President Joe Biden thinks his administration’s actions to reduce the price of prescription drugs represent some of his biggest achievements in office.
He is about to call for doing even more.
During Thursday night’s State of the Union address, Biden will propose strengthening the federal government’s ability to negotiate down the prices of drugs in Medicare, according to senior White House officials. He will also call for extending a $2,000 limit on out-of-pocket drug expenses, the officials said, so that it applies to all Americans with insurance and not just those in Medicare.
Both of these changes would represent expansions of federal action on health care that became law just two years ago, as part of the Inflation Reduction Act, the sweeping climate and health care bill that Democrats passed on party-line votes.
Several provisions of the Inflation Reduction Act sought to reduce the price of prescription drugs, especially for senior citizens. The best-known and most heavily debated of these gave the federal government power to negotiate prices of certain drugs directly with manufacturers.
This is the way the governments of other economically advanced countries have long handled drug prices, and why, not coincidentally, their residents pay far less for name-brand prescription drugs than their American counterparts do.
Getting the proposal through Congress was difficult. In order to win over skeptical Democrats like outgoing Arizona Sen. Krysten Sinema, who is now an independent, Biden and his allies had to scale back the proposal significantly ― by, among other things, limiting the number of drugs subject to negotiation to 20 each year.
Biden last year indicated he wanted to include more drugs. On Thursday night, he will specify that each year’s negotiations should include “at least 50 drugs,” according to the White House officials.
Another feature of the Inflation Reduction Act introduced the first-ever limit on out-of-pocket drug spending in Medicare, because seniors with the most serious medical problems were sometimes paying many thousands of dollars a year just for their drugs.
The limit is taking effect in two stages, the first of which took place in January. It effectively limits out-of-pocket drug costs in Medicare to about $3,500 for 2024. Next year, the annual cap will come down to $2,000, where it will stay.
But even then, the limit will only apply to Medicare. On Thursday, Biden will propose that it apply to private insurance as well, meaning non-seniors would have the same insulation from high drug costs that seniors are getting.
Getting these ideas through Congress would likely depend not only on Biden winning reelection, but also on Democrats regaining majorities in both chambers of Congress ― in other words, keeping the Senate while flipping the House away from Republican control.
That’s because Republicans have generally opposed giving the federal government more power over drug prices. They argue that federal agencies are ill-equipped to control such a dynamic and important market ― and that, with too much meddling, the federal government will end up stifling innovation and creating shortages, so that Americans end up with fewer and worse treatments.
“Apparently, the Biden Administration is really just out to make it harder for the world’s foremost engine of medical innovation to do what it’s best at ― finding cures,” Mitch McConnell, the Kentucky Republican senator about to step down as Senate GOP leader, said during a Wednesday floor speech on the administration’s actions to date.
Democrats and their allies argue such objections misunderstand the nature of the modern pharmaceutical market, given the high profits manufacturers frequently extract from drugs of questionable value. They say the kind of negotiation the Inflation Reduction Act envisions would, if anything, lead to more innovation by rewarding the development of more effective treatments.
Whatever the merits of the new and proposed drug pricing initiatives, they appear to be wildly popular. Polls consistently show large majorities of voters, even Republican voters, supporting them.
But polls also show relatively few Americans know about the changes, which is partly because they are taking effect gradually over the course of several years.
One goal of Thursday’s speech is to remind Americans of what Biden and the Democrats have already done, as well as what they’re proposing to do next if they get the chance.
“President Biden is doubling down on his efforts to lower drug prices, keep premium costs low, expand Medicaid, and put the health and well-being of families first,” Leslie Dach, chair of the advocacy group Protect Our Care, said in a prepared statement released Wednesday afternoon. Dach also called Biden “a health care president.”