Healthcare spending currently represents 18% of GDP and is projected to reach 22% by 2035 on current trends. This bill's provisions attempt to bend the cost curve through reference pricing, site-of-care incentives, and drug pricing negotiations.
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Drug Pricing Negotiation Expansion
Building on the IRA's initial drug pricing negotiation authority, this bill expands the number of drugs subject to Medicare negotiation from 20 to 50 by 2029. CBO estimates this will reduce federal drug spending by approximately $90 billion over 10 years.
Core Takeaway
The pharmaceutical industry's response to negotiation — accelerating price increases on non-negotiated drugs or reducing pipeline investment — will determine whether the net healthcare cost savings are as large as projected.