Biden’s New Plan to Lower Drug Prices

Biden’s New Plan to Lower Drug Prices

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Plus, Biden to require vaccines, tests for millions of workers
Thursday, September 9, 2021

A big kickoff today, and no, we don’t mean the start of the new NFL season. As Democrats race to pull together their historic revamping of the social safety net, five House committees, including Ways and Means, launched markups of their portions of the party’s big budget reconciliation package. Catch up on the key legislative action here, and see below for the other big developments of the day.

Biden Outlines New Plan to Combat Covid-19

Faced with a late-summer surge in Covid-19 infections, hospitalizations and deaths, President Joe Biden on Thursday announced a new plan to combat the virus and said he would require all federal employees to be vaccinated.

Biden’s six-point plan also requires more than 17 million health care workers who deal with Medicare and Medicaid patients to get vaccines, and the U.S. Department of Labor will require all private employers with more than 100 employees to institute vaccine mandates or test unvaccinated workers on a weekly basis — a move that could affect 80 million workers.

All told, the rules cover about 100 million employees, or two-thirds of the U.S. workforce.

In addition to the workplace rules, the plan calls for a national vaccine booster shot program to begin as soon as September 20; more funding for schools to vaccinate and test staff and students; a push to increase rapid and at-home testing and enhance masking requirements; more money for small businesses; and increased support for antibody treatments and hospitals.

A focus on vaccines: The White House says it does not have the authority to create a national mandate, but it is encouraging schools and businesses to require vaccines as broadly as possible. "Our overarching objective here is to reduce the number of unvaccinated Americans," White House spokeswoman Jen Psaki said. "We want to reduce that number, decrease hospitalizations and deaths and allow our children to go to school safely."

Lawrence O. Gostin, a professor of global health law at Georgetown University, told The New York Times Thursday that the latest federal effort is unprecedented. "Never before have we mandated a vaccine throughout the federal work force, the National Guard, among government contractors and also using the bully pulpit to try to influence businesses and universities and cities and states to do the same," Gostin said.

The bottom line: The nation has tried the carrots — offering lotteries, cash and other goodies to encourage vaccination. Now Biden is turning to the stick, using it where he can.

Read more about Biden’s Covid response plan at The New York Times, CNN or The Washington Post.

Biden Administration Backs Medicare Negotiations in New Plan to Lower Drug Prices

The Biden administration on Thursday called for allowing Medicare to negotiate prices directly with drugmakers as part of a new plan to lower prescription drug prices.

The 29-page plan, issued by the Department of Health and Human Services in response to an executive order signed by President Biden in July, details both legislative options and administrative tools that it says will promote competition, encourage innovation and make prices "more affordable and equitable" for patients.

The legislative proposals largely echo ideas offered up in previous Democratic plans. In addition to negotiating prices, they include capping out-of-pocket costs in Medicare’s Part D drug plan, restricting price hikes on existing drugs, speeding the availability of generic and biosimilar drugs and prohibiting "pay-for-delay" agreements by which pharmaceutical companies block generic competitors from coming to market.

The administrative actions in the plan include testing different payment models, including value-based payments in Medicare Part B, which would directly link reimbursement for drugs administered in doctors’ offices to the clinical value provided to patients. They also include testing the effect of increased cost-sharing for low-income beneficiaries in Medicare Part D who use generics and biosimilars.

The plan also calls for the federal government to work with states looking to import cheaper drugs and for greater data collection from insurers and pharmacy benefit managers "to improve transparency about prices, rebates, and out-of-pocket spending on prescription medications." And it repeats Biden’s call for the creation of a new agency at the National Institutes of Health, the Advanced Research Projects Agency for Health (ARPA-H), aimed at driving biomedical innovation.

"The Biden administration is trying to thread a political needle here by going aggressively after high drug prices while promoting research to blunt the pharmaceutical industry’s argument that innovation will be harmed," Larry Levitt, executive vice president for health policy at the Kaiser Family Foundation, told The Wall Street Journal.

