Understanding President Biden’s Plan to Reduce the Cost of Prescription Drugs

Understanding President Biden’s Plan to Reduce the Cost of Prescription Drugs

August 20, 2021

Recently, President Biden laid out his vision for reducing the high cost of prescription drugs and called on Congress to take swift action to lower financial barriers to health care, including holding manufacturers accountable for raising prices faster than inflation, implementing out-of-pocket caps for prescription drug spending under Medicare, and accelerating the development and uptake of generic and biosimilar medications.

The ADA expressed strong support for all three of these priorities and more in a submission to the White House Budget Office last month, specifically advocating for:

  • Curbing aggressive drug pricing tactics. Currently, there aren’t adequate guardrails preventing manufacturers from increasing the list prices of insulin and other drugs each year. When manufacturers increase the price of drugs in Medicare and Medicaid at a rate higher than inflation, they should be required to report on and justify these price increases. Additionally, policymakers should consider financial disincentives for manufacturers that regularly set or increase their prices above a certain threshold.
  • Implementing out-of-pocket caps. As we’ve seen through ADA’s successful push for state insulin out-of-pocket caps, establishing caps for insulin and other diabetes drugs, devices, and supplies would make a substantial difference in the lives of those struggling to afford their care. Such out-of-pocket spending limits have already been signed into law by governors in 20 states and the District of Columbia, and similar policy changes at the federal level would help bridge gaps in affordability and access that have persisted for far too long.
  • Building a competitive biosimilars marketplace. With steady growth in the numbers of Americans who are insulin-dependent, policy change should target lowering barriers to meaningful competition to drive down drug prices. One key opportunity is promoting broader availability of safe and effective biosimilar medications and incentivizing doctors and insurance companies to prescribe and cover them for patients at a lower cost.
  • Enacting rebate and insurance reforms. The savings negotiated by PBMs for prescription drugs should be shared with consumers. Those with unusually high launch prices where other lower-cost options are available should be subject to a full pass-through of rebates to consumers so that they are not given preferential treatment that limits or blocks access to lower-cost options. Additionally, regulation of insurance practices like step therapy (or “fail first”) is necessary to make sure patients are getting the therapies their doctors deem best at the most affordable price.

The ADA looks forward to working with the Biden administration to lower the cost of prescription drugs and ensure that all Americans with diabetes have access to the resources they need to stay safe and healthy.