One year later: The upsides and downsides of the Inflation Reduction Act

Wednes­day is the one-year an­niver­sary of Pres­i­dent Joe Biden sign­ing the In­fla­tion Re­duc­tion Act in­to law, open­ing the door to the first gov­ern­ment ne­go­ti­a­tions of drug prices ever, as well as oth­er cost-con­tain­ing mea­sures that have al­ready start­ed to kick.

Ac­cord­ing to a new gov­ern­ment re­port on the IRA an­niver­sary, high­lights of what the new law has done in­clude:

• Cap out-of-pock­et costs for Part D ben­e­fi­cia­ries at $2,000 an­nu­al­ly, which the re­port es­ti­mates will re­duce en­rollee out-of-pock­et spend­ing by about $7.4 bil­lion an­nu­al­ly.
• Cap out-of-pock­et costs for cov­ered in­sulin prod­ucts in Medicare at $35 for each month­ly pre­scrip­tion un­der Part D and Part B. About 1.5 mil­lion Medicare ben­e­fi­cia­ries who use in­sulin would have saved about $750 mil­lion in 2020 had these caps been in place, the re­port says.
• Elim­i­nat­ed en­rollee cost shar­ing (an­nu­al out-of-pock­et costs were $234 mil­lion for 2021) for adult Medicare Part D vac­cines rec­om­mend­ed by the CDC’s Ad­vi­so­ry Com­mit­tee on Im­mu­niza­tion Prac­tices.
• Pe­nal­izes bio­phar­ma com­pa­nies for prices that rise faster than the rate of in­fla­tion.

But on the flip side, the bio­phar­ma in­dus­try and oth­er pro-in­dus­try in­ter­ests have sued the fed­er­al gov­ern­ment over the ne­go­ti­a­tion pro­vi­sions of the IRA, which these groups liken to price con­trols, say­ing that even though they don’t take ef­fect un­til 2026, they are al­ready hav­ing a chill­ing ef­fect on in­no­va­tion.

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