Why it matters: Biden had called for allowing Medicare to negotiate drug prices as part of his campaign platform and said last month he would eliminate the legal prohibition against such negotiation. "But the HHS report’s embrace of broad price negotiation is the administration’s latest signal that it’s siding with progressives who have pushed for a far more aggressive approach to slashing pharmaceutical costs," Politico’s Adam Cancryn writes. House Democrats included a provision allowing drug-price negotiations as part of a health care reform bill they passed in 2019, but that legislation went nowhere in the Senate. Republicans have rejected the idea, as have some centrist Democrats.

Cancryn adds that the Biden plan only goes so far in supporting progressive proposals on drug pricing, noting that it does not support the use of "march-in rights" that would allow the government to license patent rights to another manufacturer for a drug that is deemed too expensive.

The Biden plan comes as Democrats are debating the scope and details of health care reforms to be included in their budget reconciliation bill. STAT News reports, for example, that Senate Finance Committee lawmakers working on drug-pricing legislation are focusing on the idea of pegging Medicare drug prices to the discounted prices paid by military health programs including the Department of Veterans Affairs.

‘Potentially significant savings’: "The plan doesn’t say whether there would be any projected costs to taxpayers, or savings," The Journal’s Stephanie Armour notes. "Some options, such as creating a new agency within the National Institutes of Health to foster medical innovation, would require billions of dollars in funding. But most of the other measures, such as new models in Medicare that test paying for drugs based on their efficacy, could result in potentially significant savings, analysts said."

The American public overwhelmingly supports having the federal government do more to lower health care costs and prescription drug prices, and it’s obvious why: A new study from West Health and Gallup finds that about 15.5 million adults under 65 and 2.3 million seniors were unable to pay for at least one prescription.

"Regardless of age or insurance type, Americans need help at the pharmacy counter and enabling Medicare to negotiate drug prices is just what the doctor ordered," said Tim Lash, chief strategy officer for West Health, a family of nonprofits focused on lowering healthcare costs. "It is an essential and long overdue policy change that would level the playing field between giant pharmaceutical companies and everyday Americans."

Stiff industry opposition: As always, any such changes — especially ones as momentous as allowing drug-price negotiations — will face pushback.

"What was released today is a laundry list of old partisan ideas and not a serious plan to address what patients pay out of pocket for prescription drugs," Stephen J. Ubl, president and CEO of the Pharmaceutical Research and Manufacturers of America, an industry trade group, said in a statement. "What it leaves out is any attempt to fix a broken insurance system that discriminates against sick patients and does nothing to hold insurers and middlemen accountable for pocketing savings from our companies that should go to patients to lower their costs."

Numbers of the Day

$2.7 trillion: The federal budget deficit totaled $2.7 trillion in the first 11 months of fiscal year 2021, according to the latest monthly budget review from the Congressional Budget Office. The deficit was $295 billion lower than the deficit in the first 11 months of 2020, even though spending was higher by 4%; tax revenues increased by 18% in 2021, reducing the gap despite the increase in outlays driven by pandemic relief efforts. CBO says that stronger than expected tax revenues could mean the deficit for the full fiscal year comes in a bit lower than the $3 trillion it projected earlier this summer.

3.2 million: According to a U.S. Census survey released this week, 3.2 million Americans said they were not working because they were "concerned about getting or spreading the coronavirus." At the peak in July 2020, 6.2 million people reported the same, with the number falling to a low of 2.5 million this past July. The recent increase suggests that the surge in the delta variant of Covid-19 is having a significant negative effect on the economy.

$23 trillion: Unequal access to education, employment and wages among different racial and ethnic groups reduced U.S. economic output by nearly $23 trillion over the last 30 years, according to a new analysis published by the Brookings Institution.

"The opportunity to participate in the economy and to succeed based on ability and effort is at the foundation of our nation and our economy," the team of economists who made the analysis said. "Unfortunately, structural barriers have persistently disrupted this narrative for many Americans, leaving the talents of millions of people underutilized or on the sidelines. The result is lower prosperity, not just for those affected, but for everyone."

Federal Reserve Bank of San Francisco President Mary Daly, one of the authors, said that the analysis highlights the benefits of reducing inequality throughout the economy. "This is a simple exercise, in many ways, to demonstrate an important point, which is that the gains to GDP are for everyone and closing the gaps isn’t a zero-sum game," she said.

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