On September 9, 2021, the United States Department of Health and Human Services (HHS) issued its Comprehensive Plan for Addressing High Drug Prices, a report in response to President Joe Biden’s Executive Order on Competition in the American Economy.
The Report outlines three guiding principles for the Drug Pricing Plan: (1) make drug prices more affordable and equitable for all consumers throughout the health care system; (2) improve and promote competition throughout the prescription drug industry; and (3) foster scientific innovation to promote better health care and improve health.
The plan does not say whether it would result in any projected costs or projected savings to Americans, but some of the options included would require billions of dollars in funding, such as creating a new agency within the National Institutes of Health to foster medical innovation.
Legislative Direction
The report includes potential legislative policies that Congress may pursue to advance the three guiding principles. Some of those ideas include: drug price negotiation in Medicare Parts B and D, with negotiated prices also available to commercial plans and employers who want to participate; Medicare Part D reform, including a cap on catastrophic spending to protect beneficiaries from unaffordable out-of-pocket costs; legislation to slow price increases over time on existing drugs; and prohibition on “pay-for-delay” agreements and other anti-competitive practices by drug manufacturers.
Administrative Actions
Similarly, the report explains some administrative tools that HHS can use to promote competition and reduce drug prices to advance the principles. Some administrative action ideas include: testing models using value-based payments in Medicare Part B, in which payment for drugs is directly linked to the clinical value they provide patients; testing total cost of care models in Medicare to determine whether they produce changes in drug utilization, reductions in total spending, and improvements in patient outcomes; data collection from insurers and Pharmacy Benefit Managers (PBMs) to improve transparency about prices, rebates, and out-of-pocket spending on prescription medications; and work with states and Indian Tribes to develop drug importation programs that reduce costs to consumers without any increased safety risk.
PhRMA Response
Pharmaceutical Research and Manufacturers of America (PhRMA) president and CEO Stephen J. Ubl released a statement in response to the plan, calling it a “laundry list of old partisan ideas and not a serious plan to address what patients pay out of pocket for prescription drugs.” Ubl goes on to note, “What it leaves out is any attempt to fix a broken insurance system that discriminates against sick patients and does nothing to hold insurers and middlemen accountable for pocketing savings from our companies that should go to patients to lower their costs.”
Ubl concluded by noting the hard work the pharmaceutical industry has put in response to the COVID-19 pandemic, “The biopharmaceutical industry is continuing to work around the clock against this pandemic while this same White House is trying to make it more difficult for our industry to continue the fight against this pandemic and plan for future health crises.”