(Bloomberg) — President Barack Obama said the government should negotiate lower prices for expensive new medicines such as Gilead Sciences Inc.’s hepatitis C treatment Harvoni, breaking a detente with the drug industry on the issue.
Spending under Medicare’s drug benefit, known as Part D, will grow 30 percent in 2016 to $98 billion, about four times the rate from a year before, according to Obama’s budget proposal released Monday. That’s driven in part by new medicines like Harvoni, which can cost $1,000 a day.
When Congress created the Medicare drug benefit in 2003, it specifically prohibited the government from negotiating prices with drugmakers. Obama maintained that position during debate over the 2010 Patient Protection and Affordable Care Act (PPACA), when drugmakers supported the law.
“The administration is deeply concerned with the rapidly growing prices of specialty and brand name drugs,” Obama said in his budget. Allowing Medicare to negotiate prices for biotechnology and “high-cost drugs” would “help ensure access to and affordability of these treatments,” he said.
The budget attaches no specific cost savings to the proposal. A spokeswoman for the Office of Management and Budget, Emily Cain, didn’t immediately respond to an e-mail asking about the policy.
See also: 5 things Eli Lilly is saying about PPACA.
Presidential budget proposals are frequently ignored by Congress, even when the legislature is controlled by the president’s own party.
While the budget proposal document is the first step in negotiations over the government’s annual spending plan, it often serves more as a statement of ideals and priorities than a basis for policy.
Drugs with prices upward of $100,000 have historically been uncommon outside of medicines aimed at rare disorders, such as enzyme deficiencies or unusual tumors. Now such prices are spreading to more diseases.