A Biden administration plan to lower prescription drug prices offers the first detailed road map of administrative actions the White House would support in addition to legislation aimed at driving down costs.
The plan, to be released Thursday, backs legislation from congressional Democrats, including a push to empower the federal government to negotiate for drug prices in Medicare and pass those lower costs along to the private sector. The road map goes further, however, by outlining administrative actions by agencies and departments that could come in concert with possible legislative changes.
Administrative measures include testing reimbursement for drugs in Medicare based on the clinical value they provide to patients and offering federal funding for research into new treatments, according to the plan viewed by The Wall Street Journal.
Medicare is the health program for people aged 65 and older and younger people with disabilities.
"The Biden-Harris administration remains committed to making health care more affordable for American families, and this plan outlines one key way we will do that," Health and Human Services Secretary Xavier Becerra said in a statement. "By promoting negotiation, competition and innovation in the health care industry, we will ensure cost fairness and protect access to care."
The plan aims to bolster support for drug-pricing legislation by showing how administrative action could complement action from Congress. But Democrats remain divided over the scope and speed of the legislation, and the pharmaceutical industry is already ramping up its opposition to a number of the legislative options.
PhRMA, a trade group for drug manufacturers, held a press call Wednesday to criticize plans to enable price negotiation for drugs in Medicare, saying it will reduce funding for the development of new treatments.
"It’s really a smokescreen for implementing new government price controls," said David Ricks, chairman and chief executive of Eli Lilly & Co. "We cannot and will not support policies that hurt patient access."
Republicans also have opposed Medicare drug-price negotiations and have called for more bipartisan approaches to lower costs.
The plan, the result of weeks of meetings with industry, patient groups and others, stems from an executive order signed by President Biden in early July that tasked Health and Human Services with developing the road map in 45 days. The report was done but hadn’t been made public yet.
The president called for the plan to include initiatives to combat high drug prices, beef up domestic pharmaceutical supply chains and address what the plan calls price gouging.
The 29-page plan is built around three broad principles: support for price negotiation with drug manufacturers and limits on drug-price increases, promotion of industry competition, and support for public and private research into new treatments, according to a copy of the report.
The plan, for example, says legislation could prohibit pharmaceutical companies from paying generic competitors to hold off on marketing their versions of brand-name drugs. Administratively, the Food and Drug Administration and the U.S. Patent and Trademark Office would then develop solutions so that drug manufacturers can’t unfairly use the patent system to discourage competition, according to the plan.
The plan calls for reducing regulatory barriers that may impede or slow the approval of lower-priced generics or licensing of biosimilars – near-identical versions of drugs that can be made once an original patent expires, as well as promoting the lower-cost alternatives.
To spur new drug innovations, the administration would launch an agency at the National Institutes of Health to drive biomedical breakthroughs. Mr. Biden requested $6.5 billion for three years in his fiscal 2022 budget for the NIH, whose focus would be to "foster medical innovations," including for diseases such as cancer, diabetes and Alzheimers.
Other administrative measures include drug importation programs that reduce costs. HHS could collect data from insurers and third-party benefit managers to improve transparency about prices, rebates and out-of-pocket spending on prescription medications, according to the plan.
HHS could test models that pay for treatment and care in Medicare based on outcomes, in which payments for drugs are directly linked to the clinical value they provide patients.
Mr. Biden in August urged Congress to move drug-pricing legislation as part of a $3.5 trillion budget package. House and Senate Democrats have largely supported the ideas in concept, with the lawmakers in both chambers currently working on legislation to include provisions aimed at lowering the cost of prescription drugs.
Democrats on the House Energy and Commerce Committee are expected to unveil a proposal based on earlier legislation that passed the House enabling Medicare to negotiate on the price of prescription drugs.
The plan also lays out possible legislative approaches that the administration supports for lowering prices. Measures include legislation to slow price increases over time on existing drugs, a cap on the amount Medicare beneficiaries pay out of pocket for drugs and the speeding up of lower-priced alternatives to patented and name-brand drugs.
Efforts to tackle high drug prices have so far made little progress despite bold announcements. Former President Donald Trump had campaigned on letting Medicare negotiate drug prices but retreated from the idea once in office.
The Biden administration has pulled back from Trump-era plans to align payments for drugs with lower drug prices in other countries and curb drug rebates paid to groups that manage pharmacy benefits for companies and the federal government.