Inflation Reduction Act Favors Biologics Over Small Molecules: In The Long Term, This Could Partly Undermine Bill’s Effort To Contain Costs

Forbes January 15, 2023
Joshua Cohen

The Inflation Reduction Act’s (IRA) drug pricing provisions include as one of three main pillars, drug price negotiations between Medicare and drug makers for a limited subset of pharmaceuticals. Currently, the IRA has two different timelines for large and small molecule therapeutics: Large molecules – biologics – can be selected for negotiation 11 years following approval, while small molecule drugs are eligible 7 years after approval. For those biologics that are selected for price negotiation, their negotiated “fair prices” will be implemented 13 years after approval, while for small molecule drugs their prices will be enacted 9 years after approval.

Because the law gives small molecule drugs a shorter, 9-year post-approval window before their “fair prices” are implemented, executives in...

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