Tag: prices

Why we’re suing Team Biden to lower Americans’ prescription-drug costs

Does President Joe Biden actually care about lowering prescription-drug costs?

In a speech last week in Las Vegas, he touted his efforts to make prescription drugs more affordable, mostly through federal coercion and threats to pharmaceutical companies.

Yet the president is simultaneously refusing to implement a Trump-era rule that would help lower prices fairly, using the power of the free market.

Our organization will file a lawsuit Thursday asking the federal courts to force the Biden administration to follow the law and give Americans real relief on prescription-drug prices.

The rule, issued in November 2020, requires health-insurance companies to publish drug-pricing information for individual and group plans, which includes employer-sponsored insurance.

The last administration heralded this policy as giving Americans the transparency that leads to better prices.


In Biden’s speech, he praised his efforts to make drug costs lower.
Getty Images/Mint Images RF

Patients could pick the health-insurance plans that offer the lowest drug costs, encouraging competing plans to lower their prices, too.

Health insurers would also find it more difficult to stealthily raise their prescription-drug prices.

As Seema Verma, then-Centers for Medicare and Medicaid Services administrator, said when the rule was announced, “prices are about as clear as mud to patients,” and the policy was designed to bring long-overdue clarity.

That rule is grounded in economic common sense and basic free-market principles.

Transparent competition puts downward pressure on prices, as anyone who shops for groceries or cars can tell you.

Yet health-insurance plans’ prescription-drug prices have long been hidden from public view.

The regulation cited numerous studies showing how even limited transparency in other parts of health care has saved consumers money — including by causing high-cost providers to lower their prices.


Prescription bottle.
Former Centers for Medicare and Medicaid Services administrator Seema Verma previously said “prices are about as clear as mud to patients.”
CQ-Roll Call, Inc via Getty Images

Considering that more than 1,200 prescription drugs saw their prices increase faster than inflation between 2021 and 2022, Americans clearly need help controlling the costs.

The rule was scheduled to go into effect Jan. 1, 2022.

Yet in August 2021, Biden’s Treasury, Labor and Health and Human Services departments quietly issued a “Frequently Asked Questions” document in which they declined to implement prescription-drug price transparency.

Under the guise of “enforcement discretion,” they announced they would “defer” this part of the rule, with the goal of pursuing “further rulemaking” at an undetermined future date.

The departments justified this delay by citing health-insurance companies’ claims the rule was unnecessary and duplicative of a federal law passed in 2021.

Yet that law, the Consolidated Appropriations Act, only requires health-insurance companies to provide drug-pricing information to federal agencies, not to the public in an easy-to-use format — which is the key to transparency and lowering prices through market pressure.

Treasury, Labor and HHS issued further FAQs in April and August 2022 that create broad exceptions to the rule while further delaying implementation.

Prescription-drug price transparency is effectively on indefinite hold. Yet the regulation is unambiguous: Health insurers were supposed to disclose prescription-drug prices more than 14 months ago.

For all its claims of enforcement discretion, the Biden administration has no legal authority to ignore a regulation with the force of law.


Biden greets people after speaking about health care and prescription drug costs at the University of Nevada, Las Vegas.
AP

The only legal way to prevent its implementation is to issue a formal rule that repeals or amends the current one.

The Biden administration has shown no signs of going through this rigorous process, instead relying on FAQs that are equal parts arbitrary and informal.

We are calling on the federal courts to intervene. They should force Team Biden to implement the transparency rule that’s on the books, without exceptions or delay.

Biden & Co.’s inaction has already left patients with higher prices for prescription drugs.

Until and unless the Biden administration delivers this legally required transparency, the president can’t honestly claim he’s delivering the broad prescription-drug relief that Americans deserve.

Tarren Bragdon is CEO of the Foundation for Government Accountability, where Stewart Whitson is legal director.

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Prices will ‘take time’ to go down

WASHINGTON — President Biden celebrated a slight decline in the rate of annual inflation to 7.1% Tuesday — while warning a return to normal rates of around 2% was “going to take time” and that there may be “setbacks along the way.”

