The Inflation Reduction Act (IRA) is expected to affect the biopharmaceutical industry across multiple dimensions, including pricing, insurance coverage, innovation, and competition. Our experts and professionals are actively analyzing the IRA’s regulatory framework. They have published and testified before Congress on its likely effects and proposed updates to the law to mitigate its potential adverse effects.
Podcast with guest speaker Celeste Saravia
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Celeste Saravia of Cornerstone Research joined DLA Piper’s podcast, Pricing Rules, to discuss antitrust considerations from the implementation of the Inflation Reduction Act (IRA). Dr. Saravia spoke about the potential long-term effects of the IRA, such as changes in incentives for price-setting behavior as well as investments into new drug development. She also discussed bundled discounts in the pharmaceutical industry, noting a lack of uniformity in standards across circuit courts when they evaluate whether a bundled discount is an anticompetitive attempt to foreclose a rival.
Coauthored by Darius Lakdawalla and Erin Trish
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The Inflation Reduction Act of 2022 (IRA) includes several consequential provisions aimed at reducing drug spending and increasing access to pharmaceuticals for millions of Americans. However, the provisions also limit insurers’ ability to implement cost-containment measures and may discourage investments in new drugs and indications. We offer three recommendations to mitigate these potential unintended consequences. First, the calculation of a “maximum fair price” for drugs should be transparent and focus on measured social value rather than price minimization. Second, post-market approval of new indications should be encouraged by delaying the government price-setting process when new indications are approved. Third, the government should exempt manufacturers from inflation rebate penalties if additional information (e.g., real-world evidence, new clinical trial data, or new indication approvals) demonstrates more value in a drug post-approval. Implementing these three strategies would balance the competing goals of incentivizing innovation, increasing patient access and reducing spending.
Coauthored by Darius Lakdawalla and Anup Malani
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Medicare drug price negotiation is almost upon us. The Inflation Reduction Act (IRA) mandates that the Centers for Medicare and Medicaid Services (CMS) implement a maximum fair price (MFP) for drug price negotiation beginning in 2026. How should CMS implement such a program given such a short timeline? We recommend a three-step approach to implementing the MFP that moves toward a drug pricing paradigm based on treatment value.
Coauthored by Alice Chen, Andrew Elzinga, and Penka Kovacheva
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The Inflation Reduction Act (IRA) was signed into law in August 2022 with the goal of curbing inflation by, among other things, lowering prescription drug prices. Notable prescription drug provisions of the IRA include the introduction of Medicare drug price negotiations, Medicare inflation rebates, and a redesign of the Medicare Part D benefit structure. Since the law’s passage, the Centers for Medicare & Medicaid Services (CMS) has issued a series of guidance memorandums on how these various provisions will be implemented. However, the full economic impact of the IRA on the pharmaceutical industry remains uncertain. In particular, there may be several unintended economic impacts on pricing, drug access, benefit design, innovation, and competition, particularly for biologics and biosimilar drugs.