Biden takes steps to lower drug prices, but odds are long for achieving his promised 60% reduction

President Joe Biden's executive order issued July 9 marked an official step toward making good on a key campaign-trail promise.  

"I'm going to lower prescription drugs by 60%, and that's the truth," Biden said during a November 2, 2020 speech. 

The recent executive order outlined the president's vision for how he wants to proceed.  

The order included an initiative designed to shore up the approval framework for generic drugs and biosimilars, working with the Federal Trade Commission to address efforts to impede competition for these types of drugs and to help Medicare and Medicaid incorporate new payment models to cover them. 

It also calls for a report to be issued within 45 days outlining the specific efforts that should be implemented to reduce prescription drug prices. More details will emerge when that document becomes available.

Experts so far have offered measured reactions. 

The administrative actions outlined in this executive order do have the potential to reduce prescription drug prices, said Matthew Fiedler, a fellow with the USC-Brookings Schaeffer Initiative for Health Policy. But it's dependent on more than just what the executive order says. 

"In each of these areas, whether prices actually fall will depend on the details of the proposals the administration ultimately puts forward," Fiedler wrote in an email. "However, these are all areas where there are opportunities to make changes that would have a meaningful impact."

It's also important to note that the FTC is an independent agency, so Biden's principle means of influencing drug policy would come from his appointments to the agency, said Fiedler. It does seem likely, though, he added, that the newly appointed FTC chair would be sympathetic to cracking down on market conduct that delays the entry of generic drugs or biosimilars. 

Still, to actually reduce drug prices by 60% would require legislation, said Benedic Ippolito, senior fellow in economic policy studies at the American Enterprise Institute. 

"And the most disruptive drug pricing reforms — those that could even sniff that kind of price reduction — are also the most unlikely to pass," Ippolito wrote in an email. "In short, I suspect that this executive order isn't going to make much headway in achieving this goal." 

Former President Donald Trump also promised that he would lower drug prices by 60% last year on the campaign trail, after repeatedly promising to reduce medication costs during his four years in office. However, little progress was made toward accomplishing the overarching goal despite issuing several, drug-pricing executive orders in 2020. 

While Biden's executive order has a different focus than most of the Trump-era drug-pricing orders, the Biden administration has signaled they may still be open to embracing some of those policies. 

Trump's directives focused on rebates paid to pharmacy benefit managers being rerouted to beneficiaries, reducing the cost of insulin by compelling federally qualified health centers to make the drugs available at low prices to low-income people, importing drugs from Canada and tying the prices of drugs to the prices of those drugs in other countries. 

Three of the Trump-era proposed rules that are a result of his executive orders are still being kept around by the Biden administration — at least for the time being. One is called the "Most Favored Nation Model." This rule is supposed to match U.S. prices for a certain class of drugs with the lower amount paid in countries which negotiate drug prices. 

According to Politico, the Biden administration's regulatory office received the rule last week, which means there may be a new public comment period and finalization of the rule — though it's likely this would take some time to complete. 

Another rule that was finalized during the Trump administration would allow states to import drugs from other countries with the Food and Drug Administration's permission. But Pharmaceutical Researchers and Manufacturers of America sued the Trump administration to get it overturned and it is still tied up in court. 

No other Trump drug-pricing efforts made much headway. Instead, they drew a fair amount of industry pushback. 

And it remains to be seen whether Biden's directives will fare any better. His executive order is just the first step in a long line of steps to try to reduce the cost of prescription drugs. When the prescription drug pricing plan comes out, more will be known. Plus, issuing rules and allowing time for public comment takes time. 

But experts agreed that most likely congressional action would be needed to achieve a 60% reduction in drug prices. With over three years left in office for Biden, who knows what could still happen on this issue. 

For now, we rate this promise In the Works.