President targets high prescription drug prices with ‘march-in’ authority

© SecondSide - stock.adobe.com

High prescription drug prices are a target for a new federal program that could change drug licensing and accessibility rules.

Critics slammed the move as an attack on free market principles that will stifle drug research and innovation.

On Dec. 7, President Joe Biden announced “new actions to lower health care and prescription drug costs by promoting competition.” Those include having the U.S. Departments of Commerce and of Health and Human Services to explore using government authority to license inventions to another party, if the invention is made using taxpayer funds.

That power is known as “march-in authority” under the Bayh-Dole Act, and this would be the first time that federal regulators could consider price in determining whether a drug or other taxpayer-funded invention is not accessible to the public, according to the White House.

‘Reasonably available and affordable’

“The administration believes taxpayer-funded medications should be reasonably available and affordable,” said the president’s fact sheet. It included details about the current state of the market for prescription drugs and health care:

• The 25 largest pharmaceutical companies control approximately 70% of industry revenues.
• Among the drugs in the top 10% greatest prices, 89% of small molecule drugs and 100% of biological products have one manufacturer.
• More than 75% of Americans live in highly concentrated hospital markets.
• Three or fewer issuers of individual health insurance control 80% of that market.
• Five insurers control more than 70% of the Medicare Advantage market.

“This consolidation contributes to higher costs for taxpayers, lower wages for health care workers, and worse quality of care for patients,” the president’s statement said.

The administration cited HHS research finding “a lack of competition in drug markets is highly correlated with higher prices.”

Much the same holds true among hospitals and independent physician practices. Meanwhile, private equity investors are on a shopping spree in health care.

Whole-of-government approach

The president’s announcement came the same day as a collaborative statement by HHS, the U.S. Department of Justice (DOJ) and the Federal Trade Commission promising a whole-of-government approach to increase competition. Efforts will include a joint request for information on how private equity investment and corporate control of health care is affecting Americans.

The FTC will appoint a new Counsel for Health Care to lead interagency and policy efforts on health care competition. DOJ published a list of antitrust enforcement legal actions, and HHS pledged to continue efforts to increase transparency in health care ownership and Medicare Advantage.

“Protecting and promoting competition in health care markets is among the Division’s top priorities,” Assistant Attorney General Jonathan Kanter of DOJ’s Antitrust Division said in a statement. “Absent competition, real people suffer real harms. Those harms are especially grave when we’re talking about the medical care people depend on to live their lives. We are committed to weeding out anticompetitive practices and market consolidation that hinder Americans’ access to quality care at affordable rates, or deprive health care workers of fair wages and opportunity.”

Republicans slam the proposal

Reaction on Capitol Hill was swift by House of Representatives Energy and Commerce Committee Chair Cathy McMorris Rodgers (R-Washington), Subcommittee on Health Chair Brett Guthrie (R-Kentucky), and Subcommittee on Oversight and Investigations Chair Morgan Griffith (R-Virginia). They issued a joint statement regarding the Biden administration's plans to use so-called “march-in rights” on pharmaceutical patients and referenced the president’s Inflation Reduction Act (IRA).

“Patients battling cancer or other rare diseases will be among those harmed most by the Biden administration’s unprecedented action that doubles down on the IRA’s innovation-killing drug price-setting scheme,” the representatives said.

The plan “will destroy the types of public-private partnerships … that are critical for conducting research on rare conditions that affect smaller patient populations,” they said. The representatives specifically cited the new Advanced Research Projects Agency for Health (ARPA-H) in the National Institutes of Health.

“By bowing to the most radical voices in his political party, the president is again undercutting any chance he might have had at achieving his Cancer Moonshot goals,” the representatives said. “He should abandon this plan immediately and stop taking hope for treatments and cures away from the patients most in need.”