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President Biden Announces Desire to Cap Drug Prices for All Americans
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In the State of the Union Address, President Biden said he wants to expand the $2,000 out-of-pocket cap beyond seniors and allow Medicare to negotiate more costly drugs.
In the State of the Union Address on March 7th, President Joseph Biden announced a proposal to expand the number of drugs targeted for annual price negotiations by Medicare and lower prescription drug costs for American families.1
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“Americans pay more for prescription drugs than anywhere else,” Biden said. “It’s wrong and I’m ending it.”2
The Inflation Reduction Act (IRA) aimed to lower prescription drug costs, benefiting individuals with Medicare. Passed in 2022, the law ensured that seniors with diabetes would receive insulin for $35 per month, compared with $400 common previously. The law also set a yearly cap of $2000 on out-of-pocket prescription drug costs in Medicare, which took effect in 2025.3
“With a law I proposed and signed...we finally beat Big Pharma," Biden said in the address. "For years, people have talked about it, but I finally got it done and gave Medicare the power to negotiate lower prices for prescription drugs just like the [Veterans Affairs] does for our veterans.”2
However, Biden announced that he wishes to cap the cost of insulin at $35 a month for all Americans that need it, which would be a significant expansion of the policy.2
As Medicare is currently negotiating lower prices for high-cost drugs, the president called for allowing Medicare the power to negotiate lower prices for over 500 drugs, which could come into effect over the next decade. Biden said that this approval could save lives and save taxpayers $200 billion.2
Additionally, Biden wants to cap the $2,000 out-of-pocket cap beyond seniors.2
Although the proposal could be beneficial for some Americans, the Senior Care Pharmacy Coalition (SCPC), an advocate organization for the long-term care (LTC) pharmacy community, announced that the negotiations will negatively impact LTC pharmacies. Additionally, the SCPC statement said an increase in negotiations will only exacerbate the issue.4
“SCPC and our members support lower drug prices for consumers, but long-term care (LTC) pharmacies must not become collateral damage in the drug pricing debate,” said Alan Rosenbloom, president and CEO of SCPC, in a press release.4
Rosenbloom noted that 8 of the 10 drugs that are currently under negotiation are largely prescribed to individuals in the long-term care setting, which accounts for significant LTC pharmacy revenues.4
Rosenbloom said that LTC pharmacies are paid less than their purchase cost for a majority of drugs and receive dispensing fees less than the cost of their services due to the “monopolistic market power and unfair trade practices of [pharmacy benefit managers] and the Part D Plans they represent.” Because of this, LTC pharmacy reimbursements could face unsustainable levels that Rosenbloom said could threaten their existence.4
“We are working hard to educate lawmakers and government officials about the dire threat posed by these new pricing policies and the impact it could have on LTC pharmacies, which will worsen each year as Medicare adds to the list of drugs targeted for price negotiations,” added Rosenbloom, in a press release.4
References
FACT SHEET: Biden-Harris Administration Announces New Actions to Lower Health Care and Prescription Drug Costs by Promoting Competition. The White House. News release. December 7, 2023. Accessed March 8, 2024. https://www.whitehouse.gov/briefing-room/statements-releases/2023/12/07/fact-sheet-biden-harris-administration-announces-new-actions-to-lower-health-care-and-prescription-drug-costs-by-promoting-competition/.
Remarks of President Joe Biden — State of the Union Address As Prepared for Delivery. The White House. News release. March 7, 2024. Accessed March 8, 2024. https://www.whitehouse.gov/briefing-room/speeches-remarks/2024/03/07/remarks-of-president-joe-biden-state-of-the-union-address-as-prepared-for-delivery-2/.
Inflation Reduction Act and Medicare. CMS.gov. News release. September 12, 2023. Accessed March 8, 2024. https://www.cms.gov/inflation-reduction-act-and-medicare.
SCPC Highlights Devastating Impact of Medicare Drug Price Negotiations On LTC Pharmacies. Senior Care Pharmacy Coalition. News release. March 7, 2024. Accessed March 8, 2024. https://seniorcarepharmacies.org/scpc-highlights-devastating-impact-of-medicare-drug-price-negotiations-on-ltc-pharmacies/.
