Biden Executive Order’s Offers a Mixed Bag for Health Consumers and a Disastrous Importation Plan

On July 9, President Biden released a sweeping executive order that purports to tackle competition issues in several sectors of the economy. A significant portion of the order’s provisions would target the private health sector, with a few small steps forward for taxpayers and health consumers but some much larger, and much more troubling, proposals looming over the modest wins. Most concerning is the revival of a Trump administration proposal to permit states to establish programs allowing the importation of prescription drugs from Canada.

The importation proposal does not come as a surprise, given President Biden supported importation on the campaign trail last year. That does not mean, however, that the latest version of this idea has ironed out the numerous concerns NTU has raised about importation proposals over the past several years.

As we wrote earlier this year:

Earlier in 2020, the Trump administration issued a proposed rule to allow states and certain wholesalers to import prescription drugs from Canada. The administration issued a final rule in October, with the policy going into effect November 30. At the time of the proposed rule, NTU wrote to the Food and Drug Administration (FDA) that the agency failed to define the potential benefits of importation to both patients and taxpayers, and failed to adequately estimate the potential costs of importation. We urged the FDA to withdraw or significantly modify the proposed rule; unfortunately the FDA largely went ahead with their original proposal. According to KFF [Kaiser Family Foundation], the proposal is subject to a lawsuit and the Biden administration has not decided how to proceed. As with MFN [Most Favored Nation], we hope the new president will ditch President Trump’s importation proposal (despite Biden’s prior support), especially given its lack of clear benefits to taxpayers and the Canadian government’s ongoing opposition to the importation proposal.

The Biden administration also goes after so-called “pay-for-delay” arrangements between brand-name and generic pharmaceutical manufacturers, but -- like prior policymakers purporting to tackle “pay-for-delay” -- the President and his aides paint too broad a brush in seeking to end or significantly curtail these private-sector arrangements. As NTU wrote earlier this year:

…[The] legislation, from Rep. Bobby Rush (D-IL), would “prohibit the practice of ‘pay-for-delay,’ in which brand name drug companies compensate generics to delay the entry of generic drugs into the market.” We have warned at NTU that the proposal “would take a sledgehammer to biopharmaceutical innovation around the country in order to treat a ‘pay-for-delay’ problem that is limited in size and scope.”

A recent Federal Trade Commission (FTC) review revealed that nearly 90 percent of agreements between generic and brand-name manufacturers do not involve “explicit compensation from a brand manufacturer to a generic manufacturer and a restriction on the generic manufacturer’s ability to market its product.” Federal and state legislation banning ‘pay-for-delay,’ though, could end up banning some of the private-sector agreements that bring benefits to consumers, taxpayers, brand manufacturers, and generic manufacturers, especially if the agreements bring other generics to market faster.

Taxpayers and health consumers should be concerned about the Biden administration’s forthcoming plan “to continue the effort to combat excessive pricing of prescription drugs,” which is due to the President in 45 days. While helping Americans who are struggling to meet prescription drug costs should be an important undertaking for Congress and the White House, too many of President Biden’s campaign proposals relied on price controls that would distort markets, undermine research incentives, and potentially restrict patient access to life-saving products.

There are a few good things the administration wrote about in their executive order, including:

  • Their instruction to the Secretary of Health and Human Services (HHS) to issue a proposed rule on expanding access to over-the-counter (OTC) hearing aids, consistent with the FDA Reauthorization Act of 2017. Allowing OTC hearing aids could offer consumers easier and better access to these helpful devices, and could also inspire more competition among device makers that could, in turn, reduce prices.
  • Their affirmation of the good work Congress did in passing the Fairness to Contact Lens Consumers Act (FCLCA) in 2003, which passed the Senate by unanimous consent when President Biden was serving there. As NTU wrote in 2018, “the FCLCA has completely transformed the contact lens marketplace for the better. The law has injected competition between traditional retail and online options for consumers, which has reduced prices, and thus expanding accessibility for millions of consumers.” The FCLCA can serve as a model for additional legislative and regulatory efforts to expand, rather than curtail, consumer-driven purchasing in the health sector.
  • Their efforts aimed at increasing the availability and use of biosimilars, which are lower-cost alternatives to expensive biological products. The administration calls on the Food and Drug Administration (FDA) to “clarify and improve the approval framework for generic drugs and biosimilars,” support “biosimilar product adoption by providing effective educational materials and communications,” and “clarify existing requirements and procedures related to the review and submission of Biologics License Applications.” Many of these initiatives align with the recommendations NTU issued to Congress in 2019 concerning biosimilars.

Of course the good work mentioned above, aimed at giving American health consumers more options and better access to drugs and devices, could be completely undermined by prior administration and Congressional proposals to aggressively set prescription drug prices in the U.S. The Biden administration should steer clear of importation, excessive regulation of brand/generic agreements, reference pricing, or any H.R. 3-like model for prescription drug price-setting.