BACKGROUND: The Inflation Reduction Act (IRA), passed in late 2022, includes several provisions to lower Medicare prescription drug costs and federal government drug spending. The bill is expected to have significant repercussions in the pharmaceutical industry.

OBJECTIVES: To understand the impact of the IRA on market access, pricing, and reimbursement and outline opportunities / methods that biopharmaceutical manufacturers can adapt.

METHODS: A secondary literature review was conducted to define the specifics of the IRA and expected implications for innovators. To capture the true impact of IRA from all stakeholder’s perspective, thorough review of pro and con published opinions

RESULTS: The IRA gives Medicare the authority to negotiate the amount Medicare pays for certain prescription drugs and to force drugmakers to pay rebate if drug prices rise above inflation rate. The new law effectively cuts the market share and drug price negotiation from at least 75% to 40% depending on market times, eliminates the cost of 5% co-insurance for catastrophic coverage and limited Part D premiums annual increment from 2024 to 2030.Innovators will now focus on generating more value-based data and real-world evidence when justifying their pricing position in negotiations to mitigate the consequences of the new rule. Additionally, manufacturers are looking to conduct portfolio evaluation and adjustments, launching cousin molecules in parallel for multiple indications, pivoting from diseases afflicting the Medicare population, towards biologics and biosimilars to gain market time. Furthermore, manufacturers are, implementing innovative pricing strategies such as optimal launch prices, pre-launch negotiations, and aggressive pricing in pharmacy benefit conditions

CONCLUSIONS: The IRA impacts the overall profitability and strategic options of US manufacturers and stakeholders. Based on our findings, we believe IRA will have negative impact on pharmaceutical companies, drug innovation and R&D, significantly decreasing new drug development for indications that mainly focus on Medicare populations