April 21, 2017
The Moran Company was engaged by the Pharmaceutical Care Management Association (PCMA), the trade association of PBM companies, to evaluate the budgetary implications of enacting these policies.
View the analysis here
- Based on these assumptions, we project an increase in Federal direct spending of more than $20 billion over the ten-year budget horizon (2018-2027).
- We assume that, in evaluating this legislation, CBO would focus on the effect of these policies in increasing the access of market participants to information about their competitors’ pricing behavior.
- Based on its stated precedents, we assume that CBO would find such disclosure to be cost-increasing, because such disclosures would have a dampening effect on the magnitude of rebates available to large plan sponsors such as Medicare Part D.
- We developed a model to estimate the degree of “compression” CBO might estimate if market actors are given greater access to the pricing information of their competitors.
- Our work with that model suggests CBO could reasonably conclude that the effect on branded drug pricing could be greater than 2% over time.
- The magnitude of this estimate is primarily due to the size of current law Federal subsidies for branded drug benefits under Part D and the ACA, which we estimate to total $1.115 trillion over the period.
- Against this background, even very small percentage changes in branded drug pricing produce very large budgetary impacts.