HHS Secretary Responds to the President’s Executive Order on Drug Prices

Action announces new models and supports access to $2 generic drugs

Today, the Centers for Medicare & Medicaid Services (CMS) announced that the Secretary of the Department of Health and Human Services (HHS) has selected three new models for testing by the CMS Innovation Center to help lower the high cost of drugs, promote accessibility to life-changing drug therapies, and improve quality of care. The Secretary released a report describing these three models to respond to President Biden’s Executive Order 14087, “Lowering Prescription Drug Costs for Americans,” which complements the historic provisions in the Inflation Reduction Act of 2022 (IRA) that will lower prescription drug costs.

“HHS is using every tool available to us to lower health care costs and increase access to high-quality, affordable health care,” said HHS Secretary Xavier Becerra. “We are full steam ahead in delivering the cost savings from the President’s Inflation Reduction Act of 2022, and people on Medicare are already feeling the benefits. But as President Biden has made clear, we must build on the new prescription drug law with further action, which is why HHS is implementing these new projects to bring down prescription drug costs.”

“Prescription drug prices in the United States are the highest in the developed world, resulting in affordability and access challenges,” said CMS Administrator Chiquita Brooks-LaSure. “The prescription drug law is making lifesaving prescription drugs more affordable for millions of people who have Medicare, and through the selected models, the Innovation Center will lower prescription drug costs and improve access for people with Medicare and Medicaid, ranging from $2 access to certain generic drugs to better deals for expensive new therapies.”

Tackling the high costs of prescription drugs and increasing access to novel therapies continue to be priorities of the Biden-Harris Administration. As part of the Inflation Reduction Act of 2022, for the first time in history, Medicare will be able to negotiate lower prescription drug prices for beneficiaries, and starting this year, drug companies that raise their prices faster than inflation will have to pay Medicare a rebate. But the Administration recognizes there is more work to do to lower prescription drug costs for more American families. That’s why on October 14, 2022, President Biden issued an executive order directing Secretary Becerra to consider additional actions to further drive down prescription drug costs. In particular, the executive order directs the Secretary to consider whether to select for testing, by the CMS Innovation Center, new health care payment and delivery models that would lower drug costs and promote access to innovative drug therapies for beneficiaries enrolled in the Medicare and Medicaid programs, including models that may lead to lower cost-sharing for commonly used drugs and support value-based payment that promotes high-quality care.

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