Biden calls for efforts to lower drug prices as part of executive order to foster competition

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President Biden is calling on federal health officials to intensify efforts to drive down prescription drug prices as part of an executive order he plans to sign Friday to spur federal agencies to promote economic competition.

The order will direct his administration to work with states to devise plans to import medicines safely from Canada, where they are sold at lower prices — an idea long endorsed by many Democrats and embraced by former president Donald Trump over the objections of the pharmaceutical industry.

The president’s directive also will urge the Federal Trade Commission to promote the availability of generic drugs by banning pharmaceutical manufacturers from paying their generic counterparts to delay entry of lower-price versions of medications into the market.

Such a ban is consistent with Biden’s support during his campaign for increasing the supply of generics. The idea also is part of legislation before the Senate.

According to administration health officials and others familiar with the executive order, all of whom spoke on the condition of anonymity because the order is not yet signed, Biden’s directive also will seek to promote competition among hospitals and health insurers, with a goal of making care more affordable.

The health-care portions of Biden’s order come among 72 initiatives spanning more than a dozen federal agencies that the president will fold into the directive, said one person familiar with the document, which will be a broad exhortation for the government to foster more competitive practices.

Details shared in advance by the officials indicate that sections of the order addressing health care represent an imprimatur of the values and goals for the administration’s work in that realm, rather than a set of unfamiliar new policies.

One aspect will direct the Department of Health and Human Services to produce a comprehensive plan in the next 45 days to combat high prescription drug prices.

The idea of an administration plan on drug costs exceeds Biden’s previous calls for Congress to take action this year to constrain pharmaceutical prices — an issue of substantial concern among voters. The order does not indicate what the plan should contain or whether it should lead primarily to a law enacted by Congress or to rules within the power of the executive branch, according to one person familiar with the order.

The part of the order involving health coverage will direct HHS to revive a rule for health plans sold within the Affordable Care Act’s federal insurance marketplaces. The Obama administration required insurers selling in ACA marketplaces to offer at least one option with a standard benefit design to make it easier for consumers to compare competing plans from different insurers. Such standard benefits were part of marketplace plans in 2017 and 2018, but the Trump administration removed that requirement as of 2019.

An individual familiar with this directive said insurers will need time to adjust to a standard design again, so the order will not specify when that will be restored, but it will not be for the coming year.

The order will contain language condemning the effects of hospital consolidations that have swept the nation in recent years. The order cites research showing that hospitals in consolidated markets tend to charge more than those with greater competition, and it says the trend has contributed to the closing of hospitals in some rural communities.

The order will direct the Justice Department and the FTC to “review and revise their merger guidelines,” with a goal of preventing patients from being harmed when hospitals combine. It does not specify ways in which those guidelines should be changed.

Biden also will say that his administration should continue to move forward with controversial recent rules that compel hospitals to disclose the prices they negotiate in private with insurance companies.

The idea of lowering drug prices by importing medicines from Canada has been controversial since it was included in a 2003 law that added drug benefits to Medicare, the federal health insurance for older Americans. The law said the importation could happen but that the HHS secretary must first sign off that it would be safe. No secretary did until Alex Azar, Trump’s longest-serving health secretary, authorized it last year.

Unlike many Republicans, Trump favored importation, and his administration finalized a rule last year allowing states to ask the Food and Drug Administration, part of HHS, for permission. Florida became the first state to apply, and the FDA has not decided whether to approve its request.

Meanwhile, the Pharmaceutical Research and Manufacturers of America, a powerful industry group, sued HHS seeking to block drug imports. The litigation began last year while Trump was president, but the Biden administration is now part of the case, trying to get it thrown out of court.

Biden’s order will make clear that his administration favors the importation rule of his predecessor and that he expects the FDA to carry it out, one individual said.

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