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Obama’s budget contains the most aggressive move yet to fight high drug prices

The budget includes a big step towards bringing down the high price of specialty medications such as Sovaldi. (AP Photo/Courtesy of Gilead Sciences, File)

On Monday, the Obama administration proposed taking a major step towards bringing prices down for expensive specialty medications.

In its budget, the White House calls for Medicare's prescription drug program to negotiate on prices for "high-cost drugs" and biologics, a complex and expensive class of drugs that is just starting to get competition from generics in the United States. "The administration is is deeply concerned with the rapidly growing prices of specialty and brand name drugs," the budget reads.

Insurers have spent the past year beating up drug companies for high prices of specialty medicines, particularly the new class of breakthrough hepatitis C treatments that come with incredibly high cure rates — but also price tags of at least $84,000. Some patient advocates have then complained that insurers have asked patients to pay more out-of-pocket for these days.

The Department of Veterans Affairs and state Medicaid programs get mandated discounts on these drugs, but Medicare was forbidden by the 2003 law creating its prescription drug program to negotiate on price. For years, liberals have been pushing to give Medicare that authority, which would make the United States more like the rest of the world.

Now, the Obama administration has taken a step toward that goal, albeit a symbolic one.

It's not clear how hard the administration will fight for this idea, but you can add this to the list of budget requests that probably aren't going anywhere. Drug companies and Republican lawmakers have regularly pushed back against the idea of price controls in Medicare Part D.

That means it's usually up to insurers and pharmacy benefit managers (PBMs) to negotiate discounts from the brand name drug companies. Notably, insurers and PBMs have had some success with this recently by striking exclusive deals to offer the new hepatitis C treatments — though that's raised some concern about patients' and doctors' ability to choose treatments.

Insurers and other health-care payers have warned that the new hepatitis C treatments are at the forefront of new budget-straining specialty medications still to come. And today's budget proposal comes on the heels of the White House's precision medicine initiative, aimed at unlocking new treatments better targeted for individual patients. But those potentially life-saving treatments, aimed at small slices of the populations, can come at a high cost.

The administration's drug negotiation proposal likely isn't going anywhere. But neither is the angst over high drug prices.

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