- President Joe Biden’s “Executive Order on Promoting Competition in the American Economy” aims to lower prescription drug prices by allowing imports of drugs from Canada, promoting generic and biosimilar drugs, and ending “pay for delay” agreements
- Biden has directed the Food and Drug Administration (FDA) to work with states and indigenous tribes to facilitate the importation of safe prescription drugs from Canada and the Secretary of the Department of Health and Human Services (HHS) to increase support for generic and biosimilar drugs and, within 45 days, issue a comprehensive plan to combat high prescription drug prices and drug price gouging
- What this plan will include, however, currently remains unknown—Biden omitted any mention of leveraging the negotiating power of Medicare to set prescription drug prices, a policy widely supported by Democrats
WASHINGTON, D.C., United States –United States President Joe Biden has signed the “Executive Order on Promoting Competition in the American Economy” to boost competition, with a specific focus on the pharmaceutical and healthcare industries. In essence, the Order aims to lower prescription drug prices by allowing imports of drugs from Canada, promoting generic and biosimilar drugs, and ending “pay for delay” agreements.
Drug Imports Given Green Light
Biden has directed the Food and Drug Administration (FDA) to work with states and Indigenous tribes to facilitate the import of safe prescription drugs from Canada, echoing a previous Executive Order issued by former U.S. President Donald Trump that was stalled once Biden took office. State-level policymakers – in particular, those from Florida and Colorado – have already passed legislation paving the way for drug imports, ahead of a federal green light, which was necessary before imports could commence.
Allowing imports from abroad has overall found bipartisan support at the state-level; even federally, Vermont Senator Bernie Sanders backed Florida Governor Ron DeSantis’ push for cheaper drugs to be imported from Canada. The go-ahead is a win for states, some of which are already setting their eyes on markets outside Canada. For example, in Colorado, SB21-123 expands the state’s prescription drug importation program so that it can import medicines from countries such as Japan, France, and Australia—manufacturers, wholesalers, or pharmacies from other countries would be permitted to export drugs to Colorado.
These measures are forecasted to generate significant savings for states, which have again been rapidly approving legislation targeting prescription drug pricing through imports. While the federal government has opened the gates for imports, Canada has expressed opposition; when Trump signed his Order allowing imports, Canadian officials said they feared Canada’s market is too small to support exports to a major market like the U.S.
“Comprehensive Plan” to Combat Drug Prices, No Mention of Medicare Negotiations
The Order also directs the Secretary of the Department of Health and Human Services (HHS) to increase support for generic and biosimilar drugs and, within 45 days, issue a comprehensive plan to combat high prescription drug prices and drug price gouging.
What this plan will include, however, currently remains unknown. Biden omitted any mention of leveraging the negotiating power of Medicare to set prescription drug prices, a policy widely supported by Democrats—U.S. Speaker of the House Nancy Pelosi has advocated for the passage of H.R. 3, the Elijah J. Cummings Lower Drug Costs Now Act, or, at minimum, its “Average International Market (AIM)” Price clause, that would set a maximum price in the U.S. based the drug’s average price among Australia, Canada, France, Germany, Japan, and the United Kingdom. Pelosi recently said she would continue to push for drug pricing legislation to be attached to Biden’s forthcoming budget bill; in fact, Pelosi wants drug pricing legislation to be passed in the Senate as part of a special budget bill that does not need support from the opposition.
While relevant text from H.R. 3 was left out of Biden’s American Rescue Plan, in June, Acting Director of the Office of Management Budget Shalanda Young said that Biden intends “to take action on this this year,” adding that the President “expects a bill from Congress allowing Medicare to negotiate drug prices.”
Trump issued his “Most-Favored Nation” Executive Order last year, that would’ve Most-Favored benchmarked U.S. prescription drug prices based on the lowest cost found among similar economic countries. Biden stalled Trump’s handful of Executive Orders when he issued a regulatory freeze memorandum – “Regulatory Freeze Pending Review” – a few days after taking office, and the MFN rule received legal challenges due to its swift issuance that allotted not time for feedback.
“Pay for Delay,” Hospitals, and Health Insurance
The final measures of Biden’s Executive Order take aim at regulatory practices. To hasten the arrival of generics onto the market, the Order encourages the Federal Trade Commission (FTC) to ban “pay for delay” and similar agreements by rule, which according to Biden have raised drug prices $3.5 billion per year and reduced innovation, including new drug trials and research and development (R&D).
Other measures in the Order include allowing over the counter (OTC) sales of hearing aids, discouraging hospital mergers, ensuring hospitals maintain price transparency, and standardizing the National Health Insurance Marketplace to enable easy comparison and shopping.
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