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1 CBO's Estimates of the Effects of Changes in the Manufacturers' Discount in the Part D Coverage Gap 1 (July 20, 2018)

handle is hein.congrec/cboeefdd0001 and id is 1 raw text is: CONGRESSIONAL BUDGET OFFICE Keith Hall, Director U.S. Congress Washington, DC 20515 July 20, 2018 Honorable Mark Meadows U.S. House of Representatives Washington, DC 20515 Re: CBO's Estimates of the Effects of Changes in the Manufacturers' Discount in the Part D Coverage Gap Dear Congressman: In a July 2, 2018, letter, you asked about the Congressional Budget Office's cost estimate for a provision of the Bipartisan Budget Act of 2018 (P.L. 115-123), which was enacted on February 9, 2018. I hope this letter answers your questions and addresses any continuing concerns you may have about this subject. Background Section 53116 of the Bipartisan Budget Act requires manufacturers of brand- name prescription drugs to increase from 50 percent to 70 percent the discount provided to certain Medicare Part D beneficiaries when those enrollees' spending on brand-name prescriptions falls within a range called the coverage gap (sometimes referred to as the donut hole). When Part D was implemented, such beneficiaries who were not enrolled in the low-income subsidy (LIS) program were responsible for 100 percent of the cost of their prescriptions in that range of spending during a given year. (The law was changed in 2010 to require manufacturers of brand-name prescription drugs to provide a 50 percent discount to non-LIS beneficiaries.) CBO's Estimate When the Bipartisan Budget Act was being considered, CBO estimated that section 53116 would reduce net Medicare spending for Part D by $7.7 billion over the 2018-2027 period.' To develop that estimate, CBO consulted extensively with ' In the table that CBO produced at that time, that effect was combined with estimated savings for section 53113 (which modified payment rules for biosimilar drugs), resulting in a combined estimate of $10.1 billion in federal savings over the 2018-2027 period. See Congressional Budget Office, Estimated Direct Spending and Revenue Effects of Division E of Senate Amendment 1930, the Bipartisan Budget Act of 2018 (February 8, 2018), www.cbo.gov/publication/53557. www.cbo.gov

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