President Biden's push to let Medicare negotiate the prices of more drugs sooner after they come to market won't become law any time soon. But some experts say even raising the topic could scare off investment into new treatments.

Why it matters: The possibility of Medicare having even more negotiating power increases uncertainty around future returns on today's R&D, and some economists argue that may ultimately make some investments too risky.

• Most Democrats still would happily strengthen the law they pushed through as part of last year's Inflation Reduction Act, arguing that it doesn't go far enough to curb drug costs.

Driving the news: In a preview of the fiscal 2024 budget the administration is rolling out today, the White House on Tuesday released its plan for extending Medicare's solvency for another 25 years.

• That includes allowing the program "to negotiate prices for more drugs and bringing drugs into negotiation sooner after they launch," although it doesn't offer any more detail.
• "Lowering drug prices while extending Medicare's solvency sure makes a lot more sense than cutting benefits," Biden wrote in a New York Times op-ed.

Between the lines: Democrats were only a few votes shy of making the law stronger last year. It wouldn't be hard to see them passing an expansion along the lines of Biden's proposal if they keep the White House and win big enough majorities in Congress.

• The Inflation Reduction Act limited negotiations to certain drugs that have been on the market for several years but don't have competition from generics. The federal health department in September will reveal the first 10 that will be subject to talks with manufacturers, with new prices to take effect at the beginning of 2026.

What they're saying: "Investing in risky assets with long development times is all about expectations. Firms are trying to predict what the market will look like 7-10 years in advance," tweeted Craig Garthwaite, a health economist and Northwestern University professor.

• "Continuing to send signals that price controls will expand ends the talking point that this is a 'limited' effort," he added.
• "The ink isn't even dry on the price setting provisions of the IRA, yet the administration is doubling down on a bad policy that is already negatively impacting R&D decisions in cancer, mental health and rare diseases, among others," said Priscilla VanderVeer, vice president for public affairs at PhRMA.

The big picture: The wide latitude that the law gives to the Health and Human Services secretary to negotiate prices — without a price floor — has already injected uncertainty into drugmakers and investors' projections, said American Enterprise Institute senior fellow Ben Ippolito.

• "All else equal, more uncertainty is costly," Ippolito said. The uncertainty exists partly "because policymakers are sure to push for expansions of the policy. But even independent of those changes, different administrations could conceivably use their authority in different ways."

Yes, but: Biden's proposal for expanded price negotiations shouldn't really surprise anyone, investors included.

• "Investors have known that if Democrats have complete control ... they will increase the number of drugs subject to negotiations. However, that's not a threat for the next couple of years, at least," said Raymond James analyst Chris Meekins.
• But even under future expansions, drugs will still be a good investment, he added. "There are few areas in health care outside of biotech where you can get the same potential returns ... if not biotech, then where?"
• When asked whether talk about expanding the law could disincentivize R&D investment today, Harvard professor Aaron Kesselheim responded with one word: "No."