Presentation by Chris Adams, an analyst in CBO’s Health Analysis Division, to the Health Economics Seminar Cosponsored by Boston University, Harvard University, and the Massachusetts Institute of Technology.
Presentation by Alice Burns and Jaeger Nelson, analysts in CBO’s Budget Analysis Division and Macroeconomic Analysis Division, to the National Tax Association.
CBO uses its microsimulation tax model to simulate the effects of tax rules for a representative sample of tax filers in each year of the budget window. The model informs much of CBO’s analysis of the individual income and payroll tax system.
CBO and the Joint Committee on Taxation use HISIM2 to estimate the major sources of health insurance coverage and associated premiums for the U.S. population under age 65.
HISIM2 is used in conjunction with other models (for example, those for related taxes, Medicaid, and Medicare) to develop baseline insurance coverage projections and their associated budgetary costs. It is also used to estimate the effects of proposed changes in policies that affect health insurance coverage.
CBO uses HISIM2 to model firms’ decisions to offer health insurance as well as households’ decisions to enroll in health insurance. Like all of CBO’s models, HISIM2 is regularly updated. This slide deck describes the analytical methods used in HISIM2 to model firms’ decisions in CBO’s baseline budget projections as of March 6, 2020.
Presentation by Tamara Hayford, Chief of CBO’s Health Policy Studies Unit, at the Association for Public Policy Analysis & Management 2021 Annual Research Meeting.
Presentation by Kathleen Burke, John McClelland, and Jennifer Shand, analysts in CBO’s Tax Analysis Division, to the National Association of Legislative Fiscal Offices.
Presentation by Alice Burns and Jaeger Nelson, analysts in CBO’s Budget Analysis Division and Macroeconomic Analysis Division, to the National Tax Association.
CBO uses its microsimulation tax model to simulate the effects of tax rules for a representative sample of tax filers in each year of the budget window. The model informs much of CBO’s analysis of the individual income and payroll tax system.
CBO and the Joint Committee on Taxation use HISIM2 to estimate the major sources of health insurance coverage and associated premiums for the U.S. population under age 65.
HISIM2 is used in conjunction with other models (for example, those for related taxes, Medicaid, and Medicare) to develop baseline insurance coverage projections and their associated budgetary costs. It is also used to estimate the effects of proposed changes in policies that affect health insurance coverage.
CBO uses HISIM2 to model firms’ decisions to offer health insurance as well as households’ decisions to enroll in health insurance. Like all of CBO’s models, HISIM2 is regularly updated. This slide deck describes the analytical methods used in HISIM2 to model firms’ decisions in CBO’s baseline budget projections as of March 6, 2020.
Presentation by Tamara Hayford, Chief of CBO’s Health Policy Studies Unit, at the Association for Public Policy Analysis & Management 2021 Annual Research Meeting.
Presentation by Kathleen Burke, John McClelland, and Jennifer Shand, analysts in CBO’s Tax Analysis Division, to the National Association of Legislative Fiscal Offices.
To prepare its spring 2019 baseline budget projections, CBO is using new sources of data as inputs and has completely revamped the way it models consumers’ and employers’ behavior. To that end, it has developed HISIM2, a new version of the model CBO uses to generate estimates of health insurance coverage and premiums for the population under age 65. The model is used in conjunction with other models to develop baseline budget projections (which incorporate the assumption that current law generally remains the same). It is also used to estimate the effects of proposed changes in policies that affect health insurance coverage.
HISIM2 incorporates new base data, including data from surveys and administrative data. It changes the way individuals and families are projected to choose among coverage options. And it changes the way firms are projected to take workers’ preferences into account when deciding whether to offer employment-based coverage.
CBO’s new health insurance simulation model creates synthetic firms that mimic the real-world variations between firms to model employers’ decisions about whether to offer employment-based health insurance.
Presentation by Alexandra Minicozzi, a Unit Chief in CBO’s Health, Retirement, and Long-Term Analysis Division, at the 8th Annual Conference of the American Society of Health Economists.
HISIM2 is an updated version of the model CBO uses to generate estimates of health insurance coverage and premiums for people under age 65. The model is used along with other models to develop CBO’s baseline budget projections (which incorporate the assumption that current law generally remains the same). It is also used to estimate the effects of proposed changes in policies that affect health insurance coverage.
Presentation by Chapin White, CBO's Deputy Director of Health Analysis, to the Leadership Fellowship Program at the National Hispanic Medical Association.
