CBO: Pelosi drug pricing bill would raise wages by $116B over 10 years

House Democrats’ bill to lower drug prices would raise wages for people on employer-sponsored health insurance by $116 billion over 10 years, according to the Congressional Budget Office (CBO)

The CBO and its companion organization, the Joint Committee on Taxation, announced the finding in a letter to House Democrats.

“CBO and JCT estimate that Title I would increase these taxable wages and salaries for people on employment-based health insurance (not counting those in the Federal Employees Health Benefits program) by approximately $116 billion over the 2020-2029 period,” the letter states. “For the purpose of this estimate, we assume that employee total compensation remains the same and that when premiums decrease, wages increase (i.e. a ‘wage pass-back’).”

The reason for the wage increase, the letter states, is that when drug prices go down, the cost of health insurance also goes down because the insurer’s costs decline. When employers don’t have to spend as much money on health insurance for their workers, they have more money to put into wage and salary increases. 

Democrats touted the findings as an additional benefit of their legislation, which on Thursday passed the House on a largely party-line vote. Democrats are expected to make the passage of the legislation a key part of their reelection effort next year. 

The bill allows the government to negotiate lower prices on up to 250 drugs per year. Republicans pointed to other findings from the CBO to argue that the bill would hinder the development of new cures. In particular, they noted that the legislation would result in 38 fewer new drugs being introduced over the next two decades, out of a total of about 600 new drugs expected during that time period.