CBO Releases the "Savings" Expected from Speaker Pelosi’s Drug Pricing Bill | Citizens Against Government Waste

CBO Releases the "Savings" Expected from Speaker Pelosi’s Drug Pricing Bill

The WasteWatcher

On Thursday evening, December 5, 2019, the Congressional Budget Office (CBO) released its savings' estimate for Speaker Nancy Pelosi’s (D-Calif.) drug pricing bill, H.R. 3, “The Lower Drug Costs Now Act of 2019.”  The CBO estimated the legislation would save Medicare $500 billion over 10 years.

Of course, Medicare could save much more, about $83 billion a year (the amount expected to be spent in 2019 for Medicare Part D), or $1.4 trillion over 10 years, by refusing to pay for any prescription drugs. That would not sit well with Medicare beneficiaries.  But H.R. 3's drug savings do not make any sense either and if the bill should ever become law, it would do significant damage to the Medicare drug benefit, private pharmaceutical plans, and America’s biopharmaceutical companies, which produce most of the new, innovative drugs in the world.

Citizens Against Government Waste (CAGW) has been very critical of H.R. 3, calling it “un-American” because it exerts “so much government authority over the pharmaceutical industry that it would equal anything that communist and socialist leaders in other countries have done to control various sectors of their economies.”

The bill would “negotiate” with drug companies over the price of a drug.  If a company refused to accept the government’s “negotiated” price, the drug company would be required to pay a 95 percent excise tax on the previous year’s annual gross sales of the drug.  Up to 250 drugs would be targeted as negotiable and the government would be required to price at least 25 drugs, not only for Medicare, but for the commercial market as well.  This tax on medicines would be enormously harmful for patients.

The President’s Council of Economic Advisers (CEA) released an analysis on December 3, 2019, which estimated that H.R. 3 would cause, “as many as 100 fewer drugs entering the United States market over the next decade, or about one-third of the total number of drugs expected to enter the market during that time. CEA also estimates that by limiting access to lifesaving drugs, H.R. 3 would reduce Americans’ average life expectancy by about four months -- nearly one-quarter of the projected gains in life expectancy over the next decade.”

With fewer new and better drugs being researched and developed, CEA found the result would be worse health outcomes.  The economic value of the loss would reach $1 trillion per year.

CEA also takes a look at some of CBO's other assessments of H.R. 3, which are not being talked about by the bill's supporters, such as it "could reduce pharmaceutical company revenues by $500 billion to $1 trillion over the next decade, which would have noticeable negative effects on drug innovation."  In other words, forget seeing the life-changing drugs that require intense, complicated, and expensive research from ever being developed.

With the CBO score now released, H.R. 3 could be considered next week.  Our lobbying organization, the Council for Citizens Against Government Waste, will express its strong opposition to the bill.  Speaker Pelosi likely has the votes to pass it, but fortunately the Senate has enough sensible opposition to stop this horrendous legislation in its tracks.

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