President Joe Biden on Thursday announced a $6.9 trillion budget which includes several measures aimed at reducing the cost of prescription drugs and healthcare. The budget builds upon the Inflation Reduction Act (IRA) to continue lowering the cost of prescription drugs.

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The announcements are of particular interest to India whose top five pharma export destinations are the United States, United Kingdom, South Africa, Russia and Nigeria.

India's pharma exports amounted to Rs 1,83,422 in 2021-22, a 103 percent increase since 2013-14. The nation ranks third worldwide for production in terms of volume and 14th by value and shares a 5.92 percent share of drugs and pharmaceuticals in global trade.

One of the key proposals in the US' latest Budget is to expand the ability of Medicare, the government national health insurance program in the US, to negotiate drug prices, which will increase the number of drugs that Medicare can select for negotiation and bring more drugs into the negotiation process sooner. The reforms are expected to save the federal government $160 billion over 10 years, while also saving billions of dollars for seniors.

The budget also includes proposals to limit Medicare Part D cost-sharing for high-value generic drugs for certain chronic conditions to no more than $2. In addition, it proposes to strengthen the Medicaid Drug Rebate Program by giving the Department of Health and Human Services the authority to negotiate additional, supplemental Medicaid drug rebates on behalf of states in order to increase purchasing power.

"We pay more for prescription drugs in America than any other advanced nation on Earth. Let me say that again. In the United States of America, for whatever prescription drug you’re buying, you’re paying more than any other nation on Earth that’s an advanced nation," Biden highlighted in his speech.

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Another proposal is to require drug companies to pay rebates for commercial drug sales, as well as sales to Medicare, when their price increases for certain drugs exceed inflation. This measure is expected to save the federal government $40 billion and reduce health insurance premiums for people with private health insurance coverage.

The budget also aims to lower Medicaid spending by addressing excessive payments to Medicaid Managed Care Organizations. The proposal would require insurance companies that are charging Medicaid far more than they actually spend on patient care to pay back some of the excess. The budget estimates this would lower Medicaid costs by over $20 billion.

On drug prices, Biden highlighted the example of Eli Lilly, which announced a cap on the cost of insulin at $35 a month, claiming that it would save lives.

"Now, how are the rest of these folks going to charge more than that when you can go to Eli Lilly and buy them for 35 bucks a month? So, folks, it’s going to save a lot of lives," Biden said.

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Finally, the budget proposes to lower Medicaid costs by improving access to HIV prevention and care programs, including access to pre-exposure prophylaxis (PrEP), among Medicaid beneficiaries. The budget also proposes to create a subscription model for drugs to treat Hepatitis C, which is expected to reduce Medicaid spending by hundreds of millions of dollars each year by 2032.

Most of the proposals in the Biden Budget thus could impact the overall revenue of drug exporters from India, especially the top ones, including Sun Pharma, Lupin, Aurobindo, Glenmark, Dr Reddy's among others, as a large chunk of revenue and profit of these companies are earned from the US, which is the world's largest market for pharmaceuticals in terms of value.

(Edited by : C H Unnikrishnan)

First Published:Mar 10, 2023 1:29 PM IST