ARTICLE | Politics, Policy & Law

How the IRA disincentivizes new indications — and how to fix it

NPC suggests CMS could tweak Inflation Reduction Act implementation to incentivize continuing R&D

February 2, 2024 8:38 PM UTC

The biopharmaceutical industry and the Biden administration are portraying the Inflation Reduction Act’s drug pricing provisions as a cudgel that will beat profits out of drug companies. The IRA could, however, be reconceived as a more precise tool and wielded in ways that benefit patients. It could, for example, incentivize investments in new indications and punish companies that fail to take advantage of opportunities to advance medicine.

A new study in The American Journal of Managed Care from the National Pharmaceutical Council (NPC), an industry-funded think tank, shows how indiscriminate application of the IRA’s price-setting power would steer drug companies into behaviors that will hurt patients. Launches would be delayed and new uses of drugs, especially for rare conditions, would be unexplored...