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Democrats’ landmark new drug pricing legislation could actually result in an initial increase in drug prices, according to information released Thursday
by the Congressional Budget Office (CBO).

The non-partisan CBO reported that the legislation, which places a cap on
price increases so they cannot go up faster than inflation, could lead drug companies to raise launch prices of new drugs to make up the difference. The CBO also said that allowing Medicare to negotiate certain drug prices
directly would contribute, albeit not as much, to higher prices.

Democrats’ party-line drug pricing legislation will likely cause
manufacturers to raise the launch prices of new drugs, the
Congressional Budget Office projected. https://t.co/rGmtBnkyJn

— Axios (@axios) August 5, 2022

The possibility that pharmaceutical companies will counteract the inflation- linked price cap by simply raising starting prices will undercut some
messaging in favor of the bill, which Democrats argue will rein in major corporations allegedly price-gouging Americans for necessary medicine.

The price cap provision of the bill has garnered bipartisan support in the past. The Medicare price negotiation is a far more contested aspect of the overall policy. Democrats are including the drug pricing reforms in the major reconciliation package slated to hit President Joe Biden’s desk in early
August after it goes before the Senate on Saturday. The package also includes provisions aimed at addressing climate change and out-of-control inflation
that has dogged the Biden administration and Democrats for months.

The bill had been stalled until Democratic West Virginia Sen. Joe Manchin recently gave his endorsement to move forward.

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Let's go Brandon!

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