Moves to Lower Drug Prices in Biden’s Executive Order on Competitiveness

This month’s presidential Executive Order on economic competitiveness in the U.S. includes a number of initiatives relating to drug pricing. There are calls to combat “excessive pricing,” to reduce the cost of drugs to the Federal government, to address “price gouging” and to promote low-cost generics and biosimilars.

The Executive Order also includes actions aimed at enhancing domestic pharmaceutical supply chains and supporting the implementation of Canadian drug importation.

The Executive Order highlights a few specific drug pricing policies that have long been championed by Democrats: drug importation, march-in rights, and barring pay-for-delay patent settlements. Of the three, march-in rights may have the biggest impact, simply because an administration has not yet attempted to wield the tool, which would enable the government to license the patented invention to a third party against the wishes of the patent owner. The policies could form the backbone of a ‘comprehensive’ plan to lower drug prices.

Pharma companies should note that a number of the proposals contained in the Executive Order may be inconsistent with existing legislation and regulations. Litigation is likely to follow if these proposals are finalized and implemented.

In what may be a tacit admission of the limits of planned regulatory action, the Executive Order also says: “[The] Administration [will] support aggressive legislative reforms that would lower prescription drug prices, including by allowing Medicare to negotiate drug prices, by imposing inflation caps, and through other related reforms.” The Executive Order does not further address these proposals but instead turns to issues that it says can be addressed by regulatory action.

The key aims of the Executive Order related to drug pricing are:

• To develop programs to authorize the importation of prescription drugs from Canada.
• To “continue the effort to combat excessive pricing of prescription drugs.”
• To increase support for generic and biosimilar drugs, including supporting the market entry of lower-cost generic drugs and biosimilars.
• To “ensure that the patent system … does not unjustifiably delay generic drug and biosimilar competition … .”
• To “consider not finalizing any provisions on march-in rights and product pricing” that the Trump Administration proposed.
• To prepare for payment models that will support increased utilization of generic drugs and biosimilars.
• To encourage a ban on “pay for delay.”
• To implement mechanisms to improve competition and consumer choice in the national Health Insurance Marketplace.

For more detail on these points click here.

This post is as of the posting date stated above. Sidley Austin LLP assumes no duty to update this post or post about any subsequent developments having a bearing on this post.