The 21st Century Cures Act, a fast-moving bill aimed at fueling medical innovation, would cost $106 billion to implement and its cost-saving provisions—including limiting Medicaid pay for durable medical equipment—would yield $12 billion over the next decade, according to the Congressional Budget Office.
Carrying out the legislation, which the House Energy and Commerce Committee approved last month, would cost about $106 billion from fiscal 2016 through fiscal 2020, according to a new CBO report (PDF). The bulk of the costs reflect $105 billion in additional funding for the National Institutes of Health to boost its research and development capabilities. Spending for the Food and Drug Administration to carry out provisions of the bill, such as speeding up the review process for potential breakthrough drugs, would cost $872 million.
Supporters of the 21st Century Cures Act see it as a way to expedite the approval process for medications and medical devices and get new treatments to patients faster. Critics have argued it heightens the risk of harm to patients by weakening federal oversight.
Key provisions include allowing the FDA to grant market approval of a drug based on its early stage testing for safety and effectiveness. Medical-device makers would be able to apply for a “breakthrough designation” pathway for products that treat conditions where no alternative exists.
More controversial aspects of the bill include extending market exclusivity on newly developed medications, as well as some brand-name drugs already on the market, if they're approved for a new indication pertaining to the treatment of a rare disease or condition. Delaying competition would increase government spending on prescription drugs by $869 million between 2016 and 2025, according to the CBO report.
Most of the savings accomplished in the bill would come from the sale of 8 million barrels of oil a year from the Strategic Petroleum Reserve between fiscal 2018 and 2025. The CBO says the oil sales would yield about $5.4 billion.
But the bill also extracts billions in savings from federal healthcare programs. One provision would limit state Medicaid durable medical equipment payments eligible for federal reimbursement to the rate Medicare pays, saving about $2.5 billion.
The report estimates the bill would increase states' Medicaid costs by an additional $2.6 billion between 2016 and 2025 because of delayed entry of generics and lower federal reimbursement for durable medical equipment.
The legislation gets another $5 billion in savings in the 10-year period with an accounting gimmick in Medicare Part D. By delaying payments to stand-alone prescription drug plans beginning in 2020, the government would shift $5 billion in spending from fiscal 2025 to fiscal 2026.