Biden calls on Congress to allow Medicare drug price negotiations
Overshadowed by President Biden’s vaccine mandate announcement, the administration earlier in the day released its top priorities for drug pricing reforms making their way through Congress.
The reforms are slated to save the government hundreds of billions to offset other spending priorities.
The 29-page HHS report makes clear the administration’s strong desire for any legislation to include Medicare drug price negotiations — an idea the pharmaceutical industry strongly opposes — as well as measures to slow price increases over time on existing drugs.
“A provision in the law that established the Medicare Part D program specifically prohibits the HHS Secretary from interfering with the negotiations between drug manufacturers and pharmacies and plan sponsors, requiring a particular formulary, or instituting a price structure for the reimbursement of covered Part D drugs,” the report says. “This restriction is unique to Part D and contrasts with how drug prices are determined in other federal programs, such as the use of ceiling prices in the VA and mandatory rebates in Medicaid—both of which result in lower brand drug prices than in Medicare Part D.”
Pegging Medicare prices to what drugmakers offer the VA is one of the top ideas being floated by the Senate Finance Committee, according to a Stat News report. Senate finance chair Ron Wyden (D-OR) is expected to offer up a bill in the coming days that could set the course for what Congress ultimately adopts when it comes to drug pricing reforms.
Wyden has previously emphasized his desire to allow Medicare to negotiate, although it remains unknown if all 50 Senate Democrats, all of whom will likely be needed for the bill’s passage, are willing to back such an idea. Sens. Bob Menendez of New Jersey and Kyrsten Sinema of Arizona have previously expressed doubts.
SVBLeerink analyst Geoff Porges said in a note this morning, “from an industry point of view this proposal is an existential threat, and is likely to be fought tooth and nail. Given the tenuous majority for Democrats in the House and Senate, and the prior opposition in the House to HR3, we believe there is next to no chance that this major pillar of the plan gets through Congress.”
In the House, the Energy & Commerce committee on Monday will begin marking up its own drug pricing bill. That currently includes Speaker Nancy Pelosi’s HR 3, which the CBO has warned could put a damper on new drug development. But those provisions could change depending on the Senate.
In conjunction with Medicare negotiations, the administration encourages Congress to impose an excise tax when manufacturers raise the price of their products faster than the rate of inflation, the HHS report adds, noting that Americans spend more than $1,500 per person on average for prescription drugs and “pay prices that are far higher than any comparable nation.”
Other provisions from the report, such as increasing generic drug and biosimilar competition with fast FDA approvals, have been floated for years by members of Congress on both sides of the aisle.
But the administration also pledged its support for so-called “skinny” labels, which have come under fire from courts recently, and can allow for generic competition to come to market for some of the indications of an approved reference product that aren’t under patent protection.
