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Biden says his administration is focused on lowering prescription drug costs

The administration announced penalties on pharmaceutical companies that raised prices for certain drugs faster than inflation, which will lower coinsurance payments for Medicare beneficiaries.

President Joe Biden on Wednesday announced fines on drugmakers for raising prices on some drugs faster than inflation for people on Medicare, a move that will lower people's coinsurance payments.

In a speech in Las Vegas, Biden said the move will "change the way drugs are priced.”

“It’s not just your health,” Biden said. “It’s about your dignity, it’s about your security. That’s why my administration is focused intensely on getting more people affordable health care, by lowering prescription drug costs and giving families just a little bit — as my dad would say — a little bit of breathing room.”

Ahead of Biden’s remarks, administration officials previewed the actions he and his health care team have taken to lower drug costs in a call with reporters Tuesday night.

The Inflation Reduction Act, which the president signed into law last year, includes prescription drug provisions that penalize pharmaceutical companies for raising prices for certain drugs faster than the rate of inflation for Medicare beneficiaries, the officials noted.

“I have no problems with a company making reasonable profits, but my Lord, not on the backs of working families and seniors. It’s about fairness, fairness and decency,” Biden said.

Starting next month, some Medicare beneficiaries will see lower out-of-pocket prices for 27 prescription drugs whose prices rose faster than inflation in the last quarter of 2022, the Department of Health and Human Services announced. Companies that violated the provision of the law will be required to pay Medicare a rebate to cover the difference in pricing. 

Health Secretary Xavier Becerra said the list of drugs subject to rebates will be updated every quarter. Becerra also noted that the Inflation Reduction Act capped the price of insulin at $35 and said it “negotiates a fair price for more prescription drugs.”

“That’s going to be good news for Americans,” Becerra said on the call with reporters. “It will make certain generic drugs available for Medicare beneficiaries for a $2 copay, brings peace of mind to millions of Americans.”

Chiquita Brooks-LaSure, the administrator of the Centers for Medicare and Medicaid Services, noted that the law has begun helping Medicare beneficiaries by saving money through three free recommended vaccines and caps on insulin costs. She said the new requirement for drug companies to pay rebates to Medicare for increasing drug prices faster than inflation went into effect in October.

Brooks-LaSure said her agency will send invoices to drug companies for the rebates in 2025, but Medicare will begin deducting out-of-pocket costs for beneficiaries in April.

Health and Human Services will also release initial guidance on its drug price negotiation process, according to a White House release.

“America spends more on prescription drugs than any advanced nation on Earth,” Biden said. “You name the drug you take, and I can take you to France and get it a hell of a lot cheaper.”

Biden’s remarks Wednesday came a week after the president outlined his budget proposals to boost Medicare funding, in which he will seek to raise a tax on the wealthy and expand the program’s ability to negotiate lower prescription drug prices.

“Medicare is more than a government program. It’s the rock-solid guarantee that Americans have counted on to be there for them when they retire,” Biden wrote in a New York Times op-ed ahead of the release of his budget proposals.

Biden wrote that his proposal will build on drug pricing reforms in the Inflation Reduction Act, strengthening Medicare’s “newly established negotiation power” by allowing it “to negotiate prices for more drugs and bringing drugs into negotiation sooner after they launch.”