President Biden believes that health care is a right, not a privilege. No American should have to face difficult choices between paying for their prescription medications or other essential needs. And yet, too many Americans face this exact challenge. On average, Americans pay two to three times as much as people in other countries for prescription drugs, and one in four Americans who take prescription drugs struggle to afford their medications. Pharmaceutical companies do ground-breaking, life-saving work, but there is a difference between developing clinical breakthroughs and driving up prices for the drugs Americans rely on. Change is sorely needed.
Today, President Biden is laying out his vision for reducing the high cost of prescription drugs. As part of his Build Back Better agenda, he’s calling on Congress to address this crisis and allow Medicare to negotiate drug prices, significantly reducing costs for millions of Americans.
Specifically, the President’s plan includes:
- Allowing Medicare to Negotiate Drug Prices.
For every other type of health care service, Medicare works to get the best prices for American seniors. But for prescription drugs – and only prescription drugs – Medicare is prohibited by law from negotiating for the best deal. This needs to change. Medicare should be able to negotiate the price for a subset of expensive drugs that don’t face any competition in the market. Medicare negotiators would be provided a framework for what constitutes a fair price for each drug, and there should be powerful incentives to make sure drug companies agree to a reasonable price.
- Making Other Needed Reforms to Lower Prices.
We need to put an end to drug prices rising higher and higher with no end in sight. Drug companies that raise their prices faster than inflation should have to pay a penalty. Furthermore, today, seniors who take expensive drugs can face unlimited exposure to high drug prices. We have to fix this, and establish a firm cap on the amount that Medicare beneficiaries have to pay out-of-pocket for drugs each year.
- Building on Existing Progress to Lower the Cost of Prescription Drugs.
These actions would build upon steps the President has taken to make prescription drugs more affordable for all Americans. Last month, President Biden signed an executive order calling upon each Agency to improve competition, increase wages, and reduce prices—including for prescription drugs. Alongside other steps, the federal government will be working with states and Tribes to import safe, lower-cost prescription drugs from Canada and accelerating the development and uptake of generic and biosimilar drugs that give patients the same exact clinical benefit but at a fraction of the price.
These reforms would lower premiums and copays for millions of Americans. Insulin prices could fall by hundreds of dollars on average. The price for some arthritis medicines might fall by more than $2,000 every month. And for some of the most expensive drugs, prices would fall by tens of thousands of dollars per year. These price savings would put money back in seniors’ pockets: a person taking an expensive cancer drug could see their out of pocket costs fall by at least $9,000 a year, and even seniors who don’t take expensive drugs could see their premiums cut. On average, Medicare beneficiaries would save about $200. And it’s not just Medicare beneficiaries that would benefit. If Medicare makes the prices it negotiates available to commercial payers, too, costs for employer health insurance would fall – reducing premiums by tens of billions of dollars or more.
Public opinion polls show that the majority of Americans—Republicans and Democrats—support this change. The Biden-Harris Administration continues to do everything we can to make high quality health care more affordable and accessible. 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.