Aug 5, 2022 - Health

Democrats' drug pricing bill could lead to higher launch prices

Caitlin Owens

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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Democrats' drug pricing bill could lead to higher launch prices

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