Drug Prices Are One Focus of Biden’s Push to Boost Competition

WASHINGTON—President Biden’s executive order to promote business competition lays out a series of steps to lower prices for prescription drugs, including taking legal action against companies that cooperate to keep generic medicines off the market and allowing states and Indian tribes to import drugs from Canada.

The administration also is calling for measures to increase the use of generic drugs and other medicines known as biosimilars, which are essentially generic versions of expensive biological drugs already on the market.

Most of the ideas have been urged in the past, primarily by Democrats but also by the Trump administration. Growing bipartisan support for lowering drug prices could give the current push a greater likelihood of success.

What isn’t in the executive order, however, is any mention of giving the federal Medicare agency the power to directly negotiate prices with drug companies. That approach, favored by many Democratic lawmakers, would potentially be more far-reaching than any of the measures in the presidential order.

“Negotiation of prices is the biggest and best solution” to lowering drug prices, said Diana Zuckerman, president of the National Center for Health Research, a nonprofit organization in Washington. The federal Medicare agency is generally barred by law from such direct negotiation for many prescription medicines, a ban many Democrats in Congress have urged be lifted.

While Republicans generally have been less supportive of such a step, “there is pressure from all sides” for legislative change as the public increasingly seeks solutions to high drug prices, Dr. Zuckerman said.

The recent federal approval of the Alzheimer’s drug Aduhelm from Biogen Inc. put a spotlight on concerns about rising drug costs. The company said the medication would have a U.S. list price of about $56,000 a year for the average patient. Amid concerns about the drug’s effectiveness and cost, the Food and Drug Administration this week narrowed the potential pool of patients in new prescribing instructions.

The drug-industry trade association PhRMA didn’t respond to requests for comment on the administration’s executive order.

In his order on Friday, Mr. Biden noted that the FDA hasn’t issued the necessary rules for high-priced hearing aids to be sold over-the-counter in drugstores. He called on the FDA’s parent agency, the Department of Health and Human Services, to issue proposed rules within 120 days to allow such sales. The administration said the four largest makers of hearing aids control 84% of the market, with the devices costing an average of $5,000 and up for a pair. As a consequence, the administration said, only about 14% of the 48 million Americans who have lost hearing are using the devices.

Mr. Biden also urged the government to curtail what are called “pay for delay” deals between brand-name drugmakers and generic companies. These are contractual arrangements in which generic companies receive compensation for keeping their lower-cost drugs off the market.

“The big picture is that the number of such pay-for-delay settlements has gone down,” said Michael Carrier, a Rutgers University law professor and leading authority on these deals. “In the few cases that make it all the way to the courts, for the most part courts are seeing the delay” and taking action, he added.

A 2013 U.S. Supreme Court decision has cut into such arrangements, Mr. Carrier said. And a Fifth Circuit U.S. Court of Appeals decision this year largely supported a Federal Trade Commission action against such an alleged arrangement. “But my sense is that it’s still going on,” Mr. Carrier said.

The administration’s order also pushes for allowing the importation of less expensive drugs from Canada, a measure that has had considerable support, including from the Trump administration.

“This is a very reasonable thing to do,” Dr. Zuckerman said. “I don’t think Canada likes it, because they’re afraid they may run out of drugs.” She points out that the Canadian market is far smaller than that in the U.S., making the likelihood slim that such a step would have a major impact on U.S. prices.

When the Trump administration proposed such a step in December 2019, a spokesman for the Canadian health ministry, Thierry Belair, predicted any such measure would have only minimal effect on the U.S. market.


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