According tothe CBO, the result of the proposal would be huge savings totaxpayers, and far-reaching effects in the pharmaceutical industry.(Photo: Shutterstock)

(Bloomberg) –A drug-price proposal from Democrats in Congresswould save taxpayers $345 billion over a seven-year period,according to a new estimate, punching a hole in pharmaceuticalcompany sales and causing ripple effects in health care systemsaround the world.

The bill, H.R. 3, is backed by Speaker of the House Nancy Pelosiand other Democrats in the chamber. It would direct Medicare, theU.S. government health program for the elderly and disabled, to setpharmaceutical prices based on an index of what other developednations pay for top-selling drugs. For products not sold abroad,the government would set their price at a discount to what U.S.purchasers paid.

Related: States pass record number of laws to curb drugprices

The result would be huge savings to taxpayers, and far-reachingeffects in the pharmaceutical industry, according to the analysisreleased Friday by the nonpartisan Congressional Budget Office.

Drugmakers would raise their prices in other countries tocompensate for lower prices in the U.S. For new drugs,pharmaceutical companies would likely introduce them at higherprices to try and offset discounts. And there would be a slightdecrease in the number of new drugs developed, the CBOprojected.

With the toxic politics of impeachment pervading Washington —not to mention a wide gap between the Democrat-controlled House andthe Republican-led Senate — the bill is a longshot to become law.But the $345 billion risk to the drug industry shows just how highthe stakes can be in any drug price overhaul.

President Donald Trump has repeatedly called for the governmentto negotiate drug prices, and has even directly phoned industryleaders whose companies raised the cost of their products.

In the Senate, Republicans and Democrats have worked together ontheir own bill. Pushed by Senator Charles Grassley, the IowaRepublican, the package would cap drugmakers' price increases,pegged to inflation, and would limit out-of-pocket spending bypeople on Medicare.

The lawmakers have said the bill would save taxpayers around$100 billion over a decade.

Read more: 

• Political drama sidelines bipartisian effort tobring down drug prices
• GOP senators distancing themselves from drug pricereform
• Federal judge shoots down rule requiring drug pricedisclosures in TV ads

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