Speaker of the House Nancy Pelosi speaks at the Atlantic Festival in Washington, September 24, 2019. Kevin Lamarque | Reuters

House Speaker Nancy Pelosi's bill to lower prescription drug prices would save Medicare $345 billion over 10 years, according to a preliminary analysis from the nonpartisan Congressional Budget Office. The savings wouldn't begin until 2023, assuming the bill gets passed by both the House and Senate and signed by President Donald Trump before the end of this year, the CBO said in the report released late Friday. The greatest savings would come in 2028 at $93 billion, according to the CBO, an independent agency that reviews congressional spending. The CBO said the largest savings would come from the provision that allows Medicare to negotiate lower prices on as many as 250 of the most expensive drugs per year and apply those discounts to private health plans across the U.S. The legislation includes a penalty on pharmaceutical companies that refuse to negotiate or fail to reach an agreement with the U.S. government, starting at 65% of the gross sales of the drug in question.

The lower prices under the legislation would immediately lower current and expected future revenues for pharmaceutical companies, according to the CBO. The plan would also alter drug manufacturers' incentives and have broad effects on the drug market, the CBO said. "A manufacturer that was dissatisfied with a negotiation could pull a drug out of the U.S. market entirely, though CBO expects that would be unlikely for drugs already being sold in the United States," CBO Director Phillip Swagel said in the report. Current rules prohibit the Department of Health and Human Services from negotiating drug prices on behalf of Medicare — the federal government's health insurance plan for the elderly. Private insurers use pharmacy benefit managers to negotiate drug rebates from pharmaceutical manufacturers in exchange for better coverage. Pelosi and other House Democratic leaders had been working on the plan for months. The legislation is expected to move through House committees to a vote on the floor as soon as the end of this month.