Biden spoke after new data showed annual price increases cooled in November, continuing a gradual deceleration from a peak of 9.1% in June, while still remaining much higher than at any point since the early 1980s.

“In a world where inflation is rising at double digits in many major economies around the world, inflation is coming down in America,” Biden said at the White House, referring primarily to European inflation, which slightly outpaces US rates due to energy disruption from Russia’s invasion of Ukraine.

“Make no mistake, prices are still too high and we have a lot more work to do,” the president said. “But things are getting better and headed in the right direction.”

“Most Americans can see the progress driving down the street and finding relief at the pump as gas prices fall,” he went on. “Today’s report contains another piece of good news: food inflation slowed last month, providing much-needed relief for millions of families at the grocery store.”

President Biden celebrated a slight decline in the rate of annual inflation to 7.1% on Dec. 13.
AP

Over the past 12 months, US food prices increased 10.6% — with grocery prices going up 12% — while energy prices jumped 13.1%, according to Bureau of Labor Statistics data.

So-called “core inflation,” referring to all items except food and energy, increased by 6% over November of 2021.

In response to a reporter’s shouted question about when prices would “get back to normal,” Biden suggested it might happen toward the end of 2023.

“I hope by the end of next year we’re much closer,” he said. “But I can’t make that prediction. I just — I’m convinced they’re not going to go up. I’m convinced they’re going to continue to go down.”

The Federal Reserve’s target for annual inflation is 2% and for the past two decades, it has been roughly that. The central bank has dramatically increased interest rates in an attempt to lower inflation, heightening concern about a possible recession next year.

The White House has largely blamed inflation on COVID-19, alleged corporate price-gouging, and Russia’s invasion of Ukraine — while Biden’s critics point to massive increases in government spending since he took office in January 2021.

“I want to be clear: it’s going to take time to get inflation back to normal levels as we make the transition to a more stable and steady growth,” Biden said. “But we could see setbacks along the way as well. We shouldn’t take anything for granted. But what is clear is that my economic plan is working and we’re just getting started.”

He added: “I know it’s been a rough few years for hardworking Americans and for small businesses as well, and that for a lot of folks things are still pretty rough. But there are bright spots all across America where we’re beginning to see the impact of our economic strategy and we’re just getting started.”

Biden has signed some of the largest spending bills in US history, arguing that they were needed to keep the economy afloat and ultimately could reduce some consumer costs, including by improving transportation and energy efficiency.

Last year, Biden signed a $1.9 trillion stimulus bill that passed without Republican support and a $1.2 trillion bipartisan infrastructure law. This year, he signed the $280 billion bipartisan CHIPS and Science Act, a $437 billion environmental and healthcare spending bill, and a $270 billion veterans healthcare bill.

Although some of the spending bills contained new revenue to offset spending, skeptics accused bill authors of budget gimmicks to paint a rosier economic picture by spreading spending out over fewer years than those offsets.

Republicans will retake the House next month and are vowing to halt ambitious Biden proposals. Rep. Elise Stefanik (R-NY), chairwoman of the House Republican Conference, told The Post in a recent interview that the GOP would seek to “claw back this reckless spending” to reduce inflation.

“The first way we start to strengthen the economy is to rein in inflation by stopping the reckless spending bills,” Stefanik said. “We absolutely will use that power … to not only claw back this reckless spending but also put a stop to Joe Biden’s spending proposals … and that will begin to lower the rate of inflation.”

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US companies dictate minimum prices on goods to retailers, shoppers left with fewer discounts

Shoppers will find fewer discounts on everything from toys to tortillas as companies increasingly set minimum prices on their goods to maintain profits and limit price cutting by retailers like Walmart and Amazon.

For many years, manufacturers set the lowest price at which retailers could advertise certain big-ticket items like TVs. They wanted to stop shoppers who scoped out an item on the showroom floor from going online to find it at a lower price.

But with inflation hovering at 8%, shoppers who have gotten into the habit of buying smaller-ticket items online during the pandemic will have a hard time finding bargains.

“We’re seeing categories adopt (these floors) that never had, like food and beverage,” said Jack Gale, an account executive at PriceSpider, a platform which gives control of the customer journey back to brands.

