Biden seeks to codify Trump-era drug price deals into law

Trump's Drug Price Deals Face a Legal Reckoning

The Biden administration is pushing to codify into law the voluntary drug price deals struck between manufacturers and the Trump administration. CMS Administrator Chiquita Brooks-LaSure announced the effort at the annual PhRMA policy forum.

These deals, known as Most Favored Nation (MFN) models, aimed to lower Medicare Part B drug prices by tying them to lower costs in other countries. The Trump administration implemented them through a mandatory demonstration model, which was later blocked in court.

From Voluntary Pledges to Binding Law

The current push seeks to transform what were non-binding industry pledges into permanent statute. This would prevent a future administration from easily abandoning the agreements.

Brooks-LaSure argued that legislative action is necessary for long-term stability. "Voluntary models are a start, but we need the certainty of law to protect savings for seniors," she stated at the forum.

The pharmaceutical industry has historically opposed government price-setting models like the MFN approach. Key industry concerns include:

• Reduced revenue for research and development of new drugs.
• The potential for other countries to further lower their reference prices.
• A precedent for more expansive federal price negotiations.

A Clash Over Policy and Precedent

This move sets up a direct conflict with PhRMA, the industry's main lobbying group. The organization has already signaled it will fight any legislative effort to mandate the MFN pricing structure.

The debate centers on the balance between lowering drug costs and funding innovation. Proponents argue other developed nations pay far less for the same medicines, while the industry contends U.S. prices subsidize global innovation.

The outcome could significantly impact Medicare's budget and the pharmaceutical market. The Congressional Budget Office previously estimated the Trump-era MFN model could save Medicare $85 billion over seven years.

The Long Road to Legislation

Turning this proposal into law faces steep hurdles in a divided Congress. It would require bipartisan support, which has been elusive for major drug pricing reforms.

However, the administration's focus suggests it sees political value in the issue ahead of the next election. High drug costs remain a top concern for voters across the political spectrum.

The effort to codify the MFN deals represents a strategic shift. Instead of creating a new model, the White House is attempting to lock in terms from a previous, industry-negotiated agreement.