Biden wants Medicare to negotiate drug prices

President Joe R. Biden is asking for Congress to act on making prescription drugs more affordable.

According to a fact sheet from the White House, the president is calling on Congress to allow Medicare to negotiate prices. This is the sole factor in healthcare spending for beneficiaries which the program is unable to negotiate on. Specifically, Biden wants Medicare to negotiate on the prices of a subset of high-cost drugs which face no market competition. These negotiators would be provided with frameworks identifying a fair price for each drug, and there should be strong incentives aimed at ensuring drug companies agree to the more reasonable price.

Biden is also asking legislators to implement a penalty against drug makers who increase the price of their drugs greater than the rate of inflation and establish an annual cap on Medicare patients’ out-of-pocket prescription drug costs, the fact sheet says.

The problem

The cost of healthcare in the U.S. has been a continuing problem and it’s much larger than just high prescription drug costs.

A study examining medical debt in collections from a nationally representative 10 percent panel of consumer credit reports between January 2009 and June 2020. It found that in June 2020, 17.8 percent of Americans had medical debt, with 13 percent accruing the debt in the previous year, and the mean amount of debt was $429, with $311 in debt accrued the previous year.

The southern U.S. had the highest mean amount of medical debt with $616, while the northeast had the least with a mean of $167; a difference of $448. It was also higher in poorer zip codes, $677, than richer ones, $126; a difference of $551, according to the study.

Expansion of Medicaid seems to have an impact on medical debt as between 2013 and 2020 states which expanded access saw a decline in the mean flow of medical debt 34 percent higher, from $330 5o $175, than the states that did not expand access, from $613 to $550. In states which expanded Medicaid the gap in the mean flow of medical debt between the richest and poorest zip codes fell $145, while it rose $218 in states that did not expand, the study says.

Executive order

Last month Biden signed an expansive executive order with provisions also aimed at lowering prescription drug prices.

The order directed the Food and Drug Administration (FDA) to work with states and tribes to import prescription drugs from Canada, pushes Health and Human Services (HHS) to increase support for generic and biosimilar drugs, and ordered HHS to release a comprehensive plan to combat high prescription drug prices and price gouging.

The order also encourages the Federal Trade Commission to ban so-called “pay for delay” agreements which see pharmaceutical manufacturers paying generic manufacturers to stay out of the market. This has raised drug prices by $3.5 billion a year.

A separate provision of the executive order also announces a policy calling for antitrust agencies to focus enforcement on a number of industries including healthcare.

As previously reported, the order also encourages the FTC to ban or limit the use of noncompete agreements in employment contracts. These agreements limit employees’ opportunities when they leave the company and can lead to costly lawsuits.

It is unclear what impact any limitations would have on physicians currently working under a noncompete agreement.

This article was originally posted on Medical Economics®.