Aug 5, 2022 - Health

Democrats' drug pricing bill could lead to higher launch prices

Illustration of the score line on a pill in the shape of an upward arrow instead of straight across.

Illustration: Gabriella Turrisi/Axios

Democrats' party-line drug pricing legislation will likely cause manufacturers to raise the launch prices of new drugs, the Congressional Budget Office projected yesterday.

The intrigue: The primary driver of the increases would be a cap preventing prices for existing drugs from rising more than inflation. That provision has received bipartisan support in the past.

  • But the measure that allows Medicare to directly negotiate prices with manufacturers — which is highly partisan and controversial — would to a lesser extent also contribute to higher launch prices, CBO said.

Between the lines: This isn't a surprise. It's long been expected that the pharmaceutical industry will try to recoup the revenue lost through price caps or negotiations by raising the prices of other drugs.

  • But the finding provides ammunition for opponents of the drug price legislation, particularly because it comes from the nonpartisan CBO.
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