The Inflation Reduction Act is a disaster. This is due partly to its effects on medical patients and innovation. Instead of improving patient care, the IRA’s misguided policies triggered devastating consequences by limiting access to lifesaving treatments, discouraging investment in new cures, and imposing billions in costs on the healthcare system.
In its final year in office, the Biden administration doubled down on these failed policies. It expanded government price controls on vital prescription drugs. It introduced a $21 billion “demonstration project” burdening taxpayers to cover up spiking Medicare premiums with massive insurer subsidies. Four days before leaving office, the administration targeted another round of medications for government-imposed price controls.
This heavy-handed government intervention is not only harming innovation but directly affecting the ability of patients to receive the best possible care. Specifically, the law includes provisions that create a “pill penalty” for small molecule drugs (which are usually produced in pill or tablet form). The “pill penalty” forces small-molecule drugs — often used to treat Alzheimer’s, Parkinsons and various cancers — into government price controls much earlier than biologic drugs. This difference in treatment will limit the availability of new lifesaving medicines as companies deprioritize this crucial research and development.
The numbers paint a stark picture. Roughly 87 percent of voters over 55 are concerned the “pill penalty” will lead to less investment in R&D. Such R&D produces cutting-edge small molecule medicines and therapies that can prevent, treat and cure many life-threatening diseases. The University of Chicago found this “pill penalty” could result in 188 fewer new small-molecule drugs over the next 20 years. These alarming statistics reveal what’s at stake for the many patients who are terrified. This will leave far too many waiting for innovative treatments that may no longer materialize.
The former administration’s approach also undercuts long-term affordability. The misalignment between the IRA’s promises and its real-world outcomes is glaring. Drug companies are already scaling back critical R&D, as the law increases the financial risks associated with developing new innovative treatments. Small-molecule drugs are easier to produce as lower-cost generics down the line. This provides broader access to essential medications that offer inexpensive alternatives to help treat conditions like debilitating neurologic diseases.
Thankfully, the bipartisan Ensuring Pathways to Innovative Cures Act offers a solution to eliminate the “pill penalty.” A Senate companion bill has also been introduced, reinforcing the pressing concern. This legislation would restore fairness by aligning the price control exemption for small-molecule drugs with biologics and extending it to 13 years. This critical fix would remove the IRA’s perverse incentive against small-molecule drug development. It would ensure continued investment in the innovative treatments on which patients rely.
The new administration and Congress are positioned to make necessary fixes to the IRA. Lawmakers should seize this moment to eliminate the “pill penalty” by including the EPIC Act in its reconciliation package. The stakes are too high to wait. Patients, taxpayers, and the future of medical innovation depend on it.