CBO's analyses of the distribution of household income rely on the Census Bureau's Current Population Survey (CPS) for information about receipt of government transfers, particularly means-tested transfers. CPS respondents underreport their receipt of those transfers, and that underreporting has increased over the past few decades. This presentation shows how CBO adjusts for the underreporting of means-tested transfers in its distributional analyses.
CBO’s health insurance simulation model (HISIM) generates estimates of health insurance coverage and premiums for the population under age 65. HISIM is used to help develop baseline projections (which incorporate the assumption that current law generally remains the same) and also to model proposed changes in policies that affect health insurance coverage.
Currently, CBO is developing and testing a new version of HISIM to respond to continued Congressional interest in understanding the effects of legislative proposals that significantly affect health insurance coverage. The new model will be used to help develop CBO’s spring 2019 baseline projections and subsequent cost estimates.
Presentation by Jessica Banthin, Deputy Assistant Director in CBO’s Health, Retirement, and Long-Term Analysis Division (HRLD), and Alexandra Minicozzi, Chief of HRLD’s Health Insurance Modeling Unit, to CBO’s panel of health advisers.
This presentation explains how much the federal government spends on the major health care programs: Medicare, Medicaid, the Children’s Health Insurance Program, and marketplace subsidies and related expenditures. In 2018, about 155 million people were enrolled in those programs. CBO projects that net outlays for the programs will grow from about $1.0 trillion in 2018 to about $2.0 trillion in 2028.
Presentation by Jessica Banthin, Deputy Assistant Director in CBO’s Health, Retirement, and Long-Term Analysis Division, at the Alliance for Health Policy Summit on Health Care Costs in America.
HISIM generates estimates of health insurance coverage and premiums for the U.S. population under age 65. CBO’s analysts use that model to develop baseline projections and to simulate the effects of proposed changes to policies involving health insurance coverage.
On June 19, two analysts will explain how HISIM is used to help estimate the cost of a proposal affecting health insurance coverage and how a new version of the model is being developed to enhance CBO’s analytic capabilities.
Presentation by Jessica Banthin, Deputy Assistant Director in CBO’s Health, Retirement, and Long-Term Analysis Division (HRLD), and Alexandra Minicozzi, Chief of HRLD’s Health Insurance Modeling Unit, at the Bipartisan Policy Center.
CBO analysts use the agency’s revised health insurance simulation model, HISIM2, to generate estimates of health insurance coverage and premiums for the population under age 65. The model is used in conjunction with other models to develop baseline budget projections (which incorporate the assumption that current law generally remains the same). It is also used to estimate the effects of proposed changes in policies that affect health insurance coverage. This presentation provides an overview of the model.
This presentation explains the process followed by CBO and the staff of the Joint Committee on Taxation (JCT) when estimating the costs of legislative proposals affecting health insurance coverage. An example is the agencies’ estimate of how repealing the individual mandate to have health insurance would affect federal deficits.
Presentation by Sarah Masi, an analyst in CBO’s Budget Analysis Division, at a Congressional Research Service seminar on CBO’s methods for developing cost estimates.
The federal government subsidizes health insurance for most Americans through a variety of programs and tax provisions. In 2017, net subsidies for people under age 65 will total $705 billion, CBO and the staff of the Joint Committee on Taxation (JCT) estimate.
This presentation provides an overview of CBO and JCT’s current baseline projections of health insurance coverage and how those projections have changed since March 2016, highlighting changes in Medicaid and CHIP enrollment and nongroup coverage.
Presentation by Jessica Banthin, Deputy Assistant Director in CBO’s Health, Retirement, and Long-Term Analysis Division, at a Congressional Research Service seminar on CBO’s methods for developing cost estimates.
International Journal of Pharmaceutical Science Invention (IJPSI) is an international journal intended for professionals and researchers in all fields of Pahrmaceutical Science. IJPSI publishes research articles and reviews within the whole field Pharmacy and Pharmaceutical Science, new teaching methods, assessment, validation and the impact of new technologies and it will continue to provide information on the latest trends and developments in this ever-expanding subject. The publications of papers are selected through double peer reviewed to ensure originality, relevance, and readability. The articles published in our journal can be accessed online.
To prepare its spring 2019 baseline budget projections, CBO is using new sources of data as inputs and has completely revamped the way it models consumers’ and employers’ behavior. To that end, it has developed HISIM2, a new version of the model CBO uses to generate estimates of health insurance coverage and premiums for the population under age 65. The model is used in conjunction with other models to develop baseline budget projections (which incorporate the assumption that current law generally remains the same). It is also used to estimate the effects of proposed changes in policies that affect health insurance coverage.
