CBO warns of almost 60 fewer new drugs over three decades with Medicare drug negotiations bill
As drug pricing legislation begins to gain steam on Capitol Hill moving into the fall, the Congressional Budget Office is offering an updated look at the effects that House Speaker Nancy Pelosi’s drug pricing bill, known as HR 3, would have in chilling biopharma R&D over 30 years.
CBO said in a new report Thursday that its updated model used to estimate the effects of HR 3 would, in part, allow for widespread Medicare negotiations on drug prices, leading to a 15% to 25% reduction in expected returns for drugs in the top quintile of expected returns.
Last February, the CBO estimated that Medicare negotiations under the same bill would reduce prices by between 57% and 75%, relative to current prices.
The latest estimates could lead to 2 fewer drugs in the first decade, 23 fewer in the second decade, and 34 fewer in the third decade, CBO said. While that total of 59 fewer new drugs over three decades would likely result in the loss of meaningful new drugs, the total doesn’t align with industry lobbying group PhRMA’s estimate in May that HR 3 could reduce by 90%+ the number of medicines developed by small and emerging biotechs, or 61 fewer drugs over 10 years.
But whereas PhRMA says such a change could threaten access to medicines, the CBO stopped short of trying to tease out exactly what the loss of those drugs might mean, particularly as the FDA approves plenty of me-too or slightly improved versions of currently marketed drugs each year.
“The illustrative policy’s exact implications for the health of families in the United States are unclear. CBO has estimated neither which types of drugs may be affected nor how the reduction in the number of new drugs will affect health outcomes. In addition, the policy may lead to lower prices and increased usage for drugs already on the market. CBO has not determined the overall effect of the policy on health outcomes,” the report says.
The release of the report also comes as it seems unlikely that the Senate will take up HR 3 in its entirety, which passed the House in 2019.
Senate finance committee chair Ron Wyden (D-OR), who’s crafting his own legislation, earlier this summer vowed to include some form of Medicare negotiations in the Senate’s package, which likely won’t need Republican votes to make it into law.
And while the CBO lays out its expected new drug losses over three decades, the government agency also made clear how difficult it can be to predict what drugs will prove positive in multiple stages of clinical trials and win approval.
“The effects could be smaller if expenditures in late-phase human trials are larger, for example. Alternatively, the effects could be larger if the cost of capital is larger,” the CBO said.