With lower Medicare drug copays slated for April, Biden says US has 'finally won' a battle against pharma's 'exorbitant profits'

President Joe Biden touted prescription drug cost enforcement and the industry’s voluntary insulin price cuts in a speech Wednesday seeking political support for his fiscal year 2024 budget’s healthcare initiatives.

The president outlined copay reductions Medicare enrollees will begin seeing in April, annual out-of-pocket price caps starting next year and drug price negotiation powers the program will receive as a result of the Inflation Reduction Act passed in August.

“You name the drug you have to take, and I can take you to France and get it a hell of a lot cheaper, [or] to Canada and throughout Europe,” Biden said Wednesday to press and healthcare providers-in-training at the University of Nevada. “It’s not fair. But after decades of trying to take on Big Pharma, we finally, finally won.”

Prescription drug prices are two to three times higher in the U.S. than in other countries, according to a September Office of the Assistant Secretary for Planning and Evaluation (ASPE) report cited by the Department of Health and Human Services (HHS).

Biden’s speech came hours after HHS unveiled a list of 27 Medicare Part B prescription drugs that raised their prices faster than inflation in the fourth quarter of 2022 and now must repay the program via rebates. As a result, HHS said seniors would begin seeing out-of-pocket costs for the 27 drugs drop anywhere between $2 to $390 per average dose starting April 1.

“Look, it’s going to change the way drugs are priced, [and] lower the costs for seniors long term,” Biden said.

The inflationary cap was one of several drug price reforms passed under the Inflation Reduction Act last year.

As of Jan. 1, the law also made recommended vaccines for shingles; tetanus and diphtheria; tetanus, diphtheria and pertussis; hepatitis A; and hepatitis B free for the roughly 51 million Americans covered under Medicare Part D.

If that provision of the Inflation Reduction Act was active in 2021, it would have saved 3.4 Medicare enrollees $234 million in out-of-pocket costs, according to a report released by HHS’ ASPE Wednesday morning.

Last year’s sweeping legislation also put a $2,000 annual cap on Medicare enrollee’s out-of-pocket costs, set to go into effect next year, and will give Medicare the power to negotiate prices for a small subset of drugs beginning in 2026.

“Now, instead of paying whatever the drug company wants to charge, Medicare will be able to negotiate prices,” Biden said. “We’ll drive down prices because we give Medicare the same power the Department of Veterans Affairs has.”

HHS released the initial guidance for its Medicare Drug Price Negotiation Program 2026 shortly after Biden's speech.

Per the administration, new "maximum fair prices" for up to 10 Medicare Part D drugs with no generic or biosimilar competition will be announced Sept. 1, 2024 and go into effect Jan. 1, 2026. Each subsequent year will add more Part D drugs and, starting in 2028, Part B drugs to the collection of Medicare-negotiated products. 

However, among the flashier milestones of the Inflation Reduction Act referenced in Biden’s Wednesday speech was the $35 monthly cap on insulin for Medicare beneficiaries.

Biden reiterated his claims that pressure from the cap and other Inflation Reduction Act measures was a key factor in recent insulin price cuts announced by drugmakers Eli Lilly and Novo Nordisk.

While the current $35 limit only applies to Medicare seniors, he reiterated calls to extend the cap to “everyone, including the 200,000 children who have Type 1 diabetes who may need insulin every day to stay alive.” Such a measure was originally proposed for the Inflation Reduction Act but did not make it into the final law.

As part of last week’s fiscal year 2024 budget proposal, Biden encouraged Congress to give Medicare broader negotiating authority so the program could cover more drugs sooner after launch. He also floated higher taxes on Americans earning over $400,000 to shore up the Medicare hospital trust fund expected to run out of money in 2028—which is slated to be a key issue during a divided Congress’ new session.

The president today painted his expanded healthcare cost reduction proposals as a prudent solution to the national deficit.

“If you limit the amount of money that can be charged to reasonable prices, by the drug companies, you know how much we’ll save this year? $160 billion,” Biden said. “Why? Because it’s $160 billion less [Medicare] has to pay out to provide the drugs for the seniors. So it’s not only the right thing to do, it is a conservative thing to do in terms of cutting the federal budget.”

He also sought to increase pressure on his political opponents by framing “MAGA Republicans” as allies of a profit-hungry pharmaceutical industry.

“They think Big Pharma should be able to make the exorbitant profits at the expense of the American people they've been making,” Biden said. “They want to repeal the Inflation Reduction Act, roll back savings for seniors, add to the deficit of $1.6 billion and continue to line the pockets of Big Pharma.

“Look, I'm a capitalist; if you want to go out and make a lot of money, go make money. Just pay your fair share, just your fair share. For real, I have no problem with a company making reasonable profits—but my lord, not on the backs of working families and seniors.”