As part of the legislative process, the Congressional Budget Office supplies the Congress with cost estimates for legislation, economic and budget projections, and other economic assessments. Information from the research community is an important element of CBO’s analyses. This is the ninth in a series of blog posts discussing research that would enhance the quality of the information that CBO uses in its work. (Earlier posts in the series discussed the need for new research in the areas of energy and the environment, finance, health, labor, macroeconomics, national security, taxes and transfers, and obesity) Please send comments to [email protected].
CBO regularly provides the Congress with information about the budgetary effects of legislation related to prescription drugs and the methods used to estimate those effects (see, for example, CBO 2022a and CBO 2023). CBO has also provided, as supplemental information, estimates of changes in the number of drugs that would be introduced to the U.S. market under bills that may substantially affect the development of new drugs.
CBO uses its simulation model of drug development to analyze such legislative proposals (Adams 2021). The agency uses estimates of changes in pharmaceutical companies’ expected future profits or development costs to project the change in the number of drug candidates entering the various stages of human clinical trials. Taking that information into account, CBO then uses the model to estimate when and by how much the number of new drugs entering the market will change. The agency has received feedback from Congressional staff and from academic and industry experts and has made changes to improve its model—such as accounting for an accelerated drug approval process and for preclinical research decisions’ being affected by the policy under consideration (CBO 2022b).
CBO will keep abreast of new information about the drug development process as it prepares analyses for the Congress. Additionally, the agency could benefit from new research about how changes in pharmaceutical companies’ expected future profits affect the development of drugs with differing characteristics, such as small- or large-molecule drugs or those that target certain diseases or patient populations (such as the elderly). Research on related questions would also be of particular interest—for example, how changes in the number of new drugs affect health outcomes, or how certain policies, such as price negotiation or accelerated drug approvals, affect companies’ decisions about which indications (that is, medical conditions that drugs are used to treat) to target for approval by the Food and Drug Administration.
Phillip L. Swagel is CBO’s Director. This blog post includes contributions from the following CBO staff: Christopher Adams, Chad Chirico, Tamara Hayford, Jeffrey Kling, Asha Saavoss, Aditi Sen, Robert Sunshine, and Chapin White.
Originally published at https://www.cbo.gov/publication/59818