Biden Administration Initiatives to Rein in Drug Prices—Déjà vu All Over Again

Merle M. DeLancey Jr.

On July 9, President Biden signed Executive Order 14063, designed to promote competition in the American economy with the goal of lowering prices for families, increasing wages for workers, and promoting innovation and even faster economic growth. The Order is expansive—requiring more than 12 federal agencies to pursue 72 initiatives. One of the Order’s prominent targets is drug pricing. At the signing ceremony, President Biden reiterated that “Americans pay two-and-a-half times more for prescription drugs than in any other leading country,” and “nearly one in four Americans struggles to afford their medication.” We have heard similar words multiple times before over many years, however, to date, there has been little progress.

The Order’s initiatives focusing on drug prices do not appear very different from similar efforts in recent years. First, the Order calls on the Department of Health and Human Services (“HHS”) to create a plan within 45 days to combat “excessive pricing of prescription drugs and enhance domestic pharmaceutical supply chains, to reduce the prices paid by the federal government for such drugs, and to address the recurrent problem of price gouging.” While perhaps a good sound bite, this initiative is not new. In fact, it sounds similar to the Trump administration’s “Most Favored Nation” drug pricing initiative under which Medicare reimbursement for certain drugs would be based on lower prices in other countries. The call for a plan to be delivered in 45 days is curious since it is reported that HHS delivered a new, Biden administration, most favored nation drug pricing rule to the Office of Management Budget for review earlier last week. Perhaps the plan will address how the Biden administration can implement this policy and avoid being bogged down in litigation.

Second, the Order calls on the Food and Drug Administration (“FDA”) to find ways to import less expensive drugs from Canada by working with Indian tribes and states. Again, this is not a new policy. Efforts to implement drug importation surfaced in the early 2000s. In September 2020, the Trump administration finalized a rule that would have allowed the importation of certain prescription drugs from Canada without approval from drug manufacturers. That rule was challenged by several industry trade groups and was never implemented. In fact, the legal challenges remain pending.

Finally, the Order calls on the Federal Trade Commission (“FTC”) to use its rulemaking authority to ban “pay-for-delay” arrangements pursuant to which brand-name drug manufacturers pay generic-drug manufacturers to postpone the introduction of copycat drugs with lower prices. Again, not a new concept. Calls to prohibit “pay-for-delay” agreements date back to 1998.

Given that the Order’s initiatives discussed above have been tried but never substantively implemented, one has to wonder why the Biden administration thinks their reintroduction will succeed. Let’s hope the administration has some tricks up its sleeve and can make some progress.

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