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 is expected 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 endorsed the idea of 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 the White House official, 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, such as House Speaker Nancy Pelosi (D-Calif.), have endorsed: setting a price range for negotiation based on what other countries pay for drugs, then imposing tax penalties on drug companies that refuse to sell at negotiated prices.
It is not clear just how detailed Biden’s comments will be. Nor is it clear whether Biden 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, the speech is expected to send an important signal about Biden’s commitment to action on prescription drug prices.
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. Thursday’s speech would seem to suggest that he is.
One likely reason 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.
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