by Robert King | Oct 14, 2019 10:56am
House Speaker Nancy Pelosi’s drug prices plan would reduce
Medicare spending by $345 billion over a seven-year period but could also
impact the number of new drugs entering the market, according to an analysis
from the Congressional Budget Office.
The analysis centers only on how the bill, which gives Medicare
the power to negotiate lower drug prices, will save money on Medicare Part D.
The bill would enable Medicare to negotiate for a lower drug price that is 120
times an average paid by other countries.
“The largest savings would come from the lower prices for
existing drugs that are sold internationally, for which the price ceiling would
be binding in most but not all cases,” said the CBO analysis, which was released late
Friday.
Pelosi’s plan would also require drug companies to offer the
negotiated Medicare price to commercial plans.
While CBO acknowledges that the bill could force drug companies
to pull out of the U.S. market entirely, the nonpartisan congressional
scorekeeper speculated that would be unlikely for all drugs being sold in the
U.S.
“Manufacturers would initially set list prices of some new drugs
in the U.S. higher than under existing law, although the net prices paid by
consumers over time could be lower in many cases,” the CBO said.
However, CBO also estimates that any cut in manufacturer revenue
“would result in lower spending on research and development and thus reduce the
introduction of new drugs.”
That estimate would be welcome news to the pharmaceutical
industry, which has said that Pelosi’s bill would stifle innovation. Impact on
R&D funding is a common defense the industry uses to attack drug pricing
policies.
CBO’s preliminary estimate said that a reduction in revenue of
$500 billion to $1 trillion “would lead to a reduction of approximately eight
to 15 new drugs entering the market the next 10 years.”
The Food and Drug Administration on average approves about 30
new drugs a year, so CBO estimates that about 300 drugs might be approved over
the next 10 years.
“The overall effect on health of families in the United States
that would stem from increased use of prescription drugs but decreased
availability of new drugs is unclear,” the agency added.
It remains unclear whether Pelosi’s bill would make it through
Congress. Lawmakers return from a two-week recess on Tuesday and a top Pelosi
health aide has said he expects the bill to be voted on by the end of the
month.
But the bill is likely to face a steep challenge in the
GOP-controlled Senate, where Majority Leader Mitch McConnell has called it a
Socialist proposal.
However, President Trump has previously shown a desire to let
Medicare negotiate drug prices and his administration has issued a proposal
that would tie the prices for certain Medicare Part B drugs to those paid by
other countries.
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