CBO Puts ‘Cures' Cost at $106 Billion, Even as Part D Offset Disappears

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By Nathaniel Weixel

June 23 — The House's 21st Century Cures legislation (H.R. 6) will cost $106.4 billion over five years ending 2020, according to a Congressional Budget Office estimate released June 23.

However, the CBO estimate takes into account the entire budget for the National Institutes of Health through 2019, which makes it difficult to estimate the actual costs and savings of the bill's provisions. The legislation, which unanimously passed the Energy and Commerce Committee in May, reauthorized appropriations for the NIH for three years. The CBO estimated that reauthorization would cost $97.1 billion.

The CBO also estimated an offset that would delay reinsurance payments to Medicare Part D drug plans would shift spending between fiscal years and would shift about $5 billion from fiscal 2025 to 2026. Under the legislation, the delay is supposed to generate $2 billion over 10 years by allowing the government to earn interest on the cash for a longer period of time. However, a committee aide told Bloomberg BNA June 23 that this offset won't be included when the bill—which seeks to spur development of new drugs and devices—makes it to the House floor for a vote, which could be shortly after the July 4 recess.

According to the Democratic aide, the final language will likely include multiple smaller offsets to cover the savings, instead of one large replacement policy.

The bill would authorize funding and modify programs within the HHS that support medical research, oversee the development and marketing approval for drugs and monitor the use of drugs in the U.S. The legislation also would change the regulatory framework surrounding medical devices and oversight of technology by the Food and Drug Administration.

According to the CBO, the amount authorized for the NIH by the legislation may not be what is appropriated. However, the legislation does require $2 billion in mandatory NIH funding annually over the next five years.

Floor Action

The aide said the committee is “quite close” to a floor vote, despite not meeting Rep. Fred Upton's (R-Mich.) self-imposed June deadline.

“If we come right back in July, if we lose a week, it's not make or break,” the aide said.

The bill contains numerous provisions that also fall under the jurisdiction of the Ways and Means Committee—such as Medicare coverage determinations, telemedicine, interoperability, site of service payments— but a staff member on that committee told Bloomberg BNA they still haven't been given a copy of the bill, which is something that should happen under normal legislative order. Both Democrats and Republicans have concerns over the language in those provisions, the staffer said.

The Energy and Commerce Committee doesn't need the approval of Ways and Means to bring the bill to the House floor, but “it's in their best interest” to do so, the Ways and Means staffer said.

Exclusivity Costs

The legislation also contains provisions that would grant an additional six months of exclusivity for certain brand-name drugs previously approved under the Federal Food, Drug, and Cosmetic Act (FDCA) if the drug is approved for a new indication that treats a rare disease or condition. According to the CBO, those extensions could delay the timing of market entry by lower-priced generic drugs or biosimilars.

The CBO estimated that about 15 percent of the share of brand-name sales for drugs previously approved under the FDCA that are expected to first experience generic competition before 2025 would have such competition delayed by six months under this provision.

The CBO estimated that the provision would increase on-budget spending on prescription drugs by mandatory health programs by $869 million over the 2016-2025 period. Beyond 2025, the potential for the legislation to delay the entry of generic drugs or biosimilars is greater, and the federal budgetary effect would increase in later years, the CBO said.

To contact the reporter on this story: Nathaniel Weixel in Washington at nweixel@bna.com

To contact the editor responsible for this story: Janey Cohen at jcohen@bna.com