Forbes March 6, 2024
Despite the concerns of the biopharma industry, the Inflation Reduction Act (IRA) has been enacted and with it, Medicare is allowed to negotiate the prices of drugs. It is believed that the IRA will save Medicare about $300 billion in drug costs in the coming decade – considerable savings for the government but also a considerable loss in revenues for industry. When one considers that biopharma invests 25% of top line revenues into R&D, these price negotiations, essentially price controls, will result in roughly $75 billion less devoted to drug discovery.
Moreover, there is another aspect of this provision of the IRA that is starting to be felt – “the small molecule penalty.” The IRA calls for price controls to...
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