Since 2017, the FDA has had the Drug Competition Action Plan, which is designed to provide assistance to getting more generic drugs into the market so consumers can more easily afford their medicines. On July 9, 2021, President Biden issued an executive order containing initiatives to address prescription drug pricing and competition, officially throwing his support behind the FDA’s Action Plan. This Executive Order also issues specific action items to both the Health and Human Services (HHS) and the Federal Trade Commission (FTC).
Action Items within the Executive Order
- HHS has 45 days from the day of the Executive Order to submit a report containing a plan to combat excessive drug pricing and improve supply chains within the US to reduce costs paid by the Federal Government.
- HHS must lower the price of drugs by taking the following actions.
- Clarify the FDA approval process for generic drugs.
- Improve educational materials and communication to help consumers understand biosimilar products.
- Facilitate the development of such drugs.
- Identify any efforts to stop or slow the dissemination of such drugs.
- HHS must develop a plan that stops patents from keeping generics off the market (while keeping developers interested in developing new drugs).
- HHS must work with Medicare and Medicaid to help them prepare to include coverage for more of these generic and biosimilar drugs.
- HHS and the FDA must work with states and Indian Tribes to assist them with importing generic drugs from Canada.
- The FTC must exercise its ability to end any agreements which delay generic or biosimilar drugs from entering the market.
- The Secretary of State is asked to reconsider “march-in” rights on federally funded drugs.
Prescription Competition & the Healthcare Industry
The Executive Order places a focus on increasing competition in the pharmaceutical industry, which is likely to have a significant impact on the industry. Though we don’t know yet whether these directives will become mandatory, or supported by judicial review, the current administration sends a clear message regarding how they plan to approach this specific healthcare matter.
While we do not expect this legislation to impact healthcare providers’ tax situation immediately, there could be an impact on the industry as a whole, which could change internal processes in the very near future.
Taylor Clinkenbeard, CPA
Taylor is a member of our tax and client accounting services department. She is developing specific expertise in the healthcare industry to serve our healthcare clients.