HISIM2 incorporates new base data, including data from surveys and administrative data. It changes the way individuals and families are projected to choose among coverage options. And it changes the way firms are projected to take workers’ preferences into account when deciding whether to offer employment-based coverage.
CBO’s new health insurance simulation model creates synthetic firms that mimic the real-world variations between firms to model employers’ decisions about whether to offer employment-based health insurance.
Presentation by Alexandra Minicozzi, a Unit Chief in CBO’s Health, Retirement, and Long-Term Analysis Division, at the 8th Annual Conference of the American Society of Health Economists.
HISIM2 is an updated version of the model CBO uses to generate estimates of health insurance coverage and premiums for people under age 65. The model is used along with other models to develop CBO’s baseline budget projections (which incorporate the assumption that current law generally remains the same). It is also used to estimate the effects of proposed changes in policies that affect health insurance coverage.
Presentation by Chapin White, CBO's Deputy Director of Health Analysis, to the Leadership Fellowship Program at the National Hispanic Medical Association.
CBO's analyses of the distribution of household income rely on the Census Bureau's Current Population Survey (CPS) for information about receipt of government transfers, particularly means-tested transfers. CPS respondents underreport their receipt of those transfers, and that underreporting has increased over the past few decades. This presentation shows how CBO adjusts for the underreporting of means-tested transfers in its distributional analyses.
CBO’s health insurance simulation model (HISIM) generates estimates of health insurance coverage and premiums for the population under age 65. HISIM is used to help develop baseline projections (which incorporate the assumption that current law generally remains the same) and also to model proposed changes in policies that affect health insurance coverage.
Currently, CBO is developing and testing a new version of HISIM to respond to continued Congressional interest in understanding the effects of legislative proposals that significantly affect health insurance coverage. The new model will be used to help develop CBO’s spring 2019 baseline projections and subsequent cost estimates.
Presentation by Jessica Banthin, Deputy Assistant Director in CBO’s Health, Retirement, and Long-Term Analysis Division (HRLD), and Alexandra Minicozzi, Chief of HRLD’s Health Insurance Modeling Unit, to CBO’s panel of health advisers.
This presentation explains how much the federal government spends on the major health care programs: Medicare, Medicaid, the Children’s Health Insurance Program, and marketplace subsidies and related expenditures. In 2018, about 155 million people were enrolled in those programs. CBO projects that net outlays for the programs will grow from about $1.0 trillion in 2018 to about $2.0 trillion in 2028.
Presentation by Jessica Banthin, Deputy Assistant Director in CBO’s Health, Retirement, and Long-Term Analysis Division, at the Alliance for Health Policy Summit on Health Care Costs in America.
HISIM generates estimates of health insurance coverage and premiums for the U.S. population under age 65. CBO’s analysts use that model to develop baseline projections and to simulate the effects of proposed changes to policies involving health insurance coverage.
On June 19, two analysts will explain how HISIM is used to help estimate the cost of a proposal affecting health insurance coverage and how a new version of the model is being developed to enhance CBO’s analytic capabilities.
Presentation by Jessica Banthin, Deputy Assistant Director in CBO’s Health, Retirement, and Long-Term Analysis Division (HRLD), and Alexandra Minicozzi, Chief of HRLD’s Health Insurance Modeling Unit, at the Bipartisan Policy Center.
CBO analysts use the agency’s revised health insurance simulation model, HISIM2, to generate estimates of health insurance coverage and premiums for the population under age 65. The model is used in conjunction with other models to develop baseline budget projections (which incorporate the assumption that current law generally remains the same). It is also used to estimate the effects of proposed changes in policies that affect health insurance coverage. This presentation provides an overview of the model.
This presentation explains the process followed by CBO and the staff of the Joint Committee on Taxation (JCT) when estimating the costs of legislative proposals affecting health insurance coverage. An example is the agencies’ estimate of how repealing the individual mandate to have health insurance would affect federal deficits.
Presentation by Sarah Masi, an analyst in CBO’s Budget Analysis Division, at a Congressional Research Service seminar on CBO’s methods for developing cost estimates.
The federal government subsidizes health insurance for most Americans through a variety of programs and tax provisions. In 2017, net subsidies for people under age 65 will total $705 billion, CBO and the staff of the Joint Committee on Taxation (JCT) estimate.
This presentation provides an overview of CBO and JCT’s current baseline projections of health insurance coverage and how those projections have changed since March 2016, highlighting changes in Medicaid and CHIP enrollment and nongroup coverage.
