Like last year, healthcare featured prominently in President Biden’s State of the Union Address. But unlike in 2023, this speech was different in tone on many topics, including healthcare. In an impassioned address, Biden took on the pharmaceutical industry. Asserting that Americans “pay more for prescription drugs than any nation in the world” he declared it time to enable the federal government to negotiate the prices of more prescription drugs and to broaden the reach to part of the commercial sector of health insurance. “They’re making a lot of money, guys,” Biden said of drug companies. And he added that after drug prices are lowered “they’ll still be extremely profitable.”
Healthcare has been a staple in many State of the Union Addresses over the years, including speeches given by Presidents Obama, Bush and Clinton. And former President Trump devoted plenty of time in his addresses to healthcare, too. For example, in February 2020, his remarks included what he viewed as the need for lower drug prices. He stated that he would support bipartisan legislation to reduce drug costs: “Get a bill to my desk, and I will sign it into law without delay.”
But it wasn’t until after President Biden took office that a bill would be signed which aimed to reduce prescription drug prices. And though the Inflation Reduction Act wasn’t a bipartisan piece of legislation, its drug pricing provisions are very popular with constituents across the political divide, according to KFF. More than 80% of adults surveyed support each of the law’s main provisions related to Medicare prescription drug costs. This includes majorities of Democrats, Republicans and independents.
And so, in what could be characterized as a populist message President Biden is floating the idea of expanding the reach of the IRA considerably, both in terms of the numbers of medicines the government will negotiate prices of within the public Medicare program, and the scope of the provisions to extend to part of the private sector.
The President seeks to more than double the number of prescription drugs to be negotiated by the Centers for Medicare and Medicaid Services, the White House announced Wednesday in a preview of what would be reiterated during the SOTU. While the current law allows the federal government to negotiate the prices of up to 20 drugs per year, Biden proposes increasing this to 50, according to STAT News.
Further, Biden spoke of expanding the law’s $2,000 annual cap on out-of-pocket drug costs for Medicare beneficiaries—as well as penalties imposed on companies that raise their drug prices above inflation—to apply to the employer-sponsored insurance sector as well. And Biden is asking lawmakers to apply the $35-per-month out-of-pocket cost cap for insulin for Medicare beneficiaries to the commercial market.
While none of these proposals have much of a chance of passage this year with a Republican-led House of Representatives, they could signal aspirations the President has if he wins a second term and Democrats regain control of the House.
Just prior to the SOTU the White House posted a fact sheet containing an assortment of steps the President is taking to “lower prescription drug and healthcare costs, expand access to healthcare, and protect consumers.” These included enlargement of the IRA that would require Congressional passage.
But the items also comprised initiatives that don’t require Congressional approval, such as implementation of a cell and gene therapy access model that encompasses outcomes-based pricing and reimbursement agreements for newly approved sickle cell disease products, among others.
The federal government had announced in January that the novel framework is designed to mitigate the costs state Medicaid programs incur when they pay for potentially curative cell and gene therapy treatments. CMS plans to negotiate deals on behalf of Medicaid state agencies that volunteer to participate in the model which commences in January 2025.
Prices of and access to prescription medications featured prominently in President Biden’s SOTU, though it’s highly unlikely in the short term that the far-reaching ideas on expanding the IRA’s drug pricing provisions will find a receptive audience in the current Congress.
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