While patient groups view the United States’ new Inflation Reduction Act as a positive move towards capping out-of-pocket drug costs for older Americans, the innovative pharma industry, after aggressively lobbying against it, still argues that the new legislation will hamper drug development.

[The new law] is a significant step in the right direction and a potentially life-saving policy change for seniors.

Lisa Murdock, chief advocacy officer, the American Diabetes Association (ADA)

With this change in policy, which will allow Medicare, the federal health insurance program for Americans over 65, to negotiate lower prices on the top 10 drugs by sales volume as of 2026, legislators have overcome the pharma industry’s opposition to limiting their pricing power. “These measures are a big blow to pharma, which has had a stranglehold for decades, preventing us from making this move,” said House Speaker Nancy Pelosi, Democrat, California.  “Now, we have relaxed that stranglehold a bit. More to be done, but giving more leverage and more breathing room to America’s families.”

Several physician and patient groups also expressed their satisfaction over the change in policy, viewing it as a positive first step towards improving care, particularly for senior citizens. “The American College of Physicians (ACP) is pleased that the Senate passed the Inflation Reduction Act of 2022 yesterday. The legislation will help to improve access to health care and improve health for all-Americans,” said President Ryan D. Mire.

The American Diabetes Association (ADA), who has long advocated for co-pay caps for insulin was equally pleased: “… this first national copay cap is a significant step in the right direction and a potentially life-saving policy change for seniors,” said Lisa Murdock, chief advocacy officer, ADA.

The National Organization for Rare Disorders (NORD) also saw the new law as a positive advance: “The Inflation Reduction Act is a significant step forward in helping ensure that individuals and families with rare diseases have access to the comprehensive health care they need to survive and thrive,” said President and CEO, Peter L. Saltonstall.

However, the drug pricing reach of the new bill is limited. Negotiations will be focused on just 10 drugs in the first year with the possibility of going up to a total of 60 by 2029. And beyond this limited number of prescription drugs, the law does not apply to any newly-approved drugs during their first nine to 13 years of market exclusivity.

 

We will continue to advocate for policies that give patients better and more affordable access to lifesaving treatments and for a system that supports innovation.

Stephen J. Ubl, CEO and President of The Pharmaceutical Research and Manufacturers of America (PhRMA)

 

Yet after lobbying aggressively against the new legislation, innovators have demonstrated their opposition. “The president signed into law a partisan set of policies that will lead to fewer new treatments and doesn’t do nearly enough to address the real affordability problems facing patients … We will explore every opportunity to mitigate the harmful impacts from the unprecedented government price setting system being put in place by this law. We will continue to advocate for policies that give patients better and more affordable access to lifesaving treatments and for a system that supports innovation,” said Stephen J. Ubl, CEO and President of The Pharmaceutical Research and Manufacturers of America (PhRMA).

The biotech sector was not supportive of the law either. Michelle McMurry-Heath, president and CEO of the Biotechnology Innovation Organization (BIO), claimed the law would “ultimately harm the very patients and seniors that lawmakers claim to be helping.”

Generics and biosimilars makers are also opposed: “The members of the Association for Accessible Medicines (AAM) and the Biosimilars Council are extremely disappointed by the Senate’s passage of legislation that will further frustrate patient access to safe, affordable generic and biosimilar medicines. The Senate has chosen to replace competition – the only proven way to provide patients relief from high brand drug prices – with a flawed framework for government price setting that will chill the development of, and reduce patient access to, lower-cost generic and biosimilar medicines,” said Dan Leonard, President & Chief Executive Officer.