Reconciliation Bill Detrimental for U.S. Life Sciences Innovation, Says ITIF

WASHINGTON—Following the passing of the Inflation Reduction Act of 2022in the United States House of Representatives today, the Information Technology and Innovation Foundation (ITIF), the leading think tank for science and technology policy, released the following statement from ITIF’s vice president of global innovation policy and director of the Center for Life Sciences Innovation, Stephen Ezell:

The Inflation Reduction Act of 2022 incorporates unnecessary and unwarranted drug price controls that will harm America’s life-sciences innovation industry and deter biomedical innovation. Moreover, the drug price controls have no place whatsoever in legislation putatively intentioned to control inflation. U.S. prescription drug prices have increased just 2.4 percent over the past year and certainly are not significant drivers of raging U.S. inflation. In fact, the consumer price index for pharmaceuticals decreased slightly from 2008 to 2019.

The legislation does include some needed Medicare Part D reforms, such as capping seniors’ out-of-pocket costs at $2,000 annually. Still, while the legislation gives to seniors on the one hand, over the long term, it will take future life-saving, -extending, or -improving biopharmaceutical innovations away from them. As ITIF has written, there are far better ways for Congress to reconcile the interests of biomedical innovation and drug-price affordability.

At least one innovation-related issue the legislation did get right was maintaining existing accelerated depreciation provisions, allowing companies subject to the minimum corporate tax to take advantage of the more-generous depreciation schedules in the existing tax code. The frontloaded depreciation schedule will enable enterprises to deduct a larger percentage of their real capital expenditures from their taxable incomes, incentivizing much-needed investments in capital assets.

It was paramount that the tax credits available to affected companies were not capped by the corporate minimum tax, especially since America’s incentives for socially beneficial activities like R&D investments are weak compared to those of OECD peers.