CBO weighs in on PBM reform, AI in healthcare

The Congressional Budget Office (CBO) addressed a series of questions from lawmakers on health policy priorities ranging from pharmacy benefit management to Medicare spending.

Across two posts issued Friday, the responses stem from two hearings in the House of Representatives held earlier this year. For example, the agency was asked for feedback on the potential use of artificial intelligence and machine learning in modeling the cost of care.

CBO said there are multiple avenues where this technology has potential, such as identifying which patients may benefit most from certain interventions or identifying diseases more quickly. However, research to date has produced both positive and negative results, the agency said.

Research found that machine learning was an effective tool in predicting mortality in oncology but less so in predicting heart failure outcomes, for instance, CBO said.

"To date, the evidence on the usefulness of AI and ML tools is mixed," the agency wrote. "Although there currently is not sufficient empirical evidence to project the overall effect of AI and ML on federal health care spending, CBO is continually evaluating new research and is particularly interested in evidence regarding interventions that might prevent the progression of disease or the need for more intensive care."

In the same post, CBO addressed questions about the Lower Costs, More Transparency Act, which includes multiple PBM reforms such as a ban on spread pricing in Medicaid and additional reporting on drug costs, rebates and sales.

CBO said eliminating spread pricing and requiring community pharmacies to participate in a study on acquisition costs would reduce federal spending by $1.1 billion between 2024 and 2033.

"CBO estimates that both measures would help states gain a better understanding of PBMs’ practices and negotiate more favorable contracts than they are able to under current law, thereby lowering federal spending," CBO said.

In the post, CBO also acknowledged that a 2003 analysis conducted by the agency significantly overestimated the cost of Medicare Part D. The agency said it is closely tracking more the impacts of more recent laws, such as the Inflation Reduction Act, and will continue to keep Congress informed of those results.

"Informing the Congress can take the form of regular reports on the accuracy of the agency’s baseline or reports that focus on a policy of particularly great interest," CBO wrote. "CBO will consult with the appropriate committees on the timing and format for presenting what the agency has learned about how the key prescription drug provisions of the 2022 reconciliation act have played out."

In the second post, CBO answered a question about the potential impact of weight loss drugs on spending in Part D. The agency said it is examining the implications of expanded Medicare coverage for these products.