More medicines will be spared from Medicare price negotiations, a change that is projected to wipe out billions in savings for the federal government.
The sweeping Republican policy bill that awaits President Trump’s signature on Friday includes a little-noticed victory for the drug industry.
The legislation allows more medications to be exempt from Medicare’s price negotiation program, which was created to lower the government’s drug spending. Now, manufacturers will be able to keep those prices higher.
The change will cut into the government’s savings from the negotiation program by nearly $5 billion over a decade, according to an estimate by the nonpartisan Congressional Budget Office.
“This is essentially giving $5 billion back to the pharmaceutical industry,” said Dr. Benjamin Rome, a health policy researcher at Brigham and Women’s Hospital in Boston. “It’s done in a way that is designed, on its face, to solve the problem of some misaligned incentives, but I don’t think it solves those problems.”
Under existing law, costly drugs are exempt from price negotiations if they are approved to treat a single rare disease — one that affects fewer than 200,000 Americans. Drugmakers have complained that this policy discourages them from running studies and seeking approval to treat a second rare disease, and that it ultimately deprives patients of new treatments.
In response, the new bill spares drugs that are approved to treat multiple rare diseases. They can still be subject to price negotiations later if they are approved for larger groups of patients, though the change delays those lower prices.