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Pharmaceuticals / Regulatory Affairs

Medicare for All Could Stifle Drug Innovation, CBO Says

May 8, 2019
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Prescription drug costs would likely have a small impact on federal spending under a single-payer system, but a national health system might have the unintended consequence of forcing drugmakers to stop taking risks on new medicines, the Congressional Budget Office says in a new analysis.

The CBO didn’t formally “score” Medicare for All plans but acknowledged that the move to a single-payer system would add “substantial” expenses to the federal budget. The good news is that prescription drugs would not be a drain on the federal coffers—prescriptions account for about ten percent of healthcare spending, where doctors accounted for about 20 percent and hospitals 33 percent, respectively.

The bad news? The designers of a single-payer system “would need to consider whether a substantial reduction in drug prices would reduce manufacturers incentive to develop new drugs,” the 34-page report states.

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