Presentation by Jessica Banthin, Deputy Assistant Director in CBO’s Health, Retirement, and Long-Term Analysis Division, at a Congressional Research Service seminar on CBO’s methods for developing cost estimates.
International Journal of Pharmaceutical Science Invention (IJPSI) is an international journal intended for professionals and researchers in all fields of Pahrmaceutical Science. IJPSI publishes research articles and reviews within the whole field Pharmacy and Pharmaceutical Science, new teaching methods, assessment, validation and the impact of new technologies and it will continue to provide information on the latest trends and developments in this ever-expanding subject. The publications of papers are selected through double peer reviewed to ensure originality, relevance, and readability. The articles published in our journal can be accessed online.
Opportunities and Barriers in Pharmaceutical Pricing: Average Manufacturer Pr...Epstein Becker Green
Part 2 of a webinar series that examines the average manufacturer price (“AMP”) Final Rule and its effect on drug pricing and contracting. Hosted by an Epstein Becker Green and EBG Advisors.
The long-awaited issuance of the Final Rule addressing AMP under the Medicaid Drug Rebate Program has provided clarity in some respects but left other issues open to interpretation. In the wake of the Final Rule, other regulatory developments are already showing signs of further impacting many of the same issues.
Using the AMP Final Rule as a baseline, we will address the evolution of some of the most significant issues affecting drug pricing and contracting. We hope you can attend one or both of the sessions in this two-part series.
In this session, Dr. Samuel R. Nussbaum, M.D., Strategic Consultant at EBG Advisors, and Lesley R. Yeung, Associate at Epstein Becker Green, will examine the pay-for-value and alternative approaches to pharmaceutical pricing. The speakers will discuss opportunities and barriers as well as highlight real-world examples.
http://www.ebglaw.com/events/the-effect-of-the-average-manufacturer-price-final-rule-on-drug-pricing-and-contracting-part-2-opportunities-and-barriers-in-pharmaceutical-pricing/
These materials have been provided for informational purposes only and are not intended and should not be construed to constitute legal advice. The content of these materials is copyrighted to Epstein Becker & Green, P.C. ATTORNEY ADVERTISING.
Historically, the medical device industry has been highly attractive and relatively stable. As a consequence, established players have been able to compete successfully across the device spectrum, applying common business models and processes without much need for differentiation.
The future, however, is very different as disruptive change is underway. Companies will need to look at new segments and offer end-to-end solutions to secure additional revenue and maintain their profit margins.
Presentation by Jared Jageler, David Adler, Noelia Duchovny, and Evan Herrnstadt, analysts in CBO’s Microeconomic Studies and Health Analysis Divisions, at the Association of Environmental and Resource Economists Summer Conference.
Presentation by Mark Hadley, CBO's Chief Operating Officer and General Counsel, at the 2nd NABO-OECD Annual Conference of Asian Parliamentary Budget Officials.
Presentation by Daria Pelech, an analyst in CBO’s Health Analysis Division, at the Center for Health Insurance Reform McCourt School of Public Policy, Georgetown University.
This slide deck highlights CBO’s key findings about the outlook for the economy as described in its new report, The Budget and Economic Outlook: 2024 to 2034.
Presentation by CBO analysts Rebecca Heller, Shannon Mok, and James Pearce, and Census Bureau research economist Jonathan Rothbaum at the American Economic Association Annual Meeting, Committee on Economic Statistics.
Presentation by Eric J. Labs, an analyst in CBO’s National Security Division, at the Bank of America 2024 Defense Outlook and Commercial Aerospace Forum.
Presentation by Elizabeth Ash, William Carrington, Rebecca Heller, and Grace Hwang of CBO’s Labor, Income Security, and Long-Term Analysis and Health Analysis divisions to the Children’s Health Group, American Academy of Pediatrics.
Presentation by Molly Dahl, Chief of CBO’s Long-Term Analysis Unit, at a meeting of the National Conference of State Legislatures’ Budget Working Group.
In the President’s 2024 budget request, total military compensation is $551 billion, including veterans' benefits. That amount represents an increase of 134 percent since 1999 after removing the effects of inflation.
A process server is a authorized person for delivering legal documents, such as summons, complaints, subpoenas, and other court papers, to peoples involved in legal proceedings.
