What’s in the American Families Plan?

2021 Q2 Rx Newsletter

May 3, 2021

The newly introduced American Families Plan and its effect on Prescription Drug Pricing.

On April 28, 2021, President Biden introduced the American Families Plan; a bill the White House describes as “an investment in our kids, our families and our economic future.”

Components of the $4 trillion economic recovery program include:

• Expanded paid leave

• Affordable child care

• Two free years of community college, as well as enhanced Pell Grants

• An extension on expanded Affordable Care Act premium tax credit

With all of the increased benefits of the American Families Plan, federal regulation of prescription drug pricing was noticeably missing from the proposed bill.

How does the Bill Impact Drug Pricing?

During the Biden campaign, the President promised to allow Medicare regulation and negotiation of drug prices. Without the regulation of prescription drug pricing, the issue is left to Congress, which is divided on this matter, so the ultimate result of the bill is uncertain. Employers have billions of dollars potentially in the balance. Control of the pricing could potentially reduce employer health spending by an estimated $195 billion over a six year period, according to West Health Policy Center. With Medicare directing the pricing of prescription drugs, Medicare would have the power to negotiate the prices, and to tie those prices to other countries’ costs, while requiring pharmaceutical companies to provide rebates to drugs priced over the price set by the government.

As of late May 2021, President Biden has continued to endorse reform for prescription drug pricing. Per the 2022 fiscal year budget, President Biden “supports reforms that would bring down drug prices by letting Medicare negotiate payment for certain high-cost drugs.” Although drug pricing provisions have been omitted from the American Families Plan, there is still hope that either via future bills proposed by the President or a bill passed in Congress, drug pricing control and employer health cost savings are in the near future.

1. Jacob Pramuk. “Biden’s families plan excludes Medicare expansion, drug price changes
backed by Democrats”, available at https://www.cnbc.com/2021/04/28/biden-american-families-plan-excludes-medicare-expansion-drug-price-cuts.html , accessed June 9, 2021.
2. The White House. (2021, May). The Budget of the U.S. Government: Fiscal Year 2022.
3. House, T. W. (2021, May 6). Fact Sheet: The American Families Plan. The White House.