Biden’s New Plan to Lower Drug Prices

U.S. President Joe Biden delivers remarks on the Delta variant and his administration's efforts to increase vaccinations, from the State Dining Room of the White House in Washington
KEVIN LAMARQUE
By Yuval Rosenberg

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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