Health and Human Services Secretary Xavier Becerra on Thursday unveiled the Biden administration’s road map to lowering the cost of prescription drugs.
The plan, summarized in a 29-page document, supports legislation that allows the federal government to negotiate lower prices on the costliest drugs each year and pass those savings on to private insurers. Current rules prohibit HHS from negotiating drug prices on behalf of Medicare — the federal government’s health insurance plan for the elderly.
It would reduce regulatory barriers to getting a new drug approved by the Food and Drug Administration and incentivize drugmakers to develop medications that are already on the U.S. market, ensuring competition and forcing other companies to lower prices, according to the administration.
“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,” Becerra said in a statement released alongside the plan. “By promoting negotiation, competition, and innovation in the health care industry, we will ensure cost fairness and protect access to care.”
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Per-capita prescription drug spending in the U.S. far exceeds that of other high-income countries, with the total increasing to $369 billion in 2019, according to U.S. data.
Lowering the cost of drugs has been a long-held goal by Democrats and some Republicans, including former President Donald Trump. The proposals have a new sense of urgency in light of the Covid-19 pandemic.
Last month, President Joe Biden asked lawmakers to enact legislation aimed at lowering drug prices, including allowing Medicare to negotiate drug prices.
Pharmaceutical companies have argued that price hikes have been modest, and they have cited concerns with the nation’s rebate system. Those are the discounts drugmakers give to middlemen such as pharmacy benefit managers, often in exchange for more favorable insurance coverage for their drugs.
The Pharmaceutical Research and Manufacturers of America trade group has criticized proposals that allow the federal government to negotiate drug prices.
PhRMA president and CEO Steve Ubl bashed the Biden administration’s proposal, calling it “a laundry list of old partisan ideas and not a serious plan to address what patients pay out of pocket for prescription drugs.”
“What it leaves out is any attempt to fix a broken insurance system that discriminates against sick patients and does nothing to hold insurers and middlemen accountable for pocketing savings from our companies that should go to patients to lower their costs,” he added.
HHS said Thursday the price for brand-name drugs in the U.S. are rising faster than inflation and lack of competition is a key factor in these high drug costs.
The new plan would support testing reimbursements for drugs in Medicare that would be based on the “clinical value” they provide patients.
It would also prohibit “pay-for-delay” agreements, a tactic that encourages drugmakers to hold off marketing generic versions for brand name drugs.