President Joe Biden on Thursday will outline his vision for how to bring down the price of prescription drugs, offering what may be his clearest endorsement yet for a set of sweeping reforms that Democratic leaders in Congress consider a priority.
In a late morning speech at the White House, Biden plans to say that Medicare should have power to negotiate prices directly with manufacturers in order to reduce the expense for both the federal government and for individual beneficiaries.
Biden “will note that while the pharmaceutical companies have done enormous work by developing lifesaving COVID-19 vaccines alongside the United States’ best scientists, crippling drug prices are unacceptable,” according to a White House official who offered a preview of the president’s remarks. The official requested anonymity because he was not authorized to speak on the record.
This will not be the first time that Biden has called for direct price negotiation. He has done so several times since becoming president, including in his April 28 address to a joint session of Congress, when he outlined his domestic agenda.
But this time, according to a fact sheet the White House distributed, Biden will mention specifically that government negotiators should have “a framework for what constitutes a fair price for each drug” and that “there should be powerful incentives to make sure drug companies agree to a reasonable price.”
That language is important because it would be consistent with the basic approach that key allies in Congress say they want to take.
House leaders, including Speaker Nancy Pelosi (D-Calif.), have said their model for reform will be a bill they passed in 2019, only to have the Senate refuse to take it up. Under that 2019 legislation, the government would set a price range for negotiation based on what other countries pay for drugs, then impose tax penalties on drug companies that refuse to sell at the negotiated prices.
Senate Finance Chair Ron Wyden (D-Ore.), whose committee will likely write the Senate version of legislation, has laid out his own principles for bringing down the prices of prescription drugs. He, too, has called explicitly for government negotiation and for some kind of financial incentives to make sure manufacturers agree to negotiated prices, although he has been less specific about how the mechanism should work ― in part because Senate Democrats don’t appear to have reached a consensus among themselves.
Just how detailed Biden will get in Thursday’s remarks remains to be seen. It is not clear, for example, whether he will call specifically for making sure that private employers and insurers can take advantage of the same negotiated prices that Medicare pays. That, too, is a key part of the approach Democratic leaders have endorsed.
Still, a White House official confirmed to HuffPost that Biden intends to signal his support for the basic policy framework that House Democrats and Wyden have embraced. And that’s significant.
Over the past few months, even many Biden allies questioned how high a priority he was giving the issue ― especially in April, when he released a budget document that mentioned drug pricing reforms but without offering policy specifics or dollar figures.
At the time, White House officials insisted those doubts were misplaced and that Biden was fully committed to pursuing big reforms.
“This doesn’t sound like the president would be backing away,” Larry Levitt, executive vice president for health policy at the Henry J. Kaiser Family Foundation, told HuffPost. “It’s very consistent with [the House Democratic bill], while leaving some room for compromise with the moderate wing of the party.”
One key advocate for action on prescription drugs was especially enthusiastic about the news.
“This is more than a green light,” Alex Lawson, executive director of Social Security Works, told HuffPost. “This is an exhortation to get it done, to go big, and to lower drug prices significantly for every person in this country.”
One likely reason for Biden’s support is that an ambitious set of reforms would save the government money by reducing what Medicare pays for drugs on behalf of seniors.
The savings could be considerable, on the order of hundreds of billions of dollars over 10 years. That savings could then help finance other initiatives high on the Democratic agenda ― such as adding dental, vision and hearing benefits to Medicare, or financing insurance for low-income people living in a dozen Republican-controlled states that have not participated in the Affordable Care Act’s expansion of Medicaid eligibility.
Like all policy proposals, aggressive prescription drug reforms would come with tradeoffs and complications. Pharmaceutical companies would see declining revenue that the companies and some experts say could hurt innovation.
Whether or not those claims are true, the industry has powerful allies on Capitol Hill, including some members of the Democratic Party. And it could take just one Democratic senator or a handful of House Democrats to kill the proposal, since Republicans are unlikely to support it.
The debate over whether and how to have the government negotiate drug prices is likely to get intense over the next few weeks because Democratic leaders want to include their reforms in the massive “human infrastructure” bill they hope to pass in the fall.
“It’s not yet clear how the Democratic leadership will corral the necessary votes for a drug pricing plan, but there’s no sign they’re backing off,” Levitt said. “An epic battle with the pharmaceutical industry is coming.”