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1 1 (2019)

handle is hein.congrec/ndrugpm0001 and id is 1 raw text is: CONGRESSIONAL BUDGET OFFICE Keith Hall, Director U.S. Congress Washington, DC 20515 May 17, 2019 Honorable Chuck Grassley Chairman Committee on Finance United States Senate Washington, DC 20510 RE: Negotiation Over Drug Prices in Medicare Dear Mr. Chairman: You asked for updated answers to two questions that CBO addressed in a letter to Senator Wyden in 2007.1 Those questions relate to the Medicare Part D prescription drug benefit and options for allowing the Secretary of Health and Human Services to negotiate over the prices paid for drugs under that benefit. Under current law, the Secretary is prohibited both from interfering in the negotiations between drug manufacturers and the prescription drug plans (PDPs) that deliver the Medicare benefit and from requiring a particular formulary or instituting a price structure for the reimbursement of covered drugs. The questions and the key conclusions from CBO's response in 2007 are below. CBO continues to stand by those conclusions. If the Secretary was given authority to negotiate by Congress and used that authority, would it be possible to obtain savings in Medicare? The key factor in determining whether negotiations would lead to price reductions is the leverage that the Secretary would have to secure larger price concessions from drug manufacturers than competing PDPs currently obtain. Negotiation is likely to be effective only if it is accompanied by some source of pressure on drug manufacturers to secure price concessions. For example, authority to establish a 1. Congressional Budget Office, letter to the Honorable Ron Wyden regarding drug price negotiation in Medicare (April 10, 2007), v wcb o ov/nublication/18550.

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