President Joe Biden on Thursday called on the US Congress to include strict controls on prescription drug prices in part by giving Medicare the power to negotiate them. "For every other type of healthcare service, Medicare works to get the best prices for American seniors, but for prescription drugs – and only prescription drugs – Medicare is prohibited by law from negotiating for the best deal. This needs to change," the White House said in a statement released announcing the President's remarks.
Biden said he wants at least three measures included in a major social policy bill that US lawmakers plan to draft this fall. These include granting Medicare the power to negotiate lower drug prices, having pharmaceutical companies face penalties if they hike prices more than the rate of inflation, and putting a "firm cap" on how much Medicare recipients have to spend out-of-pocket on medications each year.
In his remarks, Biden commended drugmakers for their work on developing COVID-19 vaccines, "but we can make a distinction between developing these breakthroughs and jacking up prices on a range of medications for a range of everyday diseases and conditions." He added "I think it is safe to say that all of us, whatever our background or our age and where we live, could agree that prescription drug prices are outrageously expensive in America," noting that people in the US pay two to three times more for prescription drugs on average as those in other countries.
Under the Biden policy proposal, Medicare would be able to negotiate the price for a subset of expensive drugs that do not face any competition in the market. Negotiators would be provided a framework for what constitutes a fair price for each drug, and there should be "powerful incentives" to make sure drug companies agree to a reasonable price, according to the White House press release. However, the Congressional Budget Office cautioned in 2019 that negotiating power alone would have "limited" impact, as negotiations would likely have to be tied to specific medications, and Medicare would have to be willing to drop a drug from its accepted coverage list if a company does not budge.
Biden said the measures announced Thursday would build on an executive order he signed last month that, among other things, seeks to lower prescription drug prices by supporting states in importing lower cost medicines from Canada. According to the administration, the new proposal could see insulin prices "fall by hundreds of dollars on average," while the cost for "some arthritis medicines might fall by more than $2000 every month, and for some of the most expensive drugs, prices would fall by tens of thousands of dollars per year."
Former President Donald Trump had also vowed to let Medicare use its purchasing power to drive for bargains, the way the Veterans Affairs Department already does. In addition, he tried to set drug prices against the much lower prices paid in other countries.
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