With lawmakers looking for ways to lower prescription drug prices, House Speaker Nancy Pelosi has a bill that would reportedly save the struggling Medicare program $345 billion over the next decade, according to the nonpartisan Congressional Budget Office.
If the bill gets passed by the end of this year — meaning it would have to be approved in the Democrat-controlled House, the GOP-controlled Senate and signed by President Donald Trump — the savings would begin in 2023, the CBO said in its report.
The CBO is an independent agency that reviews and estimates congressional spending proposals.
The largest savings would reportedly come from a provision that allows Medicare to negotiate prices on as many as 250 of the most expensive drugs each year, and apply those discounts to private health insurance plans. The law allows penalties to be imposed on companies that refuse to negotiate prices, or reach an agreement with the federal government, beginning at 65% of the gross sales of that particular drug.
The lower prices would in effect lower current and future revenue for the pharmaceutical companies, which could end up opting not to sell the drug in the U.S.
“A manufacturer that was dissatisfied with a negotiation could pull a drug out of the U.S. market entirely, though CBO expects that would be unlikely for drugs already being sold in the United States,” the report says.
The rules currently in place prevent the Department of Health and Human Services from negotiating drug prices on behalf of Medicare, which is the government-run health insurance plan for retirement-age Americans. The way it works now is pharmacy benefit managers negotiate drug rebates for private insurers in exchange for better coverage.
Pelosi, D-Calif., and House Democratic leaders have been working on the plan for several months and it is expected to move through the House to a floor vote by the end of this month.
Senate Finance Committee Chair Chuck Grassely, R-Iowa, is working on a Senate drug pricing bill that is reportedly backed by Trump. Grassley praised the savings Pelosi has worked into her bill, but said it must be bipartisan.
“The legislation I authored with Ranking Member (Ron) Wyden (D-Oregon) strikes that balance and would achieve real progress for Americans,” Grassley said. “To date, it’s the only significant, bipartisan legislation to lower prescription drug prices that’s passed a congressional committee.
“I urge my colleagues in the House and the Senate to get to work to lower costs while ensuring life-saving treatments can continue to be developed right here in America.”