Biden Presses Congress to Drive Down Drug Prices

By Yuval Rosenberg

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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