Today, the Biden-Harris Administration announced ten medications that will be subject to the Democrats’ brand of Washington-knows-best price controls under which patients will see increased costs to get the drugs they rely on and research and development will be slowed for new cures coming to market. The Democrats’ so-called Inflation Reduction Act (IRA) – enacted thanks to Vice President Harris’ tie-breaking vote in the Senate – established a price-setting scheme that gives Washington bureaucrats the authority to control seniors’ access to care without achieving any meaningful reduction in prices for drugs, while jeopardizing America’s global leadership in drug innovation and medical breakthroughs.

“The Biden-Harris Administration is taking the tried and failed approach of imposing price controls and calling it a ‘negotiation’. Seniors’ Part D premiums are, as was predicted by Republicans and others, dramatically inflating due to passage of the IRA. The response from the White House is to celebrate while they bailout large insurance companies and shift the cost to taxpayers to cover up their failures. The Ways and Means Committee has held multiple hearings this Congress highlighting the dangers and harmful effects of the Democrats’ so-called Inflation Reduction Act, which the Biden-Harris Administration have willfully ignored.

“The truth is that while Joe Biden and Kamala Harris are taking a victory lap today, tomorrow’s seniors will see themselves priced out of their health care, with only the wealthiest Americans able to afford new cures, and future cures will never reach those who need them. Research and development of new drugs have already started to slow in the two years since Democrats passed the IRA, and once these price controls are firmly in place, we will see an even greater harmful impact on drug access and innovation. The Ways and Means Committee will keep fighting to ensure that American patients, not federal bureaucrats, decide the future of their health care,” said Ways and Means Committee Chairman Jason Smith (MO-08).

FACT SHEET: Impact of Democrats’ Drug Price-Setting Scheme

Witnesses at Ways and Means hearings in Salt Lake City, Utah and Washington D.C. shared the harmful impacts the IRA is having on bringing patients the next generation of treatments and cures, especially for rare diseases.

Field Hearing on Access to Health Care in America: Unleashing Medical Innovation and Economic Prosperity – Salt Lake City, Utah July 12, 2024

• Frank Watanabe, CEO, Arcutis Therapeutics: “The IRA has set up a disincentive for pursuing any follow-on indications for an Orphan drug. Historically, that’s been the model… some of the best cures out there are repurposed from a different initial indication. Companies are not pursuing those follow-on indications anymore precisely because [of] the IRA. Every day that this disincentive is in place is days that new innovations aren’t being developed for people who are suffering from rare diseases.”

Health Subcommittee Hearing on Examining Policies that Inhibit Innovation and Patient Access – Washington, D.C. May 10, 2023

• Darius Lakdawalla, PH.D., USC Schaffer: “It’s likely there will be reduction in innovation in rare disease because follow-on indications are now potentially penalized under the IRA. It’s also the case more generally there will be reductions in incentives to innovate. It’s notable though that rare disease often features very high unmet need for patients. And as an economist, I can tell you that means the value of any given health improvement is great because patients have so little health that even a given relatively little modest amount of health can be quite valuable.”

Key Facts:

Government and third-party analyses show the Democrats’ drug price-setting scheme will increase prescription drug prices and reduce access to more affordable, generic and biosimilar alternatives.

• “The [IRA’s drug provisions] would increase the launch prices for drugs that are not yet on the market relative to what such prices would be otherwise.” – Congressional Budget Office, August 2022

Impact on Drug Innovation

The IRA will derail and destroy current and future drug development, resulting in fewer cures and reduced innovation, according to research from the University of Chicago.

• 135 fewer new drugs
• 188 fewer new indications
• $663 billion drop in innovative research and development

Since the passage of the Inflation Reduction Act:

• 36 research programs have been discontinued
• 21 drugs discontinued

Source: Incubate Life Sciences Investment Tracker

Impact on America’s Economy

The IRA’s drug provisions will have devastating effects on the economy, eliminating jobs in important STEM fields and small businesses, according to research from Vital Transformation.

• 135,900 fewer direct biopharmaceutical jobs
• 676,000 fewer jobs across the U.S.
• 70% of clinical trials are run by small businesses

FACT SHEET: Impact of Democrats’ Drug Price-Setting Scheme

READ: Bicameral Leaders Call for Review of Cost-Shifting Drug Price Policy