Making Medicare Drug Pricing Power Robust Proposed By Biden


In a recent move, the US President Joe Biden happens to be taking on a bipartisan bogeyman prior to the crucial State of the Union speech, stressing the pharmaceutical industry as well as saying that he will work towards expanding the government’s power to lower drug prices.

In a fact sheet that has been released on March 6, the White House remarked that Medicare should be allowed in order to negotiate prices for 50 medications per year. That would be a prominent jump from the limit of 20 within the Inflation Reduction Act- IRA.

It is well to be noted that President Biden is also looking forward to expanding a $2,000 cap on out-of-pocket drug expenses towards private insurers, thereby extending a $2 cost-sharing limit for high-value generic drugs across all the Medicare plans and, at the same time, widening requirements in terms of rebates when price rises exceed inflation. The White House, apart from this, listed a series of prominent novel endeavors that would go on to affect health insurance, research, as well as home care.

With the fact that the national polls show Biden trailing former President Trump, the State of the Union address is taking on outsized significance. Biden is going to be working to remind Americans of his office accomplishments and go on to persuade them that he can get even more done as far as another four years are concerned.

Both Republicans as well as Democrats go on to overwhelmingly favor more regulation in terms of prescription drug prices, as per the polling by KFF. Due to the IRA, Biden’s administration happens to be the first to have the authority so as to negotiate prices on behalf of Medicare, as well as began that process in August by way of releasing the list of the first 10 drugs that would enter talks.

The pharmaceutical sector says the negotiation provision of the 2022 law will go on to chill innovation, with the administration facing a number of lawsuits right before the list of targeted drugs even came out. Apparently, PhRMA as well as AstraZeneca have already gone on to lose their initial legal bids, while there are four drugmakers which happen to be making oral arguments at a court in New Jersey.

Apparently, the White House has gone on to say that the manufacturers of all 10 drugs that have been selected for the first round of negotiations go on to remain at the table after submitting counteroffers. The administration looks to announce the new prices later this year. The CMS, under the law, can go ahead and add another 15 drugs for negotiation in 2027 as well as 2028, another 20 in 2029, and thereafter each year post-2029.

Although raising that figure to 50 will undoubtedly hurt pharma profits, analysts are kind of skeptical that Biden’s proposals will go on to become reality under what is likely to be a divided government in Washington. And in spite of the initial dire warnings issued by the sector with regards to the consequences of negotiation, many executives have recently indicated the effects may as well not be too onerous, analyst from Leerink, David Risinger wrote in a note to clients on March 6.

Brian Abrahams, the analyst from RBC Capital Markets, opines that while rhetoric and headlines going into the election can go on to create some transient volatility within the space, they will not expect most investors to be overwhelmingly spooked by such developments.