Biden: Penalties for soaring drug prices

He urges lawmakers to let Medicare negotiate

WASHINGTON – President Joe Biden urged Congress on Thursday to take steps to lower the cost of prescription drugs, arguing that too many families must choose between paying for medications or buying food.

Biden, speaking from the White House East Room, called on lawmakers to allow Medicare to negotiate drug prices, which he said would significantly reduce costs for millions of Americans. Medicare negotiates prices for every other type of health care but is barred by law from negotiating drug prices.

“We have to change this,” he said. “And we can.”

Biden wants Medicare to be able to negotiate prices for a subset of expensive drugs that don’t face any competition in the market. Under his plan, Medicare negotiators would be provided a framework for what constitutes a fair price for each drug, and incentives would make sure drug companies agree to a reasonable price.

To keep drug prices from rising higher, Biden wants to make drug companies pay a penalty if they raise their drug prices higher than the inflation rate. He also is calling for a $3,000 cap on the amount that Medicare beneficiaries must pay out-of-pocket for drugs each year.

Drug companies should be able to make a significant profit, Biden said. But, “why should we be paying two or three times what every other country in the world is paying for a similar drug?” he asked.

Biden’s proposals drew condemnation from the pharmaceutical industry.

“The policies the president outlined would undermine access to lifesaving medicines and fail to address an insurance system that shifts the cost of treatments onto vulnerable patients,” said Steve Ubl, president and chief executive officer of PhRMA, a trade group representing drug manufacturers.

On average, Americans pay two to three times as much as people in other countries for prescription drugs, and 1 in 4 Americans who take prescription drugs struggle to afford their medications, according to the White House.

A report by the AARP in June showed that insurance-negotiated prices of 260 brand-name prescription drugs have increased, on average, faster than general inflation every year since 2006. Last year, brand-name prescription drug prices widely used by seniors saw their slowest average annual price increase since 2006. But the 2.9% increase still is twice the country’s general inflation rate of 1.3%, the report said.

A single brand-name medication taken on a scheduled, repeating basis was more than $6,600 a month in 2020, according to the report, and older Americans take, on average, 4.7 prescription drugs every month. If price increases hadn’t exceeded inflation, the same single drug would have cost $2,900.

Last month, Biden signed an executive order directing the Food and Drug Administration to work with states and Native American tribes to safely import prescription drugs from Canada. The order also calls on the Federal Trade Commission to combat pharmaceutical companies’ anti-competitive practices that seek to delay the arrival of generic drugs into the market.

“Why should we be paying two or three times what every other country in the world is paying for a similar drug?” President Joe Biden