Biden Presses Dems To Include Drug Negotiation, Copay Caps In Reconciliation

Inside Health Policy

August 12, 2021 9:01 am

President Joe Biden on Thursday (Aug. 12) called on Democrats to let Medicare negotiate drug prices, set a firm cap on Medicare out-the-pocket drug copays and penalize drug makers that raise their prices beyond the rate of inflation as part of their upcoming reconciliation bill. The move by Biden, who just a few months ago left drug pricing out of his American Families Plan, could boost efforts by Senate Finance Chair Ron Wyden (D-OR) to convince reluctant moderate Democrats to back price negotiation.

Biden says Congress should build off the administration’s efforts, noting an executive order he signed in July directing HHS, FDA and the Federal Trade Commission to take action to cut drug prices. An HHS report laying out administrative plans is due later this month.

Biden said the drug-pricing reforms he touted are part of his Build Back Better agenda.

The president said out-of-pocket costs could fall by at least $9,000 a year and Medicare beneficiaries could save on average about $200 if the legislative reforms were enacted. Premiums could be lowered even more if Medicare were to make the prices it negotiates available to commercial payers as well, reducing the cost for employer health insurance, Biden added.

The announcement came just after the Senate passed a budget resolution that instructs its committees to write a $3.5 trillion reconciliation bill that would include Medicare price negotiation as an offset for several other health care priorities.

Most House and Senate Democrats support Medicare drug price negotiation, but some moderates are wary and only a handful of Democratic no votes would sink the proposal. Drug negotiation is included in House Democrats’ H.R. 3 and Wyden (D-OR) hopes to include a version of price negotiation in his upcoming drug pricing bill.

The drug industry is lobbying hard against price negotiation, making Wyden’s job more difficult. The industry argues that allowing Medicare to negotiate prices would harm innovation by cutting into pharma’s funding for research and development.

But new research from the West Health Policy Center and Bentley University suggests drug makers could experience little to no negative impact under H.R. 3 or other measures that include Medicare price negotiation by leaning into existing industry practices such as increasing the role of smaller drug companies in drug development and using “agile” management to maximize use of the necessary development resources.

Out of three scenarios studied, researchers found that innovation might not be reduced at all in the case of cost reductions of 10% to early phase trials, and at most innovation might be reduced by 8.4% in the event of cost reductions of 10% to late phase trials. — Gabrielle Wanneh (