While legal in most of the United States, these policies are illegal in many countries, including across Europe in most cases.

Companies such as Colgate-Palmolive have in recent months used minimum advertised price policies on products like its Optic White Pro Series toothpaste on Amazon, a person familiar with the matter told Reuters.

Many consumer product categories, including Beauty and Personal Care, have seen a significant decline in discounts in 2022.
REUTERS

Other companies like Hasbro and Mr. Tortilla have managed to set a range for retailers to sell their products.

Hasbro requires retailers to keep prices for Monopoly, Twister, Chutes & Ladders and 21 other games and toys above its range of $6.99 to $33.99, unless it’s the holiday shopping season, according to a company memo seen by Reuters. The diet-friendly tortilla maker Mr. Tortilla also decided to set a minimum price level for Walmart and Amazon as it expanded sales. 

In its efforts to offer competitive prices as compared to rivals like Walmart, Amazon uses its position to compel sellers to sell at prices locked by the e-commerce giant. 

In a lawsuit filed by California against Amazon, suppliers argue that they have to agree to the rules set by the company which leads to brands implementing minimum advertised price policies. 

Agreements dictating the for-sale price between retailer and manufacturer are not legal in some states including California and Maryland.

“Amazon routinely abuses its monopoly power to coerce sellers and suppliers, preventing them from offering cheaper prices elsewhere,” said U.S. Representative David Cicilline, who is working on proposed antitrust legislation aimed at bringing down prices. 

Amazon does not restrict sellers from offering lower prices elsewhere, the company said.   

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Consumer prices — a key inflation gauge — hotter than expected in August

A key inflation indicator showed higher-than-expected increases in core prices in August, adding more pressure on the Federal Reserve to act despite the risk of a deeper recession.

Consumer prices increased by 6.2% in August compared to the same month one year ago, according to the Commerce Department’s Personal Consumption Expenditures index — the Fed’s preferred measure of inflation. The annual rate was down from 6.4% in July.

Prices rose by 0.3% compared to the previous month.

The core PCE, which excludes volatile food and energy prices, increased by a hotter-than-expected 4.9% year-over-year in August, or by 0.6% compared to July.

Ahead of the release, economists expected core PCE inflation to increase by 4.7% year-over-year and by 0.5% compared to July.

The PCE inflation gauge is one of many data points the Federal Reserve uses to inform its policy path. Earlier this month, the Fed hiked its benchmark interest rate by three-quarters of a percentage point for the third consecutive time as it doubled down on the fight against inflation.

The Fed’s hawkish stance has spooked investors who fear the central bank’s rate hikes will tip the US economy into a deep recession. Meanwhile, the Fed has pledged to adjust its path based on the data it receives.

“The [Federal Open Markets Committee] is strongly resolved to bring inflation down to 2% and we will keep at it until the job is done,” Fed Chair Jerome Powell said at a press conference earlier this month.

Ex-Treasury Secretary Larry Summers warned this week that the level of global market risk is similar to conditions seen prior to the Great Recession – and pointed to inflation-related discomfort as a key obstacle for policymakers.

The Fed is expected to enact more rate hikes this year.
AFP via Getty Images

Chicago Fed President Charles Evans, a non-voting member of the rate-setting FOMC, said he was “a little nervous” the Fed was hiking rates too rapidly to fully assess the impact on markets.

Another closely watched gauge, the Consumer Price Index, showed earlier this month that inflation ran at a hotter-than-expected 8.3% in August. Core CPI inflation, which excludes volatile food and gas prices, rose 6.3% year-over-year — up sharply from the rate of 5.9% seen in June and July.

Market analysts are increasingly fearful of a global recession.
Getty Images

As The Post reported, inflation has increased 13% since President Biden took office. Critics of the Biden administration argue the president’s government spending programs and restrictive energy policies have helped to fuel inflation.

Meanwhile, Biden and his allies have argued inflation is showing signs of improvement – and largely placed the blame for higher prices on aftershocks related to the COVID-19 pandemic as well as Russian President Vladimir Putin’s invasion of Ukraine.

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