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2022-10-16| Policy

Biden’s New Executive Order Directs HHS to Find Ways to Lower Drug Prices

by Reed Slater
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In a further attempt to ease the strain on American healthcare prices, President Biden announced an executive order asking the Department of Health and Human Services (HHS) to test healthcare payment and delivery models. The HHS will hopefully develop better payment and delivery models using appropriate tests, cutting prescription drug prices, and expanding healthcare access to millions of Americans. 

Terms of the Executive Order

The Center for Medicare and Medicaid Innovation (CMMI) is a branch within HHS that tests healthcare payment and delivery models to design more efficient configurations. According to the executive order, CMMI would be responsible for the tests Biden’s administration desires, but the HHS will submit the initial proposals.

From October 14, the HHS has 90 days to submit a report outlining models that could lower drug prices and promote high-quality care to the Assistant to the President for Domestic Policy. After the submission, the Secretary of the HHS should undergo appropriate tests and models described in the report. 

Biden initially ran on a platform that emphasized the need for lower healthcare costs, and two years into his term, he stands by that notion. The press release noted, “On average, Americans pay two to three times as much as people in other countries for prescription drugs and one in four Americans who take prescription drugs struggle to afford their medications.” The announcement also said that about 30% of Americans who take prescriptions have at one point reduced dosage on their own or skipped prescriptions entirely due to cost. 

Related Article: America’s Ongoing Battle For Lower Insulin Prices

Biden’s Healthcare Efforts Up to Now

In August, the Biden administration helped enact the Inflation Reduction Act of 2022 (IRA). Reducing healthcare costs is a primary focus of the Act, along with clean energy and tax initiatives to help with the climate crisis and make tax codes fairer. As part of the healthcare initiative, Medicare beneficiaries with prescription drug coverage will pay $0 for adult vaccines starting in January. Additionally, the HHS will have the right to negotiate prices for certain prescription drugs. 

The Affordable Insulin Now Act passed in March targets insulin prices, a growing issue in American healthcare. The Act states that Medicare beneficiaries will not have to pay more than $35 a month for insulin starting in 2023. It also says it will place a $35 cap on select insulin products or 25% of a private insurance plan’s negotiated price. 

While the Affordable Insulin Now Act seems to be a step in the right direction, insurance companies and group health plans get to choose which products qualify as ‘selected insulin products.’ The remainder of the products are not subject to price caps. Additionally, the Act would not provide any protection to uninsured individuals. 

Similar to the most recent executive order, the CMMI initiated a new model for cancer care in June. The CMMI designed the Enhancing Oncology Model to improve cancer care and lower healthcare costs, including prescription drug prices. The model will start in July next year and run until 2028 to evaluate its impact on oncology care. 

The latest executive order to develop and test new healthcare payment and delivery models is the Biden administration’s latest effort to help combat high healthcare prices and expand access to those in need. The effects of the order may take some time to come to fruition, but on paper, it is an optimistic idea that could benefit millions of Americans in big and small ways. 

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