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The One Big Beautiful Bill Act removed a number of orphan drugs from being subject to price negotiations, and this could cost the Medicare program $8.8 billion over the course of about 10 years.
That estimate is from the nonpartisan Congressional Budget Office, which delivered the updated projections this week at the behest of Democratic lawmakers.
According to the CBO, its July projections – which predicted a $4.9 billion increase to the Medicare program – did not factor in a number of drugs that could be exempted from price negotiations due to the changes in the law.
Specifically, the estimate did not account for three orphan drugs – Darzalex (daratumumab), Keytruda (pembrolizumab) and Opdivo (nivolumab).
WHAT'S THE IMPACT
Those three drugs are now exempt from price negotiations due to changes the One Big Beautiful Bill Act made to the 2022 reconciliation act, which directed the Department of Health and Human Services to use the Medicare Drug Price Negotiation Program to negotiate prices for certain prescription drugs covered under Medicare Part B and D.
The 2025 law broadened the exemption. According to the CBO, if a non-orphan drug later receives approval for a non-orphan use, the period before its first non-orphan approval will not count toward the period required to determine the drug's eligibility for price negotiation.
Also, drugs that are designed to treat more than one rare disease or condition will be exempt from negotiations if their only approved indications are for those conditions. Those changes would begin in 2028.
The estimates do not reflect the final guidance issued by the Centers for Medicare and Medicaid Services in September, which includes a plan to incorporate Medicare Advantage spending into the calculation of total Part D drug expenditures used to rank drugs for negotiation.
The CBO expects this policy will change the list of drugs selected for negotiation, but the overall effects on the federal budget are still unclear, and the agency has not yet estimated how the new guidance will affect drug prices or federal spending.
Democratic lawmakers pounced on the CBO's findings.
“While Republicans were drafting the largest healthcare cut in history, they quietly tucked in language to weaken Medicare’s ability to negotiate lower drug prices for seniors,” read a joint statement from House Energy and Commerce Committee Ranking Member Frank Pallone Jr. (D-NJ), House Ways and Means Committee Ranking Member Richard E. Neal (D-MA) and Senate Finance Committee Ranking Member Ron Wyden (D-OR). “This is a trojan horse policy that will undermine efforts to lower prescription drug prices for years to come.”
THE LARGER TREND
In July the CBO found the One Big Beautiful Bill Act would add $3.2 trillion to the national debt over a 10-year span.
That increase in the deficit – which is expected to occur between 2025 and 2034 – is estimated to result from a decrease in direct spending of $1.1 trillion and a decrease in revenues of $4.5 trillion, the CBO said.
Some of those budgetary effects are associated with programs that are classified as off-budget, though the increase in the on-budget deficit over that period is still estimated at $3.4 trillion, according to the CBO.
Jeff Lagasse is editor of Healthcare Finance News.
Email: jlagasse@himss.org
Healthcare Finance News is a HIMSS Media publication.