New Executive Order Is a Mixed Bag for Consumers

On June 7th, President Joe Biden issued an Executive Order designed to promote competition in the American economy. In total, the Executive Order “includes 72 initiatives” that the White House claims will “tackle some of the most pressing competition problems across our economy.” These competition problems, the White House claims, have led to declines in productivity, stalled investment and innovation, lower income and wealth, and increased racial inequalities. 

The order itself, arguably one of broadest in Presidential history, covers everything from airline baggage fees to big tech mergers to limiting the ability of manufacturers to prohibit self-repairs to products. For consumers, the order is truly a mixed bag with several positive policy proposals that could go a long way to lower the price of prescription medications and reduce medication insecurity, but there are also provisions that could undo major gains to internet connectivity, services, and speed that repealed net neutrality brought in 2017. 

Some of the most positive aspects of Biden’s Executive Order can be found in healthcare. Biden’s order directs the Health and Human Services Administration (HHS) to provide more substantive “support for generic and biosimilar drugs” and encourages the Federal Trade Commission to “ban pay for delay” agreements between pharmaceutical companies.

Studies have routinely shown that when generic and biosimilar drugs enter the market, consumers can benefit from substantial savings. The 2020 Generic Drug and Biosimilars Access and Savings in the U.S. Report, produced by the Association of Accessible Medicines shows that when generic drugs were made available in 2019, consumers saved $313 billion. This is largely because generic drugs “cost 30 percent to 80 percent less” than a brand name alternative.

Supporting access to generic drugs could ultimately create massive savings for patients and allow them access to vital, sometimes lifesaving, medications. This support would also go a long way to resolving medication insecurity, the inability of patients to afford prescription drugs,  a trend that is lowering health outcomes for patients.

Pay-for-delay agreements between pharmaceutical companies have also denied patients access to important medicine, exacerbating the problem of medication insecurity. Under pay-for-delay agreements, “a brand name drug company pays… their generic competitor cash or another form of payment. In exchange, the generic delays its entry into the marketplace.” In one such agreement, Teva Pharmaceuticals, for example, paid $69 million to a competitor to keep its generic competitor off the market.

These agreements are particularly bad for consumers because they deny patients access to cheaper alternatives when they should otherwise be available on the market. These agreements also serve to inflate costs for patients. In 2010, the FTC estimated that these agreements cost Americans $3.5 billion each year. As Michael Russo of the U.S. Public Interest Research Group stated in testimony to the U.S. Senate in 2013, “these deals hurt consumers by inflating drug prices and too often putting critically needed medication out of the hands of patients.”

Banning pay-for-delay agreements and increasing support for generics and biosimilar drugs could result in significant savings for consumers. For this, Biden should rightly be praised.

While Biden’s Executive Order may do good by helping lower drug prices, it could inflict significant harm to internet access by encouraging the Federal Communications Commission (FCC) to restore net neutrality regulations repealed in 2017.

Under net neutrality rules, the FCC was empowered to regulate prices, force providers to serve underserved communities, and ban what it considered to be unreasonable business practices. The result of these regulations was reduced speeds, reduced access in rural communities, and lost investment.

Once net neutrality rules were repealed in 2017, Americans experienced increased investments in broadband infrastructure, increased speeds, and most importantly, increased access in rural communities.

Restoring net neutrality guidelines will certainly see much of the post 2017 gains be lost and force Americans to once again experience sub-quality service and deny millions of Americans access to the internet. In other words, restoring net neutrality guidelines is a step in the wrong direction.

The only saving grace to this situation is that the FCC is currently deadlocked 2-2 between those who want to repeal net neutrality rules and those who want them to remain in place.

It’s difficult, and even unfair, to say that Biden’s new executive order is good or bad for consumers. If federal agencies do implement Biden’s order, patients could certainly see significant benefit in the form of lower drug prices and increased availability of generic drugs, but that will come at the expense of massive gains after the repeal of net neutrality in 2017.

You can’t get more of a mixed bag than Biden’s executive order.

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