CBO describes how it estimated the budgetary impact of three key prescription drug provisions in the 2022 reconciliation act. In total, those provisions will reduce the federal deficit by $129 billion from 2022 through 2031, CBO estimates.
The 2022 reconciliation act includes several provisions that affect prescription drug prices and coverage under Medicare. The Congressional Budget Office estimated that those provisions would reduce the federal budget deficit by $237 billion from 2022 to 2031. This slide deck focuses on three key drug-related policies that, together, are responsible for $129 billion of that reduction. To explain how the agency reached its estimate, the slide deck focuses on the effects of the three key policies in 2031:
- First, the act requires the Secretary of Health and Human Services to negotiate prices for certain drugs covered under Medicare Part B and Part D. CBO estimated that price negotiation will lower average drug prices in Medicare and will reduce the budget deficit by $25 billion in 2031.
- Second, certain manufacturers of brand-name drugs must pay rebates if their prices exceed an inflation-adjusted benchmark. CBO estimated that the inflation rebate policy will reduce the deficit by $8 billion in 2031.
- Third, the law redesigns the Part D benefit. CBO projected that changes in the Part D benefit will increase the deficit by $2 billion in 2031.