PAYGO Sequestration
CBO released updated estimates of the effects of Public Law 119-21 (the reconciliation bill). Overall, the CBO found that without Congressional action, the law would trigger the PAYGO (4% sequestration) on Medicare and reduce Medicare spending by up to $491 billion. It’s important to note that the PAYGO sequestration has never been implemented, and the underlying laws about sequestration are vague about how implementation would occur, especially how it would interact with the existing 2% sequestration (The Budget Control Act sequestration). A recent Congressional Research Service report on PAYGO Sequestration noted, “If a PAYGO sequester were to be triggered, neither the Statutory PAYGO Act nor the Budget Control Act include any explicit directions as to how the two sequesters would be implemented alongside each other.” Historically, waiving PAYGO occurs as part of a budget bill.
Tariffs
The US and EU provided more details on their trade agreement. Europe’s pharmaceutical sector, the U.S.’s top source of pharmaceutical imports, will be capped at 15%, except for generic drugs, which will receive a higher most favored nation rate. While tariffs could change, the agreement would put upward pressure on EU drug prices and/or reduce the amount of EU drugs (especially generics).
Lawsuit Updates
- Elevance lost its lawsuit against HHS, challenging HHS’s calculation for Elevance’s Medicare Advantage star ratings. Elevance accused the government of improper rounding. Elevance has not yet announced if they will challenge the ruling.
- Court watchers are keeping an eye on a potential ruling involving the ACA Program Integrity rule. The rule is scheduled to go into effect on August 25th unless a court ruling blocks it. There are two different lawsuits pending against the rule, both asking the judge to impose a temporary injunction before the rule goes into effect. Should an injunction be approved, it would only affect the states that are part of the lawsuit.
