After efforts from Democrats to push proposals that would reduce prescription drug costs – a debate that has now spanned multiple administrations – President Joe Biden excluded any real action on the hot-button issue in his new American Families Plan unveiled last Wednesday.
The $1.8 trillion plan focuses primarily on increasing access to education and child care. It excludes the most commonly floated drug-pricing initiatives, such as allowing Medicare to negotiate prices and capping drug costs for seniors.
This came as a surprise to many observers, considering that White House chief of staff Ron Klain had publicly expressed in a recent interview that “there’ll be no American Families plan unless we tackle [the healthcare prices] issue.” In his remarks to Congress, Biden expressed a need to lower prescription drug prices, even though he provided few details on how that would happen. He called for action on reducing costs before the year is out, noting that drug prices in the U.S. are nearly three times as high as the same drugs in other countries.
“Let’s do what we’ve always talked about… Let’s give Medicare the power to save hundreds of billions of dollars by negotiating lower drug prescription prices,” Biden said. “The money we save… can go to strengthen the Affordable Care Act and expand Medicare coverage benefits without costing taxpayers an additional penny.”
Biden called on both Democrats and Republicans to join the reform effort, mentioning former President Trump’s attempt to cap prices while in office.
“We know how to do this,” Biden urged. “The last President had that as an objective. We all know how outrageously expensive drugs are in America.”
To some, Biden’s comments on Wednesday came across as empty promises, given the fact there may not be other chances to include drug pricing in remaining major policy packages this year. On the other hand, backing off on reform might have had something to do with fears that “a fight over drug pricing limits would make what is already a difficult fight to pass the Families Plan impossible,” Jon Bigelow, executive director of the Coalition for Healthcare Communication, wrote in a statement.
Bigelow added, however, that the exclusion of pricing from the Families Plan legislation “may be a short-lived victory for the pharma industry.” Plans to cut drug prices still have strong support in Congress – and they poll well among voters.
Terry Haines, founder of healthcare policy consultancy Pangea Policy, argues the likelihood of some sort of drug pricing reform happening sooner versus later may be higher than expected.
“Alarm bells ought to be going off for the pharma industry, and for investors in the industry,” Haines said.
Haines pointed out that, since limiting drug prices would save the federal government some $500 billion over the course of a decade, reform could be implemented regardless of its exclusion from the American Families plan. “It’s likely to happen by using the drug pricing pay-for on something else that’s a top policy priority,” he continued. “And that’s the scenario now developing.”
Days after the Families Plan was announced, Congressional Democrats had already resumed the pricing fight. House Energy and Commerce Committee Chairman Frank Pallone Jr. and Senate Finance Committee Chairman Ron Wyden expressed plans to add drug pricing measures to the plan as it goes through Congress.
“We’re going to look at every possible vehicle, and that’s starting today,” Wyden said, adding that “it’s critical that we level the playing field by giving the federal government the ability to negotiate lower prescription drug costs, and this will be one of the top priorities as we work to pass the American Families Plan.”
The pharma industry has resisted major drug pricing reform like the H.R.3 bill. Instead, it has pushed for smaller compromises, arguing that pricing limits would dampen innovation. Lobbying group PhRMA recently unveiled a campaign that emphasized the industry’s role in producing vaccines during the pandemic.
Advocates for pricing reform, meanwhile, have started lobbying to have it included in the latest plan. A letter spearheaded by Families USA and signed by various nonprofits and advocacy organizations noted that prescription drug pricing is a “significant driver of health inequities,” particularly impacting communities of color and rural and low-income communities.
The letter urged the White House and Congress to “end industry abuses and finally act to lower the price of prescription drugs by allowing Medicare to negotiate directly with pharmaceutical manufacturers.”
The pricing debate will likely continue in the background for now. “The last year really cast a light on the disparities that exist in the U.S., and this new focus on health equity is going to potentially really raise challenging questions around cost effectiveness,” said Milena Sullivan, a principal at healthcare consulting firm Avalere, during a webinar on drug pricing this week. “It’s not an easy answer, but there’s a lot more awareness around the need to try to tackle this issue.”