Drug Pricing and Other Healthcare Policy Changes Targeted in Biden Executive Order

In what may be a tacit admission of the limits of planned regulatory action, the Executive Order also states that 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 states can be addressed by regulatory action.  

The Executive Order includes the following life-sciences-related directives:

• Prescription Drugs

•  Directs the Commissioner of the Food and Drug Administration (FDA) to work with States and American Indian Tribes that propose to develop Section 804 Importation Programs to authorize importation of prescription drugs from Canada.    

• Orders the Department of Health and Human Services (HHS) to issue a report to the White House within 45 days with a plan to “continue the effort to combat excessive pricing of prescription drugs and enhance domestic pharmaceutical supply chains, to reduce the prices paid by the Federal Government for such drugs, and to address the recurrent problem of price gouging.”

• Instructs HHS to increase support for generic and biosimilar drugs, including through greater transparency and efficiency in the approval process; clarifying the standards for interchangeability of biological products; supporting the provision of educational materials to improve understanding of biosimilars among healthcare providers, patients, and caregivers; updating and clarifying procedures related to the review and submission of Biologics License Applications; and, in coordination with the Federal Trade Commission (FTC), identifying and addressing any efforts to impede generic drug and biosimilar competition, including but not limited to false, misleading, or otherwise deceptive statements about generic drug or biosimilar products and their safety or effectiveness. The latter directive syncs with enforcement scrutiny in recent years by the Department of Justice, FTC, and State Attorneys Generals of false and misleading statements made by drug manufacturers, including regarding superior safety and efficacy to generic and branded alternatives alike.

• Directs HHS to further implement the CREATES Act of 2019 to support the market entry of lower-cost generic drugs and biosimilars.

• Directs the FDA Commissioner within 45 days of the Executive Order to write a letter to the Undersecretary of Commerce for Intellectual Property and Director of the U.S. Patent and Trademark Office “enumerating and describing any relevant concerns of the FDA” for the purpose of “ensur[ing] that the patent system, while incentivizing innovation, does not unjustifiably delay generic drug and biosimilar competition beyond that reasonably contemplated by applicable law….”

• Directs the Secretary of Commerce, acting through the Director of the National Institute of Standards and Technology, to “consider not finalizing any provisions on march-in rights and product pricing” that the Trump Administration proposed on January 4, 2021. March-in rights are rights accorded to the federal government when it funds research and development leading to a contractor’s developing a patented invention; exercise of a march-in right would enable the government to license the patented invention to a third party against the wishes of the patent owner. The proposed amendments to 37 C.F.R. part 401 would have clarified that the U.S. Government should not make use of march-in rights due solely to the price charged for a patented product or process. Thus, this aspect of the Executive Order explicitly leaves open the possibility that the Biden Administration may exercise march-in rights in order to yield lower drug prices, to the extent that the drugs are covered by one or more patents initially funded (at least in part) by the government. 

• Instructs the Administrator of the Centers for Medicare & Medicaid Services to prepare for Medicare and Medicaid coverage of interchangeable biological products and for payment models to support increased utilization of generic drugs and biosimilars.

• Encourages the FTC to ban “pay for delay” and similar agreements by regulatory action.

• Public Health Insurance Option

• Directs HHS to implement standardized options in the national Health Insurance Marketplace and any other appropriate mechanisms to improve competition and consumer choice. The Executive Order states that it is the policy of the Biden Administration to “support the enactment of a public health insurance option.”

• Hearing Aids

• Directs HHS to issue a proposed rule pursuant to notice-and-comment rulemaking regarding over-the-counter hearing aids under Section 709 of the FDA Reauthorization Act of 2017 within 120 days. 

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