Want to lower drug prices? Good luck.
In a new report released Friday, the nonpartisan Congressional Budget Office (CBO) detailed how many of the campaign proposals mentioned by presidential nominees and lawmakers in Congress may actually only have a small or negligible impact on prices.
The report looked at seven approaches to reduce net US prices of retail prescription drugs — all of which have been floated in some iteration over the last decade — including four that “would lead to a very small price reduction, no reduction, or a price increase.” Those four include allowing more drug imports, which the FDA is currently working on with states; cutting or limiting direct-to-consumer advertising, which has been floated as recently as July in the Senate; allowing generics and biosimilars to enter the market earlier; and increasing transparency in brand-name drug prices.
So what would actually lower drug prices? The CBO points to three measures — but only one would make a substantial difference. All three have been opposed by the pharma industry, and would likely lead to less R&D, the report notes.
Those three policies include capping prices based on prices in other countries, which Republican presidential nominee Donald Trump now does not support, his campaign confirmed to Endpoints News; expanding Medicare drug price negotiations with more drugs or to the commercial market, which both President Joe Biden and Vice President Kamala Harris have proposed; and requiring manufacturers to pay inflation rebates for sales in the commercial market, which is ongoing under the IRA.
“One approach — setting maximum allowed prices based on prices outside the United States — would have a large effect,” CBO said, estimating that it would reduce prices by more than 5%, and potentially by far more. “None of the approaches examined would have an effect falling within the moderate range.”
The Trump campaign’s national press secretary Karoline Leavitt told Endpoints that Trump “will also establish a special Presidential Commission of independent minds who are not bought and paid for by Big Pharma and will charge them with investigating what is causing the decades-long increase in chronic illnesses.”
But the proposal to expand negotiations under Medicare would only likely have a 1% to 3% reduction on average prices, CBO notes, which is the same estimate for the inflation rebates.
The CBO also cautions that any proposal that would lower current revenue for marketed products would make a dent in R&D investments and discourage manufacturers from investing.