ARTICLE | Politics, Policy & Law

Congress relying on flawed model to set drug pricing policy

CBO model ignores impact on preclinical biotechs, underestimates effects of price controls on drug development

August 28, 2021 12:47 AM UTC

The Congressional Budget Office’s model for analyzing how legislative proposals may affect new drug development disregards impacts on early-stage biotech companies, and as result dramatically underestimates the effects of price controls on the development of new medicines, an economist who advises the CBO, a life sciences venture capitalist, and an executive at BIO told BioCentury.

The CBO model is important because members of Congress treat its projections as gospel. It is difficult to see something that hasn’t happened, so a decline in the number or quality of drugs under development might not be obvious. The long development cycles for drugs could obscure the consequences of a reduction in investment...