernization“ of the unemployment system, Labor Secretary Marty Walsh said in a statement. It also “exposed significant vulnerabilities in state technology to criminals looking for an opportunity.”

The bottom line: The U.S. responded to the Covid crisis with an unprecedented level of support for unemployed workers. The speed of the response, coupled with outdated and underpowered benefit systems in the states, contributed to unprecedented levels of fraud, with the Labor Department’s Office of Inspector General estimating that about $87 billion in benefits may have been paid improperly.

“What we’re seeing now is really terrifying,” the Labor Department’s Michele Evermore, an expert in unemployment insurance, told CNBC. “Fraud has gotten so big.”

How One GOP Senator Got Millions in Extra Tax Breaks for His Wealthy Donors

According to a report out this week from ProPublica, Sen. Ron Johnson (R-WI) helped some of his extraordinarily wealthy donors gain millions in additional tax breaks through the 2017 tax law passed by a Republican-controlled Congress and signed into law by then President Donald Trump.

Johnson publicly opposed the GOP tax bill for a time, while calling for a more generous tax break for pass-through companies, which allow business owners to pay taxes on their personal returns. The bill writers granted Johnson his wish and according to the ProPublica analysis, that change was worth $79 million to some of Johnson’s biggest supporters in Wisconsin: Richard and Elizabeth Uihlein, billionaires who own packaging giant Uline, and Diane Hendricks, who has made billions in building supplies.

Johnson has denied that he demanded the changes to benefit his supporters, instead saying that he simply wanted to help small business owners everywhere. But there’s little doubt that the more generous pass-through tax break has benefited the Uihleins and Hendricks, who could save more than half a billion dollars over the eight-year span the tax break is scheduled to be in effect, according to ProPublica.

Though it’s impossible to say what Johnson’s ultimate motive really was, he does have a point: Other extremely wealthy Americans benefited from the tax rule. “In the first year after Trump signed the legislation, just 82 ultrawealthy households collectively walked away with more than $1 billion in total savings, an analysis of confidential tax records shows,” ProPublica’s Justin Elliott and Robert Faturechi write. “Republican and Democratic tycoons alike saw their tax bills chopped by tens of millions, among them: media magnate and former Democratic presidential candidate Michael Bloomberg; the Bechtel family, owners of the engineering firm that bears their name; and the heirs of the late Houston pipeline billionaire Dan Duncan.”

Read the full ProPublica report here.

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