Biden's SOTU Bully Pulpit Flays Pharma

President raps 'record profits' from insulin sales; pushes $35 universal cap.

President Joe Biden on Tuesday night used his State of the Union address to scold "Big Pharma" for reaping "record profits" from insulin sales, and urged Congress to support a universal $35-a-month cap on the price of the life-sustaining diabetes drug.

Noting that Americans "pay more for prescription drugs than any major country on Earth," Biden used the occasion to single-out drugmakers for many of the financial woes plaguing healthcare consumers, Medicare and Medicaid.

He cited insulin costs as a prime example of drugmakers' greed.

"Every day, millions need insulin to control their diabetes so they can stay alive," Biden told Congress. "Insulin has been around for 100 years. The guy who invented it didn't even patent it because he wanted everyone to have it. It costs drug companies just $10 a vial to make. But, Big Pharma has been unfairly charging people hundreds of dollars – and making record profits."

However, the Inflation Reduction Act on Jan. 1 capped at $35-a-month the out-of-pocket costs Medicare enrollees pay for insulin, saving them – and the federal government -- billions of dollars. Biden said the price cap should be available to everyone.

"There are millions of other Americans who are not on Medicare, including 200,000 young people with Type I diabetes who need insulin to save their lives," Biden said. "Let's finish the job this time. Let's cap the cost of insulin at $35 a month for every American who needs it."

The IRA also gives – for the first time -- the Department of Health and Human Services the power to negotiate what it will pay for Medicare's drugs, and caps out-of-pocket drug costs for Medicare enrollees at $2,000 a year. In addition, drugmakers whose prices increase faster than the rate of inflation are also required to refund the overage to Medicare.

"Bringing down prescription drug costs doesn't just save seniors money," Biden said. "It will cut the federal deficit, saving taxpayers hundreds of billions of dollars on the prescription drugs the government buys for Medicare. Why wouldn't we want to do that?"

PHRMA Responds

Stephen J. Ubl, president / CEO of the Pharmaceutical Research and Manufacturers of America (PhRMA), said in a media release that drugmakers "are eager to work with the president on these important priorities."

The PhRMA chief noted that Biden also used his SOTU address to renew his call for a "Cancer Moonshot," and to prepare for future disease epidemics, both of which would rely heavily upon drugmakers' research and manufacturing.

"Unfortunately, the (IRA) also put in place policies that are already impacting the research and development we need to achieve some of the goals President Biden laid out," Ubl said.

"The government price setting provisions in the law are forcing companies to make difficult choices," Ubl says, "including shifting focus away from certain types of medicines and discouraging the research that takes place after medicines are first approved – threatening the very research that remains critical to improving outcomes for cancer and other diseases."    

Ubl said the IRA also falls short "in the broader healthcare system that drive up people's costs at the pharmacy."

"Capping the costs of insulin helps some patients – especially those who aren't benefiting from the average 84% discount insurers and their middlemen get for insulin – but it leaves behind many others," Ubl says. "It's a band-aid on a broken system that's forcing people to pay more for medicines than health insurers and pharmacy benefit managers pay."