Biden admin backs direct government drug price negotiations

But the HHS report’s embrace of broad price negotiation is the administration’s latest signal that it’s siding with progressives who have pushed for a far more aggressive approach to slashing pharmaceutical costs.

Under the HHS plan, the government would directly negotiate prices for drugs in Medicare parts B and D, with those prices also being available to private insurance plans and any employers who want to participate.

House Democrats passed a similar provision as part of a major drug pricing bill in 2019. But it never made it into law, and some in the party’s centrist wing have since vowed to oppose drug price negotiation.

Notably, the plan stops short of supporting the use of “march-in rights” that progressives argue empower the government to pull patent rights from a drug that is deemed too expensive. Sen. Elizabeth Warren has long advocated for the approach, and urged HHS to utilize it in an August letter with Sen. Amy Klobuchar and Rep. Lloyd Doggett.

“The Biden Administration has the opportunity to lower the prices of key drugs using these authorities,” the lawmakers wrote to HHS Secretary Xavier Becerra.

The department in its report acknowledged that it has been petitioned to use march-in rights, saying only that it would give them “due consideration.”

The HHS plan also lays out a series of administration actions that the department could take to fulfill what it identified as three “guiding principles:” making drugs more affordable, improving competition within the industry and encouraging innovation.

Those options included testing value-based payment models and boosting cost-sharing support to certain low-income Medicare beneficiaries. It also suggests that improved data collection from insurers and pharmacy benefit managers could give the government better insight into drug pricing, as well as rebates and out-of-pocket spending on prescription medications.

HHS developed the report in response to an executive order that President Joe Biden issued earlier this year aimed at improving competition across a range of industries, including the drug sector.