The nonpartisan Congressional Budget Office has estimated the legislation would save Medicare $345 billion over seven years, partly because some seniors would no longer have to skimp on costly medicines, and they'd stay healthier.
A separate estimate from nonpartisan analysts at the Department of Health and Human Services found that households would save $158 billion over 10 years. But the budget office also cautioned that squeezing drugmakers could mean that some new medications — 3% to 5% — won't make it to market.
Such trade-offs were front and center Thursday as House committees considered the legislation. The Energy and Commerce committee as well as the Education and Labor panel voted largely along party lines to advance the bill. Ways and Means held a hearing. Democrats and Republicans say Pelosi is moving quickly to get the bill ready for a floor vote.
"These are jaw-dropping savings," said Rep. Anna Eshoo, D-Calif., who chairs the health subcommittee of Energy and Commerce. "This is legislation that is going to make a true, tangible difference in the lives of the American people."
Eshoo said the money could be used to provide dental, vision and hearing benefits for Medicare recipients or could be reinvested in drug research at the National Institutes of Health. But at another hearing before Ways and Means, Rep. Kevin Brady, R-Texas, caustically dubbed the Pelosi bill the "Fewer Cures for Patients Act." Brady said the budget office finding that one consequence could be fewer drug approvals should be a stop sign for lawmakers.
Although supporters of the legislation note that the CBO said only a small share of new drugs would be affected, Brady said, "One cure lost is one cure too many." The legislation from Pelosi, D-Calif., would authorize Medicare to negotiate prices for the costliest drugs — including insulin — using lower prices paid in other economically advanced countries as the reference point. The budget office says that could result in price cuts of 40% to 55% for pharmacy drugs subject to negotiations. The bill would allow private insurance plans to also get Medicare's price.
As a hammer to force companies to negotiate, Pelosi would impose steep sales taxes on the medications at issue. Overall, budget analysts estimated the legislation would cut industry revenues by $500 billion to $1 trillion over 10 years. The CBO says those numbers are preliminary.
Congressional Republicans are broadly opposed to allowing Medicare to negotiate drug prices, so the legislation has no chance in the Senate unless Trump gets behind it. As a candidate, Trump called for Medicare negotiations, and as president, he's repeatedly complained that countries with cheaper medicines are taking advantage of U.S. consumers. Pelosi's office has been in communication with top White House officials for months. Congressional Republicans say negotiations are best left to insurers that administer Medicare's prescription drug benefit.
If Trump's anger over the Pelosi-initiated impeachment probe sinks the effort, lawmakers of both parties would face voters next year with nothing to show on a top consumer issue. The White House had no comment on the budget estimates.
A poll this week found broad public support for Medicare drug negotiations, as well as for Pelosi's idea of taxing companies that won't come to the table. But the survey from the nonpartisan Kaiser Family Foundation also showed that support can shift to opposition if people are told there could be limits on research or access to new medications.
A leading policy expert on drug costs said Pelosi has framed a crucial question: What's the right balance between fostering innovation and keeping drugs affordable? "The savings are so large that you can't pretend for a second we don't have to look at this," said Peter Bach, director of the Center for Health Policy and Outcomes at New York's Memorial Sloan Kettering Cancer Center.
CBO hasn't said what kinds of new drugs could be kept off the market — whether they would be copycat medications or if life-changing medications would be affected, too. "We reduce average prices by 55%, and we will lose some new drugs — between 2.5% and 5% — that's the estimate," said Bach. "Some people will say we want everything."
Economist Douglas Holtz-Eakin, head of the center-right American Action Forum public policy group, said he's not so sure that only drugs of marginal value will be sacrificed. He said he's not worried about major drug companies but rather about smaller research-oriented outfits that have to raise considerable sums from private investors to keep going. Will their money dry up?
"The guys sitting out there in the venture capital world are going to say, 'We're not going to do drugs anymore,'" said Holtz-Eakin. "And you can't get that money back."