Source: PhRMA, “Three Years Later: The IRA’s Hidden Costs to Patents and the Innovation Pipeline,” (presentation, November 7, 2025).
Commentary: The Inflation Reduction Act, passed in 2022, gives the government the authority to unilaterally set prices for certain Medicare-covered medicines, including the 50 medications with the highest Medicare gross expenditures. However, price setting has triggered a series of adverse effects across the biopharmaceutical industry, reducing innovation and increasing consumer prices. Price setting has decreased the incentives for pharmaceutical companies to engage in the costly process of drug development, which can take 10 to 15 years to complete, resulting in a 70 percent decline in investment for new small-molecule medicines since 2021. In fact, since the IRA’s passage, the number of industry-supported small-molecule cancer treatments entering post-approval trials in the United States has fallen by 45.3 percent. With weakened biopharmaceutical innovation, the United States will find itself less competitive against Chinese firms, which now sponsor 39 percent of all oncology trials and 30 percent of all new clinical trials in 2024.
