President Biden has left out of his American Families human-capital investment plan drug pricing reforms that Democratic leaders in Congress have pressed him hard to add. House Speaker Nancy Pelosi (D-Calif.), House Energy and Commerce (E&C) Chair Frank Pallone (D-N.J.), and Senate Finance Committee Chair Ron Wyden (D-Ore.) all have said that the legislation to implement Biden’s plan must include something to reduce what consumers and the government pay for medicines.
Biden outlined his human-capital investment plan in a speech to a joint session of Congress last night. In his remarks, he said, “Let’s give Medicare the power to save hundreds of billions of dollars by negotiating lower prices for prescription drugs.”
“That won’t just help people on Medicare—it will lower prescription drug costs for everyone.
The money we save can go to strengthen the Affordable Care Act—expand Medicare coverage and benefits—without costing taxpayers one additional penny.”
“We’ve talked about it long enough—Democrats and Republicans,” the president said. “Let’s get it done this year.”
A White House fact sheet about Biden’s American Families plan given to reporters early on Wednesday said the president has a plan to “lower prescription drug costs for everyone by letting Medicare negotiate prices.” Biden’s lowering-drug-cost plan, however, wasn’t included in the American Families plan.
Key features of H.R. 3, the House leadership’s drug pricing bill, include letting the government negotiate what Medicare Parts B and D pay for a subset of expensive drugs, and making those prices available to commercial payers. H.R. 3 also would require manufacturers to pay the government rebates on Part B and Part D drugs when prices rise faster than inflation. The inflation penalty is an important component of both the 340B and Medicaid rebate programs. The E&C Health Subcommittee, which has jurisdiction over the 340B program, is holding a hearing on H.R. 3 next week.
H.R. 3 would exclude 340B-purchased drugs from the proposed Part B drug rebates. Other than that, H.R. 3 in its current form does not appear to have any other significant 340B provisions.
Tuesday night, administration officials gave reporters a preview of Biden’s human capital investment agenda. One reporter asked why drug pricing legislation, lowering the Medicare eligibility age, and other big health care ideas that congressional Democrats are pushing for aren’t in Biden’s plan.
“The President has been very, very clear that he remains fully committed to negotiations to reduce prescription drug prices—that, you will hear him reiterate as a very top priority and something he deems urgent,” a senior administration official answered. “And, you know, the flip side of that is that, you know, by reducing prescription drug prices, not only do you provide relief to millions of Americans who are buying prescription drugs every day, but you’re also generating revenue that can be applied to both expanding coverage to those places in the country that have coverage gaps still, but also expanding the benefits of Medicare itself.”
Biden’s speech to Congress came on the same day as a new U.S. Government Accountability Organization (GAO) finding that U.S. prices for 20 selected brand drugs paid at the retail level by consumers and other payers (such as insurers) were more than two to four times higher than prices in Australia, Canada, and France. GAO said “the actual differences between U.S. prices and those of the other countries are likely larger than our estimates” because, while it was able to account for rebates and confidential discounts offered on U.S. drugs, it could not do the same for prices in comparison countries.
Sen. Bernie Sanders (I-Vt.), who asked GAO to do the study, said it “confirms what we all already know: the pharmaceutical industry is ripping off the American people.”
“The time is long overdue for the United States to do what every major country on earth does: negotiate with the pharmaceutical companies to lower the outrageous price of prescription drugs,” Sanders said. “I would urge the President to put this proposal in the American Families Plan and use the savings to expand and improve Medicare for older Americans. We can no longer tolerate the American people paying, by far, the highest prices in the world for prescription drugs.”
“I look forward to working with the President to make health care and prescription drugs more affordable,” House E&C chair Pallone said in a statement about Biden’s speech. He said the president “committed to giving the federal government the ability to negotiate lower prescription drug costs, a key provision in the drug pricing legislation that I and other Democratic health leaders introduced last week.”
