President Joe Biden urged Congress to pass legislation to help lower prescription drug prices on Thursday as the White House balances the interests of the industry that developed Covid-19 vaccines in record time with an American public feeling the squeeze of ever-increasing healthcare costs.
“Pharmaceutical companies do ground-breaking, life-saving work, but there is a difference between developing clinical breakthroughs and driving up prices for the drugs Americans rely on,” according to a White House fact sheet released ahead of the press conference. “Change is sorely needed.”
Americans pay two to three times more on average for prescription drugs than other countries, the White House said, which is similar to an estimate produced by the Rand Corporation earlier this year. One of the pillars of Biden’s policy proposal is to allow Medicare, the government healthcare program for seniors, to directly negotiate drug prices with manufacturers. Nearly nine in ten Americans favor allowing the federal government to negotiate lower prices on medications, according to a Kaiser Family Foundation poll. Support for the plan crosses party lines, including 77% of Republicans and 96% of Democrats.
The Medicare Part D program, which covers certain prescription drugs, went into effect in 2006. It includes what’s known as a “noninterference” clause that says the Secretary of the Department of Health and Human Services “may not interfere with the negotiations between drug manufacturers and pharmacies and [prescription drug plan] sponsors.” This means the U.S. government, unlike many other developed countries, cannot have a direct role in determining how much drugs should cost for those covered by government insurance plans. As a result, prices are set using a benchmark based on average drug costs in the market .
Biden’s plan also calls for drugmakers to pay a penalty if they raise prices faster than inflation. Retail prices for brand name prescription drugs increased by an average of 2.9 percent — more than double the general inflation rate of 1.3 percent — from 2006 to 2020, according to an analysis by AARP Public Policy Institute.
This is a developing story and will be updated.