Biden Administration Executive Order to Promote Competition in the American Economy: Drug Pricing and Health Industry Initiatives – Food, Drugs, Healthcare, Life Sciences

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United States: Biden Administration Executive Order to Promote Competition in the American Economy: Drug Prices and Health Industry Initiatives

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Hannah Elson, a Morrison & Foerster Summer Associate in our Washington DC office, contributed to the writing of this article.

On July 9, 2021, President Biden issued a comprehensive implementing regulation for the creation of a “nationwide competition policy”. Morrison & Foerster outlined government policy in a recent customer announcement that provides a comprehensive summary of efforts to change the content and concept of the federal government’s US competition policy. Among the many initiatives addressed to more than a dozen federal agencies, the executive order aims to combat increasing market concentration and prices in prescription drugs and devices, health insurance, and hospital markets.

The Executive Order’s health initiatives direct federal agencies to undertake projects as diverse as standardizing health options in the national health insurance market or proposing a rule that allows hearing aids to be sold over-the-counter. He also encourages the Department of Justice (DOJ) and the Federal Trade Commission (FTC) to review and revise their merger guidelines to better address the increased costs and inadequate options caused by hospital mergers, particularly in rural areas, and advises the Department of Health to the and Human Services (HHS) to implement the price transparency initiatives required by the No Surprises Act.

However, the focus of the Healthcare Industry Implementing Regulation guidelines is on addressing drug pricing concerns. The main new proposal directs the FTC to consider exercising its regulatory powers to “prevent unfair anti-competitive behavior or agreements in the prescription drug industry, as President Biden also obliges his government to lower prescription drug prices through” aggressive legislative reforms “To lower, such as

Other new guidelines include instructing HHS to come up with a plan within 45 days to combat inflation, improve domestic pharmaceutical supply chains, and address the “recurring problem of price gouging,” and instructing the FDA commissioner to write a letter Write to the patent and trademark office within 45 days, in which all concerns are raised as to whether the patent system is unduly delaying competition in generics and biosimilars.

Many provisions in the executive order related to drug pricing are causing HHS and FDA to continue the existing policy, including:

  • Encouraging HHS to further increase the transparency, efficiency and predictability of the regulatory framework for generics and biosimilars to encourage competition and lower prices for these products by implementing the 2017 FDA Drug Competition Action Plan and 2018 Biosimilar Action Plan;
  • Clarification of the standards for the interchangeability of biosimilars;
  • Improving understanding of biosimilars and interchangeable products among healthcare providers, patients and caregivers;
  • Continue to update FDA Biologics Regulations to clarify existing requirements and procedures related to the review and filing of biologics license applications by advancing the “Modernize Biologics Regulation” regime;
  • Working with the FTC to identify and resolve false, misleading, or otherwise misleading statements about generic and biosimilar products and their safety or effectiveness;
  • Continue to implement the CREATES Act of 2019 through timely approval of Covered Products and issuing guidance to the industry; and
  • Call on the Centers for Medicare and Medicaid Services (CMS) administrator to “Prepare Medicare and Medicaid Coverage of Exchangeable Biological Products and Payment Models to Support Increased Use of Generics and Biosimilars.”

In particular, the Executive Ordinance also instructs HHS to continue to enforce the controversial rule on importing prescription drugs that was finalized in the final months of President Trump’s tenure. The rule is subject to a federal lawsuit that the Biden government has continued to defend. Just days before the executive order was passed, the Biden administration drew two more Trump-era proposals to allow re-import of insulin and widespread personal import from anywhere. The FDA reportedly said it withdrew the proposals because it did not receive any proposals in response to the call for proposals, but was considering other options.

Last week, CMS also presented a new, economically significant proposed rule to the Office of Management and Budget (OMB) called the “Most Favored Nation (MFN) Model,” which is likely the latest proposal for the rule that President Trump has issued to Medicare Part B to tie drug prices to those that are paid in other wealthy countries. The previous rule was enacted without notice or comment in the final days of the Trump administration and ordered by a federal court in Baltimore for violating the Administrative Procedure Act. While CMS’s latest MFN proposal can be a negotiating tool to instigate action by Congress, it could be a sign that President Biden is continuing some of the Trump administration’s most aggressive and controversial drug pricing initiatives.

These recent drug import measures and the MFN proposal, combined with the proposals in the Executive Order to Increase Competition in the American Economy, show that the Biden administration intends to keep up pressure on drug prices.

Due to the generality of this update, the information provided herein may not be applicable in all situations and should not be implemented in certain situations without specific legal advice.

© Morrison & Foerster LLP. All rights reserved

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