Russian anarchist and anti-war movement in the third year of full-scale warAntti Rautiainen
Anarchist group ANA Regensburg hosted my online-presentation on 16th of May 2024, in which I discussed tactics of anti-war activism in Russia, and reasons why the anti-war movement has not been able to make an impact to change the course of events yet. Cases of anarchists repressed for anti-war activities are presented, as well as strategies of support for political prisoners, and modest successes in supporting their struggles.
Thumbnail picture is by MediaZona, you may read their report on anti-war arson attacks in Russia here: https://en.zona.media/article/2022/10/13/burn-map
Links:
Autonomous Action
http://Avtonom.org
Anarchist Black Cross Moscow
http://Avtonom.org/abc
Solidarity Zone
https://t.me/solidarity_zone
Memorial
https://memopzk.org/, https://t.me/pzk_memorial
OVD-Info
https://en.ovdinfo.org/antiwar-ovd-info-guide
RosUznik
https://rosuznik.org/
Uznik Online
http://uznikonline.tilda.ws/
Russian Reader
https://therussianreader.com/
ABC Irkutsk
https://abc38.noblogs.org/
Send mail to prisoners from abroad:
http://Prisonmail.online
YouTube: https://youtu.be/c5nSOdU48O8
Spotify: https://podcasters.spotify.com/pod/show/libertarianlifecoach/episodes/Russian-anarchist-and-anti-war-movement-in-the-third-year-of-full-scale-war-e2k8ai4
What is the point of small housing associations.pptxPaul Smith
Given the small scale of housing associations and their relative high cost per home what is the point of them and how do we justify their continued existance
ZGB - The Role of Generative AI in Government transformation.pdfSaeed Al Dhaheri
This keynote was presented during the the 7th edition of the UAE Hackathon 2024. It highlights the role of AI and Generative AI in addressing government transformation to achieve zero government bureaucracy
Understanding the Challenges of Street ChildrenSERUDS INDIA
By raising awareness, providing support, advocating for change, and offering assistance to children in need, individuals can play a crucial role in improving the lives of street children and helping them realize their full potential
Donate Us
https://serudsindia.org/how-individuals-can-support-street-children-in-india/
#donatefororphan, #donateforhomelesschildren, #childeducation, #ngochildeducation, #donateforeducation, #donationforchildeducation, #sponsorforpoorchild, #sponsororphanage #sponsororphanchild, #donation, #education, #charity, #educationforchild, #seruds, #kurnool, #joyhome
This session provides a comprehensive overview of the latest updates to the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (commonly known as the Uniform Guidance) outlined in the 2 CFR 200.
With a focus on the 2024 revisions issued by the Office of Management and Budget (OMB), participants will gain insight into the key changes affecting federal grant recipients. The session will delve into critical regulatory updates, providing attendees with the knowledge and tools necessary to navigate and comply with the evolving landscape of federal grant management.
Learning Objectives:
- Understand the rationale behind the 2024 updates to the Uniform Guidance outlined in 2 CFR 200, and their implications for federal grant recipients.
- Identify the key changes and revisions introduced by the Office of Management and Budget (OMB) in the 2024 edition of 2 CFR 200.
- Gain proficiency in applying the updated regulations to ensure compliance with federal grant requirements and avoid potential audit findings.
- Develop strategies for effectively implementing the new guidelines within the grant management processes of their respective organizations, fostering efficiency and accountability in federal grant administration.
Many ways to support street children.pptxSERUDS INDIA
By raising awareness, providing support, advocating for change, and offering assistance to children in need, individuals can play a crucial role in improving the lives of street children and helping them realize their full potential
Donate Us
https://serudsindia.org/how-individuals-can-support-street-children-in-india/
#donatefororphan, #donateforhomelesschildren, #childeducation, #ngochildeducation, #donateforeducation, #donationforchildeducation, #sponsorforpoorchild, #sponsororphanage #sponsororphanchild, #donation, #education, #charity, #educationforchild, #seruds, #kurnool, #joyhome
Jennifer Schaus and Associates hosts a complimentary webinar series on The FAR in 2024. Join the webinars on Wednesdays and Fridays at noon, eastern.
