Biden’s 2024 Budget: New Drug Pricing and Coverage Policies

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Summary

The Biden administration’s budget outlines a healthcare policy agenda focused on drug pricing, coverage reform, infectious diseases, and biomedical research.

Background

President Biden’s proposed fiscal year (FY) 2024 budget proposal includes many healthcare policy priorities discussed in the 2023 State of the Union. The proposal also includes $1.7 trillion in mandatory funding and $144.3 billion in discretionary funding for programs administered by the Department of Health and Human Services (HHS).

While the annual budget tends to be aspirational and often requires Congressional support to pass key provisions, it also reflects the priorities that could form the basis of a policy-making agenda in the coming year. While many of the provisions in the FY 2024 proposal reflect similar policies from past budgets, healthcare stakeholders should be prepared to evaluate four key themes that are new to this year’s budget.

Expanded IRA Drug Pricing Provisions

The Biden administration’s budget proposal seeks to expand several of the Inflation Reduction Act’s (IRA) drug pricing provisions. For example, the administration proposed to expand inflation rebates for Medicare Part B and Part D drugs to include commercial units and would expand the number of drugs eligible for Medicare drug price negotiation from 10 to 20 Part D drugs in 2026 and 20 to 40 Part B drugs in 2029. Additionally, the Biden administration proposed to allow HHS to negotiate drug prices starting 5 years after approval, instead of 7 years for small-molecule drugs and 11 for large-molecule drugs, as specified in the IRA.

Other areas of focus unrelated to the IRA include limiting cost sharing for insulin to $35 per month in the commercial market and granting the Health Resources and Services Administration (HRSA) rulemaking authority over the 340B program to establish and enforce participation, compliance, and transparency standards.

Possible New Opportunities for Coverage for At-Risk Populations

The Biden administration seeks to permanently grant enhanced premium tax credits to qualified individuals who are purchasing plans on the individual health insurance market. The provision was first introduced in the American Rescue Plan Act to temporarily increase the Affordable Care Act (ACA) premium tax credits available to some individuals from 2021 to 2022. The IRA subsequently extended the subsidies to 2025. Notably, however, the budget proposal would eliminate contribution requirements for individuals and families making 100%–150% of the Federal Poverty Level (FPL), enact an 8.5% of income maximum toward benchmark plans, and remove the 400% FPL cap on premium tax credit eligibility.

The budget also includes proposals to expand Medicaid access and coverage. The administration aims to permanently extend “Medicaid-like coverage” to individuals with low income residing in states that have not expanded Medicaid under the ACA. Concurrently, the budget proposal offers a financial incentive to expansion states to maintain broadened eligibility for their Medicaid programs. The budget would also require that all states extend postpartum Medicaid coverage to 12 months after birth.

The Biden administration aims to offer greater healthcare access to people with obesity-related chronic diseases who are covered by Medicare and Medicaid. Specifically, the budget includes a proposal requiring Medicare and Medicaid to include nutrition and obesity counseling. It would allocate funding to a pilot program to offer medically tailored meals to beneficiaries.

Prioritization of Health Disparities Related to Infectious Diseases

The budget proposal includes a mandatory national hepatitis C elimination program ($5 billion, net cost over 10 years) to increase the availability of and access to diagnostics tests, care, and curative treatments and to enhance provider capacity to deliver care. The program would require Medicare Part D coverage of hepatitis C treatments, including 100% of the out-of-pocket costs for Medicare Part D beneficiaries. The program would establish a national subscription model to purchase hepatitis C treatments, allowing the HHS to negotiate directly with manufacturers to purchase medication to address the unmet need among underserved populations (e.g., Medicaid beneficiaries and uninsured individuals). The subscription model mirrors the approach taken by states in recent years to increase access to hepatitis C cures for their Medicaid populations. Inclusion in the budget signals the Biden administration’s interest in leveraging the purchasing power of the federal government to improve health outcomes and reduce healthcare costs for underserved populations.

The budget also includes another $850 million to HHS’s Ending the HIV Epidemic initiative to fund prioritized jurisdictions through the Centers for Disease Control and Prevention, HRSA Ryan White HIV/AIDS Program, and HRSA’s Community Health Centers Program grants. The budget also contains a proposal to establish a mandatory pre-exposure prophylaxis (PrEP) delivery program ($9.7 billion over 10 years), initially proposed in FY 2023, to address ongoing disparities in PrEP uptake and coverage. The program would provide PrEP medications and ancillary services to uninsured and underinsured individuals at no cost and similarly reduce costs for Medicaid beneficiaries to expand access.

Expansion of Investment in Cancer Prevention and Treatment

The budget proposal allocates $7.8 billion to advance cancer research and would reauthorize the Cancer Moonshot Initiative through 2026. The initiative aims to reduce cancer deaths by at least 50% over the next 25 years and improve the experience of cancer survivorship for patients and their families. The budget proposal would also allocate funding to address preventable cancers associated with tobacco and poor nutrition and to address environmental exposures associated with specific cancers.

Key Takeaways

President Biden’s budget proposal would affect a wide range of healthcare stakeholders. Stakeholders should consider and prepare for the effects of the proposed policies.

  • Life sciences manufacturers potentially eligible for Medicare negotiation should assess and evaluate the impact and likelihood of an expansion to the IRA’s drug pricing provisions.
  • The President’s coverage proposals for the exchanges, Medicare, and Medicaid could create new opportunities to improve access to care and treatment for people with chronic diseases.
  • Life sciences manufacturers and patient groups should also consider how the “subscription model” for hepatitis C treatment worked in states that have implemented it to assess the scalability of such an initiative at the national level.
  • Life sciences manufacturers and advocates should weigh the budget proposal’s potential to improve access to PrEP for uninsured and underinsured with other proposals to establish federal funding for a national PrEP program.
  • Patient groups and providers should examine how investment in cancer research could accelerate access to breakthrough therapies.

Avalere uses our deep policy expertise to help healthcare stakeholders understand the implications of policy changes and navigate the current landscape. To learn more about how Avalere can help your business examine avenues for advancing your policy priorities with Congress and the Biden administration, connect with us.

Webinar | A Closer Look at Patient Support On June 6 at 2 PM ET, Avalere experts will explore how potential implications of the Inflation Reduction Act (IRA)’s out-of-pocket cap, in addition to other key regulatory and policy activities shaping benefit design and patient cost-share (e.g., EHB), could impact patient commercial and foundation assistance. Learn More
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