CBO: Grassley-Wyden Bill Could Help Save More Than $94 Billion

The Congressional Budget Office has estimated that the Grassley-Wyden bill regulating pharmaceutical prices would generate savings of more than $94 billion over the next decade.
Skylar Jeremias
March 18, 2020
The bipartisan Grassley-Wyden Senate bill, which would incentivize the uptake of biosimilars and generics, could save the United States more than $94 billion over the next decade, according to an updated Congressional Budget Office (CBO) estimate.

This is roughly $10 billion higher than the CBO estimated last year. The updated estimate includes a $72 billion reduction in out-of-pocket spending and a $1 billion premium reduction.

The Prescription Drug Pricing Reduction Act, which focusses on Medicare Part D and Part B drugs, includes incentives for physicians to implement more usage of biosimilars by increasing the physician add-on payment from 6% to 8% for the first 5 years after market introduction.

HHS Secretary Alex Azar spoke about the bill at the Biosimilars: Breaking Through the Barriers symposium last week, highlighting that it would require augmenting the star rating system for Medicare Advantage to recognize improvements in patient access to biosimilars.

The Alliance for Affordable Medicine championed the bill, saying that it’s “a step in the right direction” that would “address the misaligned incentives that are preventing Medicare’s seniors from benefitting fully from the record-level number of FDA approvals of generic and biosimilar medicines.”

Supported by President Donald Trump, the bill passed through the Senate Finance Committee in July 2019 (19-9) with bipartisan support. However, it has yet to see action by the full Senate.

Various elements of the bill have been opposed, including provisions to restrict drug price increases to the level of inflation. Much contention occurred over a suggestion to peg drug prices to an international pricing index. Besides retooling Medicare payment methodologies, the bill would increase transparency within the drug supply chain.

In a joint statement about the revised CBO analysis, the bill’s cosponsors, Senators Chuck Grassley (R-IA) and Ron Wyden (D-OR), said, “We’re continuing to build support for the bill and this information will be key in educating our colleagues about the many benefits of our approach.”

The bill competes with another price reduction bill spearheaded by House Majority Leader Nancy Pelosi, which would allow the federal government to negotiate drug prices with the pharmaceutical sector. The CBO has estimated savings from this of $369 billion in Medicare spending over a decade. Pelosi’s bill has also been rejected by President Trump and faces a tough battle in the Senate.

Grassley and Wyden have said that the biggest savings coming from their bill involve rebates required of manufacturers whose prices increase faster than inflation. Those drugmakers would be required to pay money back to Medicare and pay less to physicians who administer intravenous drugs considered too costly to beneficiaries.

Recent developments related to COVID-19 have stimulated concerns that accord over drug-pricing legislation is a too-lofty target.  A COVID-19 $8.3 billion spending package was engineered to protect manufacturers’ rights to charge market rates for vaccines and other medicines developed in response to the outbreak, which has led to concerns that pharmaceutical companies may profit at the expense of consumers.

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