Biden pushes Congress to allow Medicare to negotiate drug prices

President Biden laid out his vision Thursday for reducing the high cost of prescription drugs, and pushed Congress to pass legislation that would allow Medicare to negotiate drug prices for millions of Americans.

Medicare, at this point, is prohibited by law from negotiating for the best deal in prescription drugs – something the White House says "needs to change." 

The president said Medicare should be able to negotiate the price for "subset of expensive drugs that don’t face any competition in the market," and that Medicare negotiators would be provided a framework for what constitutes a "fair price" for each drug. The White House added that there should be "powerful incentives" to make sure drug companies agree to a reasonable price.

"I've instructed the Federal Drug Administration to get these generic drugs to consumers faster. It is going to increase competition, lower drug prices for everyone," Biden said, adding that it would make "a gigantic difference for an average family." 

The president said that working families and "too many seniors" are currently "struggling to make it work."

"Today, one in four Americans, who take prescription drugs, struggle to afford them. Nearly 30 percent have skipped doses, cut pills, in half or because they can't afford the cost," Biden said. "We have to change this and we can. My administration has already taken significant steps to lower the cost of prescription drugs." 

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The president called for "an end" to endless rises in drug costs, and is set to propose drug companies that raise their prices faster than inflation "pay a penalty." 

The president proposed a "firm cap" on the amount that Medicare beneficiaries have to pay out-of-pocket for drugs each year.

"For all those folks expressing concerns about rising costs for families, I urge you to support these basic reforms," the president said Thursday. "They will allow drug companies to still make billions of dollars, which they have a right to do, and addresses one of the largest out-of-pocket expenses that families face--prescription drugs." 

"We can do this," he added. 

The president also said that signing up for affordable health insurance, through the Affordable Care Act, would help lower costs for families, encouraging uninsured individuals to sign up for Obamacare on healthcare.gov through Sunday, Aug. 15. 

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The proposals come after Biden, last month, signed an executive order calling on each agency to improve competition, increase wages and reduce prices – including for prescription drugs. The Biden administration also has started working with states and tribes to import "safe, lower-cost prescription drugs" from Canada, while also calling to accelerate the development of generic and bio similar drugs that give patients "the exact same clinical benefit but at a fraction of the price."

"I've ordered the FDA to work with states and tribes to import prescription drugs safely from Canada," Biden said Thursday, adding that "these are drugs that the FDA has determined are safe." 

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Administration officials argued that the proposed reforms would lower premiums and copays for millions of Americans, citing specific prices – like for insulin, which could fall by "hundreds of dollars on average," and some arthritis medications that could fall "by more than $2,000 every month." 

Officials said the price savings would "put money back in seniors’ pockets," pointing to expensive cancer drugs that could see out-of-pocket costs falling by at least $9,000 a year, and even seniors who don’t take expensive drugs having the potential to see their premiums cut.

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The president’s proposal comes after the Trump administration, last November, issued regulations that were intended to lower the prices Americans paid for prescription drugs. 

The Trump-era rules tied what Medicare paid for medications administered in a doctor’s office to the lowest price paid among a group of other economically advanced countries, called the "most favored nations" approach. At the time, the Trump administration argued it could save $28 billion over seven years for Medicare recipients through lower copays. 

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President Biden, though, scrapped Trump’s proposed rule, which was challenged in court. 

"The Biden-Harris administration continues to do everything we can to make high quality health care more affordable and accessible," the White House said. "By enabling Medicare to negotiate drug prices, Congress can do its part to bring down costs and secure the health and financial security of our nation’s seniors." 

Meanwhile, reacting to the president's remarks, PhRMA (Pharmaceutical Research and Manufacturers of America) president and CEO Steve Ubl said while the organization stands "ready" to work with Congress, the approach is "misguided." 

"We stand ready to work with lawmakers and do our part so that patients can see lower costs at the pharmacy and continued access to the cures and treatments they need," Ubl said, adding, though, that "Unfortunately, the policies the president outlined today would undermine access to life-saving medicines and fails to address an insurance system that shifts the cost of treatments onto vulnerable patients." 

"Many in Congress know that access to medicine is critical for millions of patients and Medicare is not a piggy bank to be raided to fund other, unrelated government programs," Ubl told Fox Business. "This is a misguided approach." 

He added: "The recent infrastructure bill is a reminder that bipartisan reform is possible, and patients deserve the same bipartisan leadership to help ensure they have access to their medicines with out-of-pocket costs that are affordable."

The Associated Press contributed to this report.