CBO Says Lower Health Care Costs Act Could Save $7.6 Billion by 2029

The Congressional Budget Office (CBO) has released its score of the Senate Committee on Health, Education, Labor, and Pensions’ proposed bill, S.1895, the Lower Health Care Costs Act. According to the CBO, enacting the bill would increase direct spending by about $18.7 billion and increase direct revenues by $26.2 billion, resulting in a net decrease in the deficit of $7.6 billion by 2029.

The proposed legislation comprises 5 elements: ending surprise medical bills, reducing the prices of prescription drugs, improving transparency in health care, improving public health, and improving the exchange of health information.

Among those sections, elements aimed at reducing drug prices would be responsible for a substantial share of the savings; the CBO says that these provisions would result in a net decrease in the deficit of $4.6 billion over the coming decade.

Key to reducing drug prices are several of the bill’s provisions that apply to generics and biosimilars. According to the CBO, some of these elements of the bill would allow generics and biosimilars to reach the market sooner, leading to a decline in federal spending on prescription drugs and subsidies for health insurance.

Provisions in this portion of the bill would allow the FDA to:

• Deny a citizen petition if the agency determines that the petition was submitted with the intent to delay competition from a generic or biosimilar
• Allow the FDA to approve some generics if no first generic applicant has received full approval
• Allow the approval of a generic for marketing even if safety information on the reference product’s label is protected by market exclusivity by requiring a statement of appropriate safety information on the generic’s label
• Allow generic and biosimilar makers to sue drug makers that do not make samples of their products available for testing
• Eliminate the requirement for biosimilar or generic makers to use the same risk management system as the branded product’s maker

The CBO states that the section of the bill providing the right to sue over sample availability and removal of the requirement to share a risk management system would, on its own, account for more than $3.7 billion in savings over 10 years. This substantial reduction in the deficit would result, in part, from the ability of generics and biosimilars to reach the market 1 to 2 years earlier, on average.