White House plan backs Medicare drug price negotiation

The Biden administration on Thursday unveiled a detailed blueprint for lowering prescription drug prices that includes aggressive proposals backed by congressional Democrats.

The blueprint includes few new proposals, and instead emphasizes policies that have become standard planks for Democrats in recent years.

The administration’s plan includes a proposal to allow Medicare to directly negotiate drug prices — both those administered in doctor’s offices and those obtained in a retail pharmacy. Those negotiated prices will be available to commercial plans and employers who want to participate.

The plan would also permit drug importation from Canada, limit the ability of drug companies to hike prices on existing drugs and put a cap on out-of-pocket spending for the Medicare prescription drug benefit.

“Life-saving prescription medication should not cost anyone their life savings. Yet too often, many low-income families cannot take their prescription medications because of cost concerns,” Health and Human Services (HHS) Secretary Xavier Becerra said in a statement. 

President Biden’s executive order on competition gave the agency 45 days to write a report outlining strategies to increase competition and lower drug prices. 

The proposals it outlined have mostly been floated by House and Senate Democrats in recent years. While not binding, they also largely track with the sweeping goals Democrats have for the $3.5 trillion reconciliation package.  

Biden last month called on Congress to take action to lower the “outrageously” high price of prescription drugs.

The plan includes administrative actions but relies heavily on Congress. It calls for legislation aimed at bringing generic and biosimilar drugs to market more quickly, including shortening exclusivity periods, and creating incentives for doctors to prescribe biosimilars instead of brand-name drugs. 

The administration also backs legislation banning “pay-for-delay” schemes, which has received bipartisan support in the past.

House Democrats previously passed legislation allowing for Medicare price negotiation in 2019, but it did not make it through the GOP-controlled Senate.

Lowering prescription drug prices is a top priority for Democrats, but there are also internal divisions over just how far to go. Progressives are pushing to be as aggressive as possible, but centrist Democrats have signaled they do not support Medicare price negotiation.

Direct price negotiation is also fiercely opposed by the pharmaceutical industry, which has warned that any aggressive actions amount to “price controls” and could lead to companies developing fewer medicines.