Biden Administration Announces Moves to Cut Drug Prices

Derick Alison
Derick Alison
7 Min Read

The Biden administration announced several actions Thursday aimed at lowering prescription drug costs, including decreasing some drug copays for Medicare beneficiaries and getting pricing concessions for COVID treatments developed in part with federal funding.

“I have no problem with companies making reasonable profits, but not on the backs of seniors and working people,” President Biden said during an event at the NIH in Bethesda, Maryland. “This is all about fairness; it’s about dignity.”

As one part of its agenda, HHS on Thursday released a list of 48 drugs whose prices increased faster than inflation last quarter, meaning that they are possibly subject to inflation rebates beginning in the first quarter of 2024. Medicare beneficiaries who take these drugs under the Medicare Part B program may see their copays drop — the amount of decrease could vary from $1 per average dose all the way to $2,786.

The 48 drugs are used by a total of 750,000 Medicare beneficiaries, Biden noted. “If the medication you take is on the list, our program will keep the cost down.” He added that because the rebate program also requires the drug companies to pay back funds to the Medicare program, “this is a double-header” since it also saves money for taxpayers. The combination of the inflation rebates plus Medicare’s new ability to negotiate the prices of certain prescription drugs will save taxpayers $160 billion over 10 years, Biden said.

In addition to releasing that list, the administration also announced other actions it is taking to cut down the price of drugs paid for by the federal government. HHS said that the Administration for Strategic Preparedness and Response (ASPR) is making fair pricing a standard part of contract negotiations for medical products developed with federal government support.

For instance, in September, ASPR finalized a contract agreement under Project NextGen — a $5 billion effort to develop the next generation of treatments for and vaccines against COVID-19 — for a COVID treatment being developed by Regeneron, stating if the product is commercialized, its list price in the U.S. will be equal to or less than its retail price in comparable global markets.

Since then, ASPR has also included similar language in recent agreements with CastleVax, Codagenix, and Gritstone Bio, developers of the first three vaccines selected for development within Project NextGen, the White House said in a fact sheet. These clauses will be in effect if and when a company’s candidate vaccine is selected to move into ASPR-supported phase IIb trials to evaluate clinical safety and efficacy. Biden praised those contracts in his speech, saying that Americans “shouldn’t pay the highest price in the world for drugs your tax dollars already helped to create.”

The administration also is serving notice on some of the drug pricing and pharmacy payment practices used by pharmacy benefit managers (PBMs) and health insurers. “Pharmacies serve a critical role in delivering healthcare and providing access to medications across the country,” the Centers for Medicare & Medicaid Services (CMS) said in a letter to PBMs, Medicare Part D plans, Medicaid managed care plans, and private insurance plans. “CMS is concerned about the sustainability of these businesses, especially small and independent pharmacies, and their potential closures that may leave pharmacy services out of reach for many people, especially those in rural and underserved areas.”

The letter noted that, starting in January, changes are coming to the way pharmacies are paid under the Medicare Part D prescription drug benefit program, and that “we strongly encourage Part D plan sponsors and their PBMs to make necessary cash flow arrangements with network pharmacies in preparation for these upcoming changes. In addition, we will closely monitor plan compliance with pharmacy access and prompt payment standards to ensure that all people with Medicare Part D continue to have access to pharmacies and medications.”

“We urge plans and PBMs to engage in sustainable and fair practices with all pharmacies — not just pharmacies owned by PBMs — and we are closely monitoring plan compliance with CMS network adequacy standards and other requirements,” the letter continued.

All of these moves come on the heels of the administration’s announcement last week of a plan to possibly implement “march-in rights,” a controversial provision of the Bayh-Dole Act of 1980 that gives the government the authority, under certain circumstances, to assert control of a drug patent and license it to another company if the drug was developed with government support. Last week, the administration released a proposed framework to rein in prescription drug “price gouging” that included the use of those rights.

Drugmakers criticized the march-in rights announcement. Use of the rights “would be yet another loss for American patients who rely on public-private sector collaboration to advance new treatments and cures,” Megan Van Etten, deputy vice president for public affairs for the Pharmaceutical Research and Manufacturers of America (PhRMA), said in a statement. “The administration is sending us back to a time when government research sat on a shelf, not benefitting anyone.”

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    Joyce Frieden oversees MedPage Today’s Washington coverage, including stories about Congress, the White House, the Supreme Court, healthcare trade associations, and federal agencies. She has 35 years of experience covering health policy. Follow

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