President Joe Biden on Wednesday expressed his desire for the federal Medicare program to engage in negotiations for a minimum of 50 prescription drugs annually, a notable increase from the current target of 20 medications.
This announcement is part of a series of fresh health-care policy propositions that Biden is set to release during his forthcoming State of the Union address on Thursday, as per a fact sheet disseminated by the White House on Wednesday. Many of these initiatives are aimed at broadening aspects of the Inflation Reduction Act, specifically designed to enhance the affordability of medications for seniors, potentially impacting the profits of pharmaceutical companies.
The fact sheet stated, “Medicare should not be limited to negotiating just 20 drugs per year. Instead, the President is proposing that Medicare be able to negotiate prices for the major drugs that seniors rely on, like those used for treating heart disease, cancer, and diabetes.”
Biden has consistently highlighted the reduction of U.S. drug prices as a pivotal component of his healthcare agenda and reelection strategy for 2024. However, the fate of his latest proposals rests with a divided Congress, casting uncertainty on their passage into law. The president’s proposal to increase the number of drugs eligible for negotiations with Medicare is anticipated to encounter staunch opposition from the pharmaceutical industry.
Already engaged in contentious legal battles with several drugmakers over negotiation rights, the Biden administration secured early victories in two separate cases this year. Nevertheless, the industry is seeking to elevate the matter to the Supreme Court.
The negotiation process initiated last fall by the Centers for Medicare and Medicaid Services presented the initial 10 drugs open to price discussions with Medicare. Negotiations for these medications are slated to conclude this fall, with revised prices taking effect in 2026.
Following the initial discussions, Medicare will have the capacity to negotiate prices for an additional 15 drugs, effective in 2027, and a further 15 thereafter, taking effect in 2028. As per the current framework, the number of negotiated medications per year is set to rise to 20 starting in 2029. While Biden had previously indicated a desire for more drugs to be subject to negotiations, Wednesday marked the first instance where his administration specified a higher target number.
Neera Tanden, the president’s domestic policy advisor, remarked, “The change will not only save taxpayers billions of dollars but more importantly, it will save lives and give seniors critical breathing room that they need.”
The White House disclosed that the president’s budget would reduce federal spending by $200 billion, potentially enabling Medicare to select more drugs for negotiation and expedite the inclusion of additional medicines in the negotiation process.
However, details regarding whether the number of drugs would gradually escalate to 50 over several years or if the new target would apply from 2029 onward were not disclosed by the White House. A senior administration official conveyed the president’s eagerness to collaborate with Congress on the proposal’s specifics.
“We have built a system that we are confident is working and will deliver lower prices for the American people, and we believe we can scale that up,” the administration official remarked.
Among the other policy proposals outlined are initiatives to limit Medicare copayments for common generic drugs to $2 and to extend the $2,000 cap on out-of-pocket drug costs beyond Medicare to all private plans.
Furthermore, Biden aims to expand another provision of the Inflation Reduction Act, mandating drugmakers to pay rebates to Medicare in instances where their drug prices surge faster than inflation. The president seeks to extend this policy to commercial drugs, not solely those sold to Medicare.