Recordings are on YouTube and the company website.
https://www.youtube.com/@jenniferschaus/videos
1. Presentation to the Health Economics Seminar Cosponsored by
Boston University, Harvard University, and the Massachusetts Institute of Technology
February 2, 2022
Chris Adams
Health Analysis Division
CBO’s Model of New Drug
Development
2. 1
CBO’s model is:
▪ Intended to help the Congress understand the effect that legislative
proposals would have on the development of new drugs
▪ Used to produce alternatives to the elasticity estimates reported in the
literature that CBO can present along with its estimates of the budgetary
cost of legislation
Potential policies that could be analyzed with the model include:
▪ Allowing the Secretary of Health and Human Services (HHS) to negotiate
drug prices
▪ Placing pricing restrictions on drug manufacturers
▪ Increasing funding of preclinical drug development
▪ Reducing requirements for marketing approval
▪ Providing advanced market commitments
▪ Allowing easier entry for generic and biosimilar drugs
A Model of New Drug Development
3. 2
See Congressional Budget Office, Negotiation Over Drug Prices in Medicare (May 2019), www.cbo.gov/publication/55270.
Under current law:
▪ The Secretary of HHS is not allowed to negotiate prices for drugs
purchased by Medicare.
▪ Medicare Part D provides prescription drug coverage for seniors.
– Prices are negotiated between manufacturers and insurers.
– The federal government reimburses insurers.
▪ Medicare Part B covers provider services, including infused drugs such as
chemotherapy.
Changes proposed under Build Back Better (November 2021):
▪ Prices would be negotiated for Medicare only; an inflation rebate would
apply to drug purchases covered by Medicare and commercial insurers.
▪ Would apply only to drugs that have been on the market for many years.
CBO’s previous finding: Allowing price negotiations would not, in and of itself,
lead to lower prices.
Background on Drug Price Negotiation
4. 3
See Congressional Budget Office, cost estimate for H.R. 3, Elijah E. Cummings Lower Drug Costs Now Act (December 10, 2019), www.cbo.gov/publication/55936.
Changes proposed under H.R. 3, The Elijah E. Cummings Lower Drug Costs Now
Act (2019–2020)
▪ Allow the HHS Secretary to negotiate drug prices for Medicare Part D.
▪ Price would be available to all parties in the U.S.
▪ Prices of 25 drugs with highest Medicare spending would be negotiated first.
CBO estimates that:
▪ New (expensive) drugs would be priced at 80% of the price that would have
been set under current law.
▪ Global pharmaceutical revenues would be reduced by 19%.
Modeled policy specifications:
▪ A reduction in revenues for the top quintile of revenue distribution, increasing
from 15% to 25% over the quintile.
▪ A 200 basis-point increase in financing costs associated with removing an
estimated $900 billion from the industry.
Modeling the Effects of Government Price Negotiations on
Prescription Drugs
5. 4
See Christopher P. Adams, CBO’s Simulation Model of New Drug Development, Working Paper 2021-09 (Congressional Budget Office, August 2021),
www.cbo.gov/publication/57010.
Impact of Negotiation on Number of New Drugs
Entering the Market
The policy is implemented in year
zero, but the full difference is not
reached until after year 20. The
policy is associated with a long-run
reduction of 10% in the number of
new drugs.
The number of new drugs in year
zero is set at the average for 2015
to 2019.
The results differ from the results in
the August 2021 working paper
because of technical improvements
to the model that now allow it to
account for these three factors: the
policy’s effects on financing costs,
its effects on decisions made
during preclinical development, and
an accelerated approval process.
7. 6
BLA = Biologics License Application; FDA = Food and Drug Administration; IND = Investigational New Drug; NDA = New Drug Application.
The Evaluation and Research Stages of the
Drug Development Process
9. 8
To bring a drug to market, the firm is assumed to have four decision points:
phase 0 (preclinical), phase I, phase II, and phase III.
At each decision point, the firm observes expected costs and expected returns
for its candidate drug. If expected returns are greater than expected costs, the
firm chooses to enter the development stage.
The model works by drawing a large number of simulated drugs from the joint
distribution of expected returns and expected costs. Note that the value of each
draw is assumed to be independent across the decision points for the same drug
candidate.
CBO estimates parameters of the distribution using data on net revenues and
survey results on costs reported in the literature.
Model Overview
10. 9
Joint Distribution of Expected Costs and Returns
at Beginning of Phase III
The figure shows, in a log
scale, the estimated joint
distribution of expected returns
and costs with the H.R. 3-like
policy (red dots) and without
the policy (X marks) for drugs
entering phase III. Only drugs
above the 40th percentile of the
distribution of expected returns
are included; for those drugs,
the policy leads to a downward
shift in expected returns (X
mark to red dot). The gray line
represents the break-even
point. Simulated drugs above
and to the left of the line have
expected returns greater than
expected costs and would enter
phase III.
12. 11
Use data on Medicare Part D spending by drug.
▪ Data from 2010 to 2018
▪ Net prices (include rebates paid by manufacturers)
▪ Aggregate NDC-level data up to “ingredient” level
Regress revenues on “time on market.”
