InBrief: CBO Estimates H.R. 1919 Would Exceed Unfunded Mandate Threshold For Private Entities

WASHINGTON - JANUARY 26: The Congressional Budget Office made copies of its Budget and Economic Outlook for FY 2010 to 2020 available to reporters and the public January 26, 2010 in Washington, DC. The CBO's latest estimates see a $1.35 trillion deficit for the current budget year, dropping to $980 billion next year only if a host of tax cuts enacted under President George W. Bush are allowed to expire at the end of the year. (Photo by Chip Somodevilla/Getty Images)Just one business day before the U.S. House of Representatives is scheduled to vote on H.R. 1919, Safeguarding America’s Pharmaceuticals Act of 2013, the Congressional Budget Office (CBO) published their estimates for the public and private costs to implement it relative to the Federal Unfunded Mandates Reform Act (UMRA).

CBO has determined that the costs to State, local, and tribal governments would be “…small and below the intergovernmental threshold established by UMRA…”.  However, they also estimate that the costs to private entities “…would exceed the threshold established in UMRA ($150 million in 2013, adjusted annually for inflation)”.

Interestingly, the CBO used the 2008 report by Accenture, and updated by NACDS in 2011, “Current Status of Safety of the U.S. Prescription Drug Distribution System” to determine costs to individual retail pharmacies.  Here is the link to the 2008 version.  I have not seen the 2011 updated version that the CBO references.  The CBO seems to have cut in half the minimum cost found by Accenture for the first year deployment in a retail pharmacy for the purposes of their estimates.  I should note that few people agreed with Accenture’s calculations at the time.

The problem with using the Accenture/NACDS cost projections for implementing H.R. 1919 at the pharmacy level is that the bill would impose a lot-based pedigree at least through 2027, and after that it might turn into the kind of package-level track & trace system envisioned by that 2008 report.  That is, the 2008 report projected costs for a totally different type of regulation than that which the current version of H.R. 1919 would result in.  In my mind, that disqualifies it as a valid source for estimating the cost of implementing H.R. 1919—even if you cut the Accenture/NACDS cost projections in half.

Despite the poor justification of their estimates, I don’t think this new CBO estimate is likely to have any significant impact on the vote in the House or the Senate.  The House is scheduled to vote on H.R. 1919 this evening after floor debate sometime between 2:00 pm and 6:30 pm today.