Letting Medicare Negotiate Drug Prices Would Save US Nearly $290 Billion

Friday’s Congressional Budget Office revealed that a Senate Democrats’ proposal to allow Medicare to negotiate directly to lower drug prices would result in nearly $290 Billion in savings and new revenue over ten year implementation. This is a predictable but crucial finding for lawmakers trying to revive a legislative deal in coming weeks.

The Democratic effort to revive a larger reconciliation package that could pass in the narrowly-split Senate with no Republican votes is considered the best thing that can be done after Sens. Joe Manchin and Kyrsten Sinema tanked the much larger Build Back Better plan — one that included sweeping climate provisions and other social investments — last year.

With Schumer now directly negotiating with Manchin on the tighter package, the hopes that Medicare can better control the outrageous drug prices imposed by pharmaceutical giants would be considered a win.

According toThe CBO based its analysis upon draft text released by the Senate Budget Committee, the legislation now under consideration “would result in a net decrease in the unified deficit totaling $287.6 billion over the 2022-2031 period. This decrease in deficit would be due to a decrease of direct spending of $249.2 million and an increase of revenues of $38.4 million.

Senator Majority Leader Chuck Schumer praised the budget office score as a finding which bolsters the push for Medicare such authority.

“This CBO score shows allowing Medicare prescription drug negotiation will yield billions in smart savings for Americans annually and will deliver much needed relief for millions of seniors,” said Schumer in a statement.

“Fixing unaffordable prescription drug pricing has been a top issue for Americans and the vast majority of both Democrats and Republicans year after year,” the New York Democrat added. “By empowering Medicare to directly negotiate prices for prescription drugs Congress can end the days of seniors missing lifesaving medications because they cannot afford them, lower costs for millions of patients when they visit the pharmacy, and do so in a fiscally responsible way.”

The Democrats’ proposal would allow Medicare to negotiate discounts for some of the costliest drugs on the market and would impose punishment on pharmaceutical companies that increase prices faster than inflation. Medicare beneficiaries would also have to pay $2,000 annually in out-of-pocket expenses under the legislation. Although only 10 of the most expensive drugs in 2026 would be allowed initially under the plan, this number will increase to 20 drugs by end of decade.

Axios reported earlier this week that if a deal can be finalized within the Senate’s Democratic caucus, a potential vote on the package could come as early as August.

Frederick Isasi (executive director of Families USA), commented on the importance and lobbying of Big Pharma.

“Senators need to seize this historic moment and get meaningful prescription drug reform over the finish line,” said Isasi. “When too many families in America are struggling with the high costs of everything from housing to gas, we have an opportunity to make an historic breakthrough on prescription drug negotiation and making Medicare work better for individuals and families across the country.”

“Big Pharma has made money off of gimmicks and abuses for years while consumers have suffered the consequences,” he added. “The time is now for Congress to bring this legislation across the finish line and provide health care affordability to all of our families nationwide.”