So what will health care reform mean to prescription drug pricing? In response to a query from Paul Ryan, a Republican from Wisconsin who is theranking member of the House Budget Committee, the US Congressional Budget Office has analyzed the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act of 2010 and come up with the following forecasts, which discuss price hikes and rebates...
For instance, the new law is expected to raise prices paid by pharmacies, less any rebates paid by drugmakers to insurers, by about 1 percent, on average. That increase would slightly raise federal costs for Medicare’s drug benefit and the costs for some beneficiaries, but the new discounts would make the costs faced by other beneficiaries substantially lower. The CBO, however, did not specify which beneficiaries would gain and which would lose.
For newly introduced drugs purchased through Medicaid, CBO estimates prices paid by pharmacies will rise about 4 percent, on average. "For currently available drugs purchased through Medicaid, which account for the bulk of projected Medicaid drug spending over the next decade, other provisions will constrain the ability of drugmakers to raise prices to offset new rebates. The combined effect of price increases and new rebates means Medicaid would pay less for drugs, on average, than it would in the absence of those provisions."
As for biosimilars, the CBO believes the ensuring competition will yield "substantially lower prices" for certain meds. But the affected drugs represent a "relatively small share" of projected total drug spending over the next decade. Consequently, the CBO estimates the average effect on prices would be modest - a reduction of about 2 percent in 2019.
What else? The law imposes an annual fee on drugmakers and importers of brand-name drugs. CBO expects the fee will probably increase prices of drugs purchased through Medicare and prices of newly introduced drugs purchased through Medicaid and other federal programs by about 1 percent. Those increases will be on top of the increases already noted. You can read the full explanations here.