President Biden called for expanding the Inflation Reduction Act to lower prescription drug prices. What would Trump do if he wins the 2024 election?
Pictured: American flag flying in front of the Capitol building in Washington DC/iStock, Mesut Dogan
We learned this week that the 2024 presidential election is officially in full swing—and not just because Donald Trump cemented his position as the shoo-in Republican nominee with an overwhelming win on Super Tuesday. In Thursday’s State of the Union address, President Joe Biden was in full campaign mode, taking aim at Big Pharma with calls to ratchet up efforts to lower prescription drug prices for Americans.
The U.S. pays the highest prices in the world for prescription drugs, according to Biden. “It’s wrong and I’m ending it,” he declared. “Medicare will no longer have to pay those exorbitant prices to Big Pharma.”
Invoking the Inflation Reduction Act (IRA), Biden said in his speech to the nation that he would support legislation to expand Medicare price negotiations to at least 50 drugs per year, up from 20 drugs annually.
“This year, Medicare is negotiating lower prices for some of the costliest drugs on the market that treat everything from heart disease to arthritis,” Biden said. “It’s now time to go further and give Medicare the power to negotiate lower prices for 500 different drugs over the next decade.”
What Biden didn’t mention in his speech was that the administration is also looking to expand the IRA’s requirement that pharma companies pay rebates to Medicare if their price increases for certain drugs exceed inflation. “The President is calling on Congress to require those rebates for commercial drug sales, as well as sales to Medicare,” according to a White House fact sheet. “That will save the federal government billions of dollars, further curb prescription drug price inflation, and reduce health insurance premiums for people with private health insurance coverage.”
Merith Basey, executive director of drug pricing advocacy group Patients For Affordable Drugs Now, applauded Biden’s initiative, which she said in a statement would “expand cost-saving measures to millions of people on private insurance.”
Drugmakers, on the other hand, are unsurprisingly displeased with Biden’s IRA expansion proposals. In a statement emailed to BioSpace, a spokesperson for the Pharmaceutical Research and Manufacturers of America (PhRMA) said that the IRA “is already having unintended and harmful consequences that are creating access barriers for patients and stifling research and development of new cures.” Investment in small molecule development has begun to decline, the spokesperson explained, and insurers now offer fewer Part D plans. “Expanding this bad policy and giving government bureaucrats even more power over individual healthcare decisions only exacerbates these issues.”
The Ongoing Battle Over Drug Prices
Big Pharma including AstraZeneca, Bristol Myers Squibb, Johnson & Johnson, Merck, Novartis and Novo Nordisk have filed lawsuits trying to block the implementation of the IRA’s Medicare Drug Price Negotiation Program. However, last week a Trump-appointed federal judge in Delaware tossed out AstraZeneca’s lawsuit by granting the government summary judgment.
“Drug manufacturers like AstraZeneca desire the old pricing regime, and they lobbied and perhaps expected Congress not to pass the IRA in 2022,” Judge Colm F. Connolly wrote in his decision. However, Connolly wrote: “No one is entitled to sell the Government drugs at prices the Government won’t agree to pay.”
It’s not just the drug developers themselves that are unhappy with the IRA in its current form as well as Biden’s new proposals, though. Other stakeholders including the venture capital (VC) community and patient advocacy groups also object. Peter Rubin, executive director of No Patient Left Behind, a nonprofit focused on patient access to affordable medicines, told BioSpace that “rather than expanding price controls to more drugs, the President and Congress could have a bigger impact on long-term cost reduction by fixing the IRA’s small molecule ‘pill penalty,’ which is already undermining new drug R&D on diseases of aging and other conditions.”
Similarly, John Stanford, executive director of the life sciences VC lobbying group Incubate, told BioSpace that the White House’s latest IRA initiative “sends an even clearer signal to those of us in the early-stage ecosystem that this is really just the beginning and there’s no ceiling to the amount of injury that [the Biden administration] is willing to inflict on this industry.”
But the most doom-and-gloom assessment came from Gaurav Gupta, managing partner of J.P. Morgan Life Sciences Private Capital. Gupta told BioSpace that the proposals “would expand a policy that in its current form has already disincentivized biomedical innovation” and that “if ever enacted, this would be a significant threat to American dominance in biopharma.”
The Trump Wild Card
The Biden administration’s showdown with Big Pharma was inevitable given the high stakes 2024 presidential election. There will no doubt be more fireworks to come between Biden and drugmakers. The question is whether Trump, the presumptive Republican nominee, would be any different if he were to win the presidency in November.
Remember that near the end of his term, in September 2020, Trump signed an executive order stating that Medicare would not pay more for certain drugs than the lowest price for that medication in any member nation of the Organisation for Economic Co-operation and Development. However, that order was challenged by lawsuits from industry groups like PhRMA and eventually pulled.
Trump has also taken a different approach to reducing drug pricing, signing a law in 2018 that gave the Federal Trade Commission greater access to deals involving biosimilars, ostensibly to increase market competition with costly namebrand drugs. Since then, biosimilar approvals have been climbing, though AbbVie’s blockbuster antibody Humira continues to maintain its market dominance.
But Trump hasn’t made drug pricing a focus of his campaign so far in 2024—not like he did in the run-ups to the 2016 and 2020 presidential elections. If Trump returns to the White House, would he try to weaken Medicare drug pricing negotiations mandated by the IRA which Biden signed into law in 2022? Or are Biden’s and Trump’s views on the issue not that far apart? We’ll see as this presidential election year progresses.
Greg Slabodkin is the News Editor at BioSpace. You can reach him at greg.slabodkin@biospace.com. Follow him on LinkedIn.
