Here’s how Biden’s executive order could cut healthcare costs

President Biden’s recent executive order aims to help Americans save on medical and drug costs while expanding access to health care coverage.

Its order requires changes to prescription drugs, improved pricing transparency rules, standardization of diet options in the healthcare market, and permission to sell hearing aids over the counter.

The ordinance – which includes other initiatives designed to increase economic competition in other industries as well – describes these targeted areas as “where lack of competition in health care increases prices and reduces access to health care. quality care ”.

Here’s how it could impact your healthcare.

Cheaper prescription drugs

The prescription contains several guidelines for prescription drugs.

It orders the Food and Drug Administration (FDA) to work with states and tribes to safely import prescription drugs from Canada. It also orders the Department of Health and Human Services (HHS) to increase support for generic and biosimilar drugs, as well as create a “comprehensive” plan within 45 days to tackle high prices and price hikes. .

Nancy LeaMond, advocacy manager for AARP, said her organization was “encouraged” by the measures.

“Our recent poll revealed strong bipartisan support for lowering drug prices, with 70% of older Americans saying it’s very important that action be taken,” she told Yahoo Money. “The safe and legal importation of cheaper prescription drugs will help reduce costs and increase competitive pressure on drug manufacturers to lower their prices in the United States.”

The ordinance also encourages the Federal Trade Commission (FTC) to end “pay for delays,” a method used by drug companies to circumvent patent laws, according to David Blumenthal, chairman of the Commonwealth Fund.

Typically, a drug from a pharmaceutical company is protected from competition by a patent for 20 years, which means that no other company can produce and sell a drug that is similar or is based on the same intellectual property, the same properties. chemical or biological, Blumenthal said. After that 20-year period, competition can come in, produce the same drug and sell it for less, hurting the profits of the company holding the patent.

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To avoid this, some pharmaceutical companies will pay their competitors not to create cheaper generic drugs for consumers.

“They can get away with it because their margins on the branded product are so high that they can afford to give a cut to their generic competitors while still making a healthy profit – and a larger profit than if they had to reduce their price is enough to compete with the generic market, “Blumenthal said.” It’s paying for the delay. “

Transparency of prices and packages

Biden’s order also directs the HHS to back existing hospital pricing transparency rules and complete the implementation of the legislation with bipartisan support that deals with surprise billing – measures that can help patients negotiate. potentially their medical bills.

“I don’t think we should expect any substantial effects on healthcare markets or prices from any of these transparency initiatives, but take steps to create a claims database for all payers. would make it easier for policymakers and researchers to identify adverse effects of consolidation and other ongoing health system events that harm consumers, ”said Loren Adler, Associate Director of the USC-Brookings Initiative Schaeffer for health policy.

Additionally, this decree makes it easier for consumers to shop for health insurance by standardizing plan options in the national health insurance market.

“The insurance market is chaotic and incredibly complex,” said Blumenthal. “A lot of people end up choosing the cheapest plan, but the cheapest plan may not be good value for money. Standardization means making it comparable across plans for the average person, not for someone with a doctorate. “

Hearing aids, fusions

Another issue addressed in the decree is making hearing aids more accessible and affordable. The ordinance noted that 14% of the 48 million Americans with hearing loss use them and they cost more than $ 5,000 per pair, which is often not covered by health insurance.

“One of the main drivers of the expense is that consumers must obtain them from a doctor or specialist, even though experts agree that a medical evaluation is not necessary,” the prescription says. “On the contrary, this requirement only serves as red tape and a barrier to more companies selling hearing aids.”

The Biden administration is also asking the Justice Department and the FTC to “review and revise” the hospital merger guidelines.

“Hospital mergers can be harmful to patients,” said Blumenthal. “I have almost as good empirical data to show that horizontal mergers between hospitals result in higher prices and that not all of these studies have been able to reap the benefits associated with these mergers.”

The only recourse, he said, is the enforcement of antitrust laws through state attorneys general.

“I think there is a fairly large consensus that in many markets there is hardly any competition between hospitals,” said Blumenthal. “For those who believe in competition – and not everyone in the health field believes it – going in this direction is a necessity in order to establish the conditions for a lack of competition.”

Adriana Belmonte is a journalist and health policy and policy editor for Yahoo Finance. You can follow her on Twitter @adrianambells and contact her at [email protected].

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