CNN–The Biden administration Thursday announced five new measures that seek to lower health care costs by promoting competition.
Reducing health care prices is one of President Joe Biden’s key platforms as he seeks to build momentum in the 2024 presidential campaign. The president has repeatedly pointed to the steps he and congressional Democrats have already taken, including allowing Medicare to negotiate certain drug prices for the first time and capping the cost of insulin at $35 per month. However, few Americans are aware of these provisions, a recent KFF poll shows.
The measures announced Thursday, which are largely incremental, seek to counter the power and practices of big health care companies.
The Commerce and Health and Human Services departments released a proposed framework for agencies concerning the exercise of march-in rights, which enable the federal government to license drugs or inventions backed by taxpayer funds to other parties if the invention is not made accessible to the public. The proposed framework specifies for the first time that price can be a factor in determining the accessibility of a taxpayer-funded drug or other invention.
The government has never used its march-in authority, which was enabled by the Bayh-Dole Act.
“Fundamentally, we are establishing that price can now be a factor in determining when the federal government can march in to ensure that we have lower prices,” Neera Tanden, the White House domestic policy adviser, told reporters.
Certain Democratic lawmakers have pushed for greater use of march-in rights to counter high drug prices. Massachusetts Sen. Elizabeth Warren, a leading proponent, praised the administration’s effort.
“President Biden is taking a critical and much-needed step to lower costs and rein in the abuses of the pharmaceutical industry, which has raked in billions of dollars by jacking up prices for drugs that taxpayers paid to develop,” she said in a statement. “Today’s announcement means that drug companies will no longer have a free pass to hike up prices for life-saving drugs that benefitted from taxpayer dollars.”
But the administration’s proposal has already drawn criticism from the pharmaceutical industry and at least one Republican senator.
“So-called ‘march-in’ authority, codified in the 1980 bipartisan Bayh-Dole Act, is intended to be a safeguard if good-faith efforts aren’t being made by a private sector partner to commercialize federally-funded research,” the Pharmaceutical Research and Manufacturers of America, known as PhRMA, said in a statement. “It was never intended to be a government price setting policy.”
Both PhRMA and Louisiana Sen. Bill Cassidy, the top Republican on the Senate Health, Education, Labor and Pensions Committee, pointed to a 2002 letter in the Washington Post by former Democratic Sen. Birch Bayh of Indiana and former GOP Sen. Bob Dole of Kansas.
The senators wrote “the purpose of our act was to spur the interaction between public and private research so that patients would receive the benefits of innovative science sooner … Bayh-Dole did not intend that government set prices on resulting products.”
The Biden administration’s announcement could harm the development of new medicines, both PhRMA and Cassidy said.
“This kind of short-sighted decision would kill American health care innovation and deny millions of Americans future lifesaving cures and treatments,” Cassidy said in a statement.
Ensuring competition
The Biden administration also unveiled several efforts aimed at countering anticompetitive practices by big health care companies.
Some are aimed at private equity firms, which have been buying up physician practices, nursing homes and other health care providers. Officials are concerned that corporate owners are “maximizing their profits at the expense of patients’ health and safety, while increasing costs for patients and taxpayers alike,” according to the administration’s fact sheet.
The Justice Department, along with HHS and the Federal Trade Commission, will seek input on how the growing involvement of private equity and other corporations in health care is affecting Americans. The agencies will use the information to identify areas for future regulation and enforcement prioritization and will work together on various competition policy initiatives.
The three agencies will also share data to help antitrust enforcers identify companies that engage in a series of relatively small acquisitions that lead to market consolidation – known as a “roll up” strategy – that might otherwise evade review.
Meanwhile, the Centers for Medicare and Medicaid Services is releasing for the first time ownership data on Federally Qualified Health Centers and Rural Health Centers, as it already has for hospitals, nursing homes, hospice providers and home health agencies. Making this information available helps in identifying common owners with histories of poor performance, evaluating the connection between ownership and changes in costs and outcomes and enabling analysis on how market consolidation affects consumers.
And CMS will solicit information from the public early next year about Medicare Advantage insurance plans, which now enroll about half of Medicare beneficiaries and are expected to receive more than $7 trillion from the federal government over the next decade. It’s the latest step in the agency’s effort to understand the impact of Medicare Advantage’s growing enrollment on consumers and care.
