Biden Issues Executive Order on Drug Prices – Policy & Medicine

On October 14, 2022, United States President Joe Biden issued an Executive Order on Lowering Prescription Drug Costs for Americans. In the executive order, Biden outlines new payment and delivery models that he expects will lower the prices of prescription drugs, with a focus on models that can be tested by the Center for Medicare and Medicaid Innovation (CMMI).

The executive order opens by saying, “Too many Americans face challenges paying for prescription drugs. 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. Nearly 3 in 10 American adults who take prescription drugs say that they have skipped doses, cut pills in half, or not filled prescriptions due to cost.”

Biden referred to several actions he has attempted to reduce drug prices, including Executive Order 14036, Promoting Competition in the American Economy, which aimed to improve competition and reduce prices for prescription drugs (in addition to other goods and services). In response to that Order, the Department of Health and Human Services (HHS) submitted a report to the White House Competition Council regarding legislative and administrative actions that should be taken to reduce drug prices.

The Inflation Reduction Act was also cited in the Executive Order as protecting Medicare beneficiaries from “catastrophic drug costs” by phasing in a cap for out-of-pocket costs on prescriptions at the pharmacy and by establishing a $35 cap per month per insulin prescription covered by a Medicare prescription drug plan and insulin delivered through traditional pumps. That legislation also requires certain companies to pay Medicare rebates if they increase the prices of drugs used by Medicare beneficiaries quicker than the rate of inflation.

In the executive order, which builds upon the Inflation Reduction Act, Biden assigns HHS Secretary Xavier Becerra to determining which new health care payment and delivery models CMMI should test. To that end, the executive order requests that within 90 days, Secretary Becerra submit a report to the Assistant to the President for Domestic Policy that describes the selected models, including a general plan and timeline for testing the models.

CMMI will then be tasked with testing potential new payment and delivery models that would cut costs and promote access to new drug therapies for Medicare and Medicaid beneficiaries – including models that may lead to lower cost-sharing for commonly used drugs and support value-based payments.

Only time will tell what models CMMI comes up with and whether they ultimately move the needle on out-of-pocket drug costs for patients.