▪ Quantile regression for each percentile
▪ Cubic in time on market and a time trend
Estimate the distribution of revenues.
▪ Use coefficient estimates
▪ Sum up using weighted average cost of capital (WACC)
Multiply up to global revenues using estimates from the IQVIA Institute for
Human Data Science.
Estimates of Revenues
13. 12
Percentiles of Estimated Lifetime Returns From Medicare Part D
CBO estimates the distribution of
revenues over the lifetime of a
drug in Medicare Part D. Each
line represents the estimated
relationship between revenues
and the number of years on the
market at each percentile.
CBO uses data on revenues net
of rebates for Medicare Part D. To
estimate the relationship, CBO
uses a cubic that includes a term
to account for the trend in net
prices. Revenues are estimated
at the ingredient level.
14. 13
Estimated Distribution of Lifetime Returns From Medicare Part D
The figure shows CBO’s
estimate of the distribution of
lifetime revenues for Medicare
Part D drugs in a log scale of
dollars. Using data from 2010 to
2018, CBO found that some
drugs (4 percent) earn less than
$10,000, most (81 percent) earn
more than $1 million, and only a
few (7 percent) earn more than
$10 billion. The discounted
present value of the sum of
revenues net of rebates uses a
discount rate of 0.086 (the same
as the estimated WACC).
Revenues are estimated at the
ingredient level.
16. 15
See Joseph A. DiMasi, Henry G. Grabowski, and Ronald W. Hansen, “Innovation in the Pharmaceutical Industry: New Estimates of R&D Costs,” Journal of Health Economics, vol. 47
(May 2016), pp. 20–33, https://doi.org/10.1016/j.jhealeco.2016.01.012.
Authors selected a sample of drugs fully developed by a small set of biotech
firms and surveyed those firms about:
▪ Expenditures on each drug candidate for each phase of development
▪ The time each drug candidate spent in each phase of development
The study reported the following:
▪ Fitted distributions of expenditures for each phase (I to III) and fitted
distributions of time in development for each phase (0 to III)
▪ Moments of the joint distribution of expenditures and time in development
for each phase (I to III)
▪ Average expenditures per project in phase 0
▪ Average time from development to market
CBO uses those survey data to estimate costs.
Survey Data From DiMasi et al. (2016)
17. 16
Distribution parameters: shift = −10.880; scale = 5.204; shape = 0.928
Estimated Distribution of Expenditures in Phase III
Estimates of expenditures
are based on the survey of
pharmaceutical
manufacturers reported in
DiMasi et al. (2016). The
authors report the fitted
distribution of expenditures.
The figure presents the
estimated log-normal
distribution of expenditures
in phase III.
Figure 3. Fitted Distribution (lognormal) of Phase III costs
(millions of 2013 dollars)
Distribution parameters: shift= -10.880, scale=5.204, shape= 0.928
0.000
0.001
0.002
0.003
0.004
Probability
Density
Phase III cost
Percentile Cost
10th 44.5
25th 86.4
50th 171.0
75th 329.3
90th 586.7
Phase III Cost
(Millions of dollars)
Probability
Density
18. 17
See Aswath Damodaran, “Cost of Capital by Sector (U.S.)” (accessed December 8, 2020), http://tinyurl.com/171f0kqm; and Scott E. Harrington, “Cost of Capital for Pharmaceutical,
Biotechnology, and Medical Device Firms,” in Patricia M. Danzon and Sean Nicholson, eds., The Oxford Handbook of the Economics of the Biopharmaceutical Industry (Oxford
University Press, 2012), pp. 75–99, https://doi.org/10.1093/oxfordhb/9780199742998.013.0004.
Phases I to III:
▪ Use reported fitted curves and moments to calibrate a joint distribution of
expenditures and time in development for each phase.
▪ Use reported time from development market and WACC (from Damodaran
analysis) to draw a simulated set of capitalized costs.
Phase 0:
▪ Use reported average expenditures, fitted distribution of time in
development, and WACC + 200 basis points.
▪ Based on discussion in DiMasi et al. (2016) and estimates presented in
Harrington (2012).
Cost Estimates for Phases 0 to III
19. 18
Standard approval:
▪ Estimate costs for phase 0 to phase III.
▪ Estimate time from current phase to entry after phase III.
▪ Estimate revenues after phase III.
Accelerated approval:
▪ Estimate costs for phase 0 to phase II.
▪ Estimate time from current phase to entry after phase II.
