Facing a divided Congress unlikely to pass major legislation, President Joe Biden’s administration is now cajoling or working with private companies to advance an otherwise stymied policy agenda on everything from prescription drug costs to expanding child care options.
On Wednesday, Biden celebrated pharmaceutical giant Eli Lilly’s announcement that it would slash and cap the cost of insulin. Earlier in the week, the Commerce Department announced it would require chipmakers to offer plans for affordable child care to qualify for more than $50 billion in subsidies. And three major airlines responded to Biden’s call in the State of the Union to eliminate fees for parents and children to sit together by doing just that.
All three announcements advance the administration’s long-standing policy goals — to lower prescription drug costs, to expand affordable child care options and to eliminate so-called “junk fees” — in ways Congress has so far been unable to. It shows how the administration is turning to public pressure and regulations to enact its agenda.
“The president’s bully pulpit is a really important tool that he’s using to reduce costs for families in a number of ways,” Bharat Ramamurti, the deputy director of the White House’s National Economic Council, told HuffPost in a phone interview. “It’s not meant to substitute for getting things through Congress, or for getting something done in rulemaking.”
Key to the efforts is the underlying popularity of the ideas: Lowering prescription drug costs has long been one of the public’s biggest priorities, and public surveys show Biden’s push against junk fees is broadly popular.
“We pick these issues where there is something fundamentally unfair and unreasonable that is happening, and you shine the presidential spotlight on it,” Ramamurti continued. “The president must have talked about lowering the price of insulin 100 times over the last year and a half as he’s been pushing for this, and this week you saw a pharmaceutical company respond to his call to act.”
The tactic is not a new one for the White House. Shortly after Biden unveiled his antitrust agenda with a sweeping executive order in 2021 including a push for “right to repair,” Apple announced it would sell repair kits to the public for the first time.
At the same time, the moves ― all of which are incremental ― also show how limited the White House’s toolkit is to deal with major problems driving up costs for Americans.
Drug Prices
The Inflation Reduction Act took a giant step forward in taming high pharmaceutical prices, an ongoing top concern for the American public. It gave Medicare the ability to use its buying power to negotiate lower prices for drugs for the first time, even if Democrats friendly to the pharmaceutical industry made sure to limit those powers.
It also capped the out-of-pocket cost of insulin for people on Medicare at $35. (An attempt to apply the cap to those on private health insurance plans failed due to Senate rules despite getting 57 votes.) Since its passage, Biden, other Democrats and even some Republicans have pushed for companies to voluntarily comply with the cap.
On Wednesday, Eli Lilly became the first of the three major companies manufacturing insulin to acquiesce, capping out-of-pocket costs at $35 a month. Market forces, including the development of biosimilars and the efforts to manufacture cheaper insulin, played a role. But at least some of the credit also goes to political pressure.
“It’s rare that we see a drug company voluntarily lower its prices,” said Juliette Cubanski, the deputy director of the program on Medicare policy at the Kaiser Family Foundation. “The company was facing pretty strong headwinds in terms of political pressure from lawmakers.”
Speaking to House Democrats at their annual conference in Baltimore, Biden predicted the other major manufacturers ― the Danish pharmaceutical giant Novo Nordisk and France-based Sanofi ― would have no choice but to follow suit.
“Guess what that means?” Biden said. “Every other company making insulin is going to have to lower their prices to $35 because they can’t compete.”
The decision will make a big difference for people with no insurance, since most consumers with insurance will likely already pay less than $35 a month, Cubanski noted. She also pointed out the newest insulin products Eli Lilly manufactures won’t be covered by the price cut.
“This is the kind of persistent concern with drug prices in the United States that the Inflation Reduction Act does nothing to address,” she said.
Junk Fees
Biden’s push against so-called “junk fees” ― the fees added on to tickets, financial services and other products ― has generated no shortage of industry opposition. Since he launched it shortly before delivering his State of the Union address last month, the U.S. Chamber of Commerce and other groups have slammed it as akin to price-fixing, and major players in the hotel and ticket industries have also pushed back.
However, his specific callout of airline industry fees has prompted three major U.S. airlines ― Frontier, United and American ― to eliminate fees for children and parents to sit together. Administration officials are hopeful the recent rollout of a Department of Transportation dashboard tracking the fees will encourage other airlines to follow suit.
“Baggage fees are bad enough ― they can’t just treat your child like a piece of luggage,” Biden said in the State of the Union.
It helps that the Department of Transportation is already working on a rule requiring the elimination of those fees, even if the proposal could be years away from going into effect. For now, the White House is looking to work with Rep. Ann Wagner (R-Mo.) ― who has sponsored stand-alone legislation banning fees for families to sit together ― to get the requirement passed into law.
Child Care
The administration’s move to expand child care differs from their other recent successes. While Biden and other officials verbally confronted airlines and pharmaceutical companies, Commerce Secretary Gina Raimondo has emphasized the requirement for chipmakers to offer child care as an example of the administration working with industry.
“We right now lack affordable child care, which is the single most significant factor keeping people, especially women, out of the labor force,” Raimondo said on a conference call last week. “And so we need to see how these companies are going to be meeting their labor force needs.”
Senate Republicans, who mostly backed the CHIPS Act, which provided the semiconductor funding, are grumbling about the move. Sen. Mitt Romney (R-Utah) called the requirements “woke” and Sen. Thom Tillis (R-N.C.) referred to them as “social engineering.”
Administration officials, however, are arguing the requirements are necessary to build the workforce that semiconductor manufacturers will need. Two innovation scholars at the Center for Strategic and International Studies, a centrist think tank, made a similar argument in a blog post last week.
“It is not, as some have wrongly argued, an issue of social policy,” the scholars wrote. “It is a pragmatic move, clearly aligned with the nation’s security interests, to grow the workforce necessary to get the fabs built and producing the chips on which our country runs.”
Child care, however, remains a national crisis Biden was unable to fully address, primarily due to the opposition of Sen. Joe Manchin (D-W. Va.) and Kyrsten Sinema (D-Ariz.) to his original “Build Back Better” plan, which would have funneled billions towards both child care and prekindergarten programs.