Health Affairs June 9, 2023
When Congress passed the Inflation Reduction Act (IRA) of 2022, for the first time Medicare was granted the authority to negotiate payments for certain high-price brand-name prescription drugs. This new authority represents a seismic shift in the federal government’s efforts to address excessive prescription drug spending and promote maximally useful innovation. The law includes several restrictions on how many and which drugs can be selected each year, excluding drugs approved for a single rare disease condition and drugs that have not been on the market for at least nine years (13 for complex biologics). The Congressional Budget Office estimated that price negotiations will save the federal government about $102 billion over the next decade.
One reason that these price negotiations...