▪ Estimate revenues minus phase III expenditures.
Procedure for Estimating Costs of Standard and Accelerated
Approval Processes
21. 20
𝑅 = ቊ
𝑅∗
𝑖𝑓 𝑅∗
− 𝐶∗
> 0
. 𝑜𝑡ℎ𝑒𝑟𝑤𝑖𝑠𝑒
𝐶 = ቊ
𝐶∗
𝑖𝑓 𝑅∗
− 𝐶∗
> 0
. 𝑜𝑡ℎ𝑒𝑟𝑤𝑖𝑠𝑒
We are interested in determining the distribution of {𝑅∗
, 𝐶∗
}.
But we observed the distribution of R from one source and the distribution of C
from a different source.
Can we determine the distribution of {𝑅∗
, 𝐶∗
}?
Yes, but we must make structural assumptions and parametric restrictions to do so.
Identification: Roy Model
23. 22
A
D
Identification: Example
By observing the probability of
entry for drugs with low
revenues, we can infer that
those drugs also had low costs.
That observation allows us to
determine A.
B
Revenue
Cost
C
A
A
24. 23
A
D
Identification: Example
By observing the probability of
entry for drugs with high
revenues, we can determine
that they have either low costs
or high costs. That allows us to
determine the value of the
parameters C + D, but not C
and D separately.
B
Revenue
Cost
D
C
A
C
25. 24
A
D
Identification: Example
By observing the probability of
entry for drugs with low costs, we
cannot tell if they have high
revenues or low revenues, but we
can determine the value of A + C.
Because we already determined A,
we can now determine C. We
already know C + D, so once we
have determined C, we can
calculate D. Finally, we can
determine B because A + B +
C + D = 1.
B
Revenue
Cost
C
A
C
A
27. 26
Phase III trials: 0.7% decrease
Phase II trials:
▪ Standard approval: 3.4% decrease
▪ Accelerated approval: 1.2% decrease
Phase I trials:
▪ Standard approval: 4.8% decrease
▪ Accelerated approval: 5.1% decrease
▪ Expected revenues are 25% lower for
all drugs
Phase 0 (preclinical development):
▪ Standard approval: 1.5% decrease
▪ Accelerated approval: 2.5% decrease
Effects of Price Negotiation Policy on the Number of
New Drugs Entering the Market
28. 27
See Margaret E. Blume-Kohout, “Does Targeted, Disease-Specific Public Research Funding Influence Pharmaceutical Innovation?,” Journal of Policy Analysis and Management,
vol. 31, no. 3 (Summer 2012), pp. 641–660, https://doi.org/10.1002/pam.21640.
Phase I trials: 1.2% increase after 12 years
Estimate of the response to additional NIH
funding is based on the elasticity estimate of
0.45 from Blume-Kohout (2012).
NIH funding is assumed to go back to
baseline amount after 10 years.
Effects of Price Negotiation Policy Combined With a
$10 Billion Increase in NIH Funding Over 10 Years
30. 29
CBO’s model of new drug development is intended to help the Congress
understand the effect that legislative proposals would have on the development
of new drugs.
It is used to produce alternatives to elasticity estimates presented in the literature.
A price negotiation policy would have little effect for the first 10 years, but in the
long run, such a policy would decrease the number of new drugs entering the
market by 10%, CBO estimates.
Conclusion
31. 30
See Congressional Budget Office, “Estimated Budgetary Effects of Title XIII, Committee on Ways and Means, H.R. 5376, the Build Back Better Act, as Posted on the Website of the
House Committee on Rules on November 3, 2021 (Rules Committee Print 117-18), as Amended by Yarmuth Amendment 112” (November 18, 2021), note h,
www.cbo.gov/publication/57626; and Christopher P. Adams, CBO’s Simulation Model of New Drug Development, Working Paper 2021-09 (Congressional Budget Office,
August 2021), www.cbo.gov/publication/57010.
Changes made to the model:
▪ The effects that a policy would have on financing costs are now included in
the main model.
▪ The model can now be used to analyze the effect of a policy on preclinical
development (phase 0), which involves higher capital costs than other
phases. The process for estimating costs thus differs slightly from that used
for other phases.
▪ The model now accounts for an accelerated approval process (in which
phase III is conducted after a drug enters the market).
In the working paper, the sample policy was estimated to result in an 8%
reduction in the number of new drugs entering the market. Using the revised
model, CBO now estimates that the policy would result in a 10% reduction.
Updates Made to CBO’s Model Since the Publication of the
Working Paper Describing It