For Immediate Release:
Contact: Kelly Broadway, 202-808-8853
[email protected]
Washington, D.C. – A new report by the Council for Affordable Health Coverage (CAHC) examines the damaging impact of the Inflation Reduction Act (IRA) on Medicare Part D beneficiaries by imposing price controls at different timeframes simply based on the type of medication.
“The so-called Inflation Reduction Act continues its parade of horribles and needs to go,” said Joel White, president of CAHC. “For the law to penalize one type of treatment because it is cheaper to make and easier to dispense is not only the definition of insanity but will lead to less drugs on the market at a higher price.”
The IRA allows for small molecule drugs (pills) to be subject to government price-setting nine years after they are approved. In comparison, large molecule drugs (biologics) are given an additional four years before price controls take effect. This unfair treatment is known as the pill penalty. If pills and biologics were on the same 13-year timeline, half of the drugs chosen for price controls in 2026 would not have been selected.
New analysis conducted by Magnolia Market Access found that plans have already started adjusting in preparation for the pill penalty. These adjustments are leading to tighter coverage and increased patient cost-sharing at the pharmacy counter – from 10.6 percent to 75.8 percent.
Beyond beneficiaries, the pill penalty could have a broader industry impact on product availability with pharmacies choosing not to stock those pills chosen for government price setting. There will also be a significant decrease in the research and development of new, small molecule treatments. One study estimates 188 fewer approved small molecule treatments, including more than 100 fewer post-approval indications. That means less access at pharmacies as care shifts to hospitals and physician offices, which are more expensive and less accessible to consumers. In total, more than 116 million life years will be lost due to the IRA reducing or eliminating opportunities to improve health care.
To read CAHC’s report, click here.