President Joe Biden outlined his proposals to lower prescription drug prices on Thursday, but he avoided some of the thorny policy choices that Democrats on Capitol Hill will have to consider as they craft legislation over the coming months.
In comments at the White House, the president reiterated his call to allow Medicare to negotiate drug prices, and said Medicare prices should be extended to private insurance plans. He also backed a policy to cap drug price increases at the rate of inflation or require the companies to pay a fine.
Biden’s drug pricing plan comes as Democrats start drafting a reconciliation package that they hope will include drug pricing provisions to help finance an expansion of health insurance coverage. The House is poised to vote later this month on a budget resolution that includes reconciliation instructions that the Senate adopted earlier this week, 50-49, on a party-line vote.
Democrats are expected to try to include a provision allowing Medicare to negotiate drug prices in a reconciliation package this fall. House Democrats have proposed a sweeping bill that would allow Medicare to negotiate prices for a subset of prescription drugs, while Senate Finance Chair Ron Wyden, D-Ore., is working on a separate proposal that would likely be more moderate. All 50 Democratic senators would have to back a reconciliation bill for it to pass.
“What we’re proposing is that we’ll negotiate with the company based on a fair price,” Biden said, noting that would include the drug’s research and development costs and companies’ need to make a profit. “And by the way, if there’s a significant amount that’s invested in it and a fair price is very expensive, we’re going to have to figure out how society can provide for that drug that will save lives and people can’t afford.”
Democrats hope to use the savings achieved from Medicare negotiating drug prices to fund other policies, such as expanding Medicare to include vision, dental and hearing benefits, extend enhanced tax credits offered under the 2010 health care law and filling the Medicaid coverage gap, among other things.
Biden threw his support behind a proposal offered last year by Wyden and Sen. Charles E. Grassley, R-Iowa, a former Finance Committee chair, to cap annual drug price increases at the rate of inflation or to levy a fine on the drug makers. Biden also backed an out-of-pocket maximum for Medicare beneficiaries to pay for prescription drugs annually.
The president said the administration will also work with states to import pharmaceuticals from Canada, which the Trump administration first proposed but no state has yet implemented. The administration will also work to speed up the development of generic drugs and biosimilars, he said.
Republicans have said allowing Medicare to negotiate amounts to setting prices, which they say would stifle innovation that could lead to new drugs and treatments. They point to the COVID-19 vaccines that became available late last year, but Biden sought to counter that argument in his remarks.
“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,” he said.
Still, the pharmaceutical lobby opposes the plan and is urging lawmakers to take a bipartisan approach to drug pricing. Steve Ubl, the president and CEO of the Pharmaceutical Research and Manufacturers of America, called Biden’s approach “misguided.”
“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,” 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.”