Biden bookends drug price negotiations

Aug 16, 2024

Driving The Day

President Joe Biden speaks at a podium.

President Joe Biden spoke at a campaign event Thursday celebrating his successful bid to lower prescription drug prices. | Francis Chung/POLITICO

BIDEN’S 50-YEAR DRUG PRICE BATTLE — Efforts to establish Medicare drug price negotiations have a long history beyond the Inflation Reduction Act but with the same beginning and ending: Joe Biden.

“First time I sponsored a bill to let Medicare negotiate the price of drugs was in 1973, as a freshman senator, with a guy named Frank Church,” Biden said Thursday at an event marking the first results of its negotiations policy.

How we got here: The IRA allows Medicare to negotiate the prices of prescription drugs with drugmakers. Last year, the White House unveiled the first 10 drugs in the program and, on Thursday, said the negotiated prices would generate $6 billion in savings across the 10 drugs when the new prices take effect in 2026.

Where we came from: In 1973, Biden’s first year in the Senate, he cosponsored failed legislation alongside the late Frank Church, a Democrat from Idaho, that would have established a Medicare Formulary “listing the drugs deemed qualified for benefits … together with maximum allowable costs and additional information concerning such drugs,” and “makes provisions for selecting drugs for the Formulary.”

A ’90s attempt: In 1993, the Clinton administration took another stab at the policy, putting a provision in its health care reform package to let Medicare “use its negotiating power to get discounts from the pharmaceutical companies,” per the legislative text.

Then-HHS Secretary Donna Shalala told Pulse Thursday that drug makers joined forces with other groups, including providers and insurers, to defeat the plan.

“What we ended up with was the stakeholders who didn’t like certain parts of the bill got together with each other. That’s a negative coalition,” she said.

Shalala said pharmaceutical companies at that time had complaints about the reform similar to those today about the IRA: The policy would reduce their ability to research and develop new drugs.

“We were pretty sensitive about it,” she said. “I remember talking to pharmaceutical companies and saying, ‘Hey, give me your number for research, and we can include that as part of the negotiations.’”

The Bush years: President George W. Bush would later oversee the creation of Medicare Part D, which added prescription drug coverage to Medicare, similar to earlier proposed plans but without federal price negotiation.

Back to Biden: Although Biden signed the IRA into law in 2022, the negotiated prices — if the program survives several legal challenges, won’t go into effect until 2026, well after his term.

“I thank God that in the last three months I’m president of the United States, I was able to finally get done what I tried to get done when I was a young senator,” Biden said Thursday.

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Drug Pricing

House Speaker Mike Johnson walks to a vote at the U.S. Capitol.

House Speaker Mike Johnson says that Medicare's prescription drug price negotiations with pharmaceutical companies are akin to price-fixing. | Francis Chung/POLITICO

SOME IN GOP HIT IRA — The rollout of prices for the first 10 drugs selected for Medicare price negotiations was met with ire from pharmaceutical groups, as well as from some GOP leaders in Congress, Ben reports.

Senate GOP leadership didn’t mention the announcement in a messaging release Thursday, instead attacking Vice President Kamala Harris’ on inflation and crime. That’s despite Senate Minority Leader Mitch McConnell frequently calling Medicare negotiations “prescription drug socialism” and no Republicans voting for the 2022 Inflation Reduction Act, which established the negotiations.

But House GOP leadership, including Speaker Mike Johnson, called it price-fixing, as did the Republican National Committee, and said it endangered future cures. The RNC also hammered Harris on other issues like rising Medicare premiums.

Sen. Mike Crapo (R-Idaho), ranking member of the Senate Finance Committee, said that “affordable health care remains a pressing challenge for too many Americans” but that “misguided government overreach” isn’t the answer.

Sen. Bill Cassidy (R-La.), ranking member of the Senate Health, Education, Labor and Pensions Committee, called the savings generated from negotiated prices “fake” in a post on X, saying the administration is spending billions to “cover up” Medicare premium increases.

The bigger picture: Despite the attacks Thursday, Republicans aren’t expected to make opposition to the negotiations a top election-year issue. That reflects the broad popularity among voters, including Republicans, of allowing Medicare to negotiate drug prices.

Still, polling has shown many voters are unaware of the negotiation provisions. Democrats have made it a top campaign issue, which has boosted awareness. The prices won’t go into effect until 2026, which could blunt its impact at the polls.

MEDICAL DEBT

MED DEBT ACTIVISTS TURN TO HARRIS — Two of the nation’s leading health care advocacy groups want Democratic presidential candidate Kamala Harris to commit to helping Americans with medical debt if she wins in November, POLITICO’s Gregory Svirnovskiy reports.

Community Catalyst wants a Harris White House to prohibit the use of deferred-interest credit cards in health care settings because they can saddle borrowers with high-interest charges if they don’t pay off a balance within a specific time frame.

The group also wants HHS to build a simple recommended financial assistance application that can be standardized for hospitals and ensure stricter oversight of insurance claims and prior authorization denials.

Undue Medical Debt hopes the next administration will support state efforts like those in North Carolina under Gov. Roy Cooper.

Background: One in 5 Americans have medical debt — totaling $88 billion — with balances averaging $3,100 for the 15 million Americans whose medical debt appears on credit reports, according to the Consumer Financial Protection Bureau. Their situation leads many to avoid seeking health care when needed, the groups told POLITICO.

“There’s expensive copays, high deductibles, high premiums, but also certain things are still not being covered,” said Mona Shah, a senior director at Community Catalyst. “When it comes to health care, you don’t have a choice.”

Harris’ record: As vice president, Harris has been key to the Biden administration’s medical debt program, which includes a proposal for a new CFPB rule to ban medical debt from appearing on borrowers’ credit reports. And the administration’s signature American Rescue Plan arms states, counties and cities with the funds to wipe away $7 billion in medical debt by the end of 2026.

In July, CMS approved a bid by Cooper to dole out enhanced Medicaid reimbursements for hospitals that erase medical debt dating more than 10 years for eligible citizens and automatically enroll patients into financial assistance programs, among other measures.

And in June, Minnesota Gov. Tim Walz, the Democratic nominee for Vice President, signed a state law halting medical debt reporting to credit bureaus while also barring providers from denying necessary care because of overdue bills.

Public Health

REVACCINATED DOGS AGAINST RABIES — More than a hundred dogs imported from high-risk countries into the U.S. were vaccinated with a potentially ineffective rabies shot and had to be revaccinated between August 2021 and May 2024, the CDC said Thursday.

A CDC report said it had identified 132 imported dogs believed to be vaccinated with Canvac R, made by Dyntec, and at risk for rabies. That vaccine is considered potentially ineffective because other imported dogs contracted rabies after receiving the vaccine. The CDC requires that the dogs be revaccinated in the U.S.

Of the 132 dogs identified, eight never entered the U.S., 102 were already revaccinated and 22 were referred to state and local health departments for revaccination, resulting in 94 percent of the dogs revaccinated.

Why it matters: The field report comes after the CDC updated a rule that would have further restricted bringing dogs into the U.S. after an intense pressure campaign.

The rule initially required a variety of paperwork for all dogs entering the U.S., including veterinary records showing the dog is vaccinated against rabies. It now requires only one form for dogs coming into or returning to the U.S. from a low-risk or rabies-free country — as long as the dog has not been in a high-risk country for canine rabies in the past six months.

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