The Impact of The House Proposed IRA Expansion on the US Biopharma Ecosystem
The Executive Summary
- Vital Transformation (VT) modeled the impacts of the drug pricing provisions of the Inflation Reduction Act, with the expansions proposed by Representative Frank Pallone, Jr. (NJ-06) called the, “H.R. 4895: Lowering Drug Costs for American Families Act”, which would impose government price setting for up to 50 selected Medicare Drugs starting in 2029 and expand those negotiated prices to the commercial market.
- We modeled the impacts on industry revenues, future R&D investments for the Medicare aged population, and lost innovation including industry jobs.
- We estimate a loss of 136,000 – 216,000 direct biopharmaceutical industry jobs and 678,000 – 1,076,000 indirect jobs across the U.S. economy if H.R. 4895 were to be implemented.
- We estimate that the expanded government price setting could result in roughly 134 fewer FDA approvals of new medicines treating primarily the Medicare aged population over a ten-year period:
- Impacts will be felt most heavily in many areas of unmet need, including in rare disease, oncology, neurology, and infectious disease targeting those over 65 years of age.
- H.R. 4895 impacts the entire commercial market at the point of negotiated prices entering Medicare.
- The most significant ecosystem impacts would be concentrated primarily in CA and MA.
- Had the drug pricing provisions of the House Bill H.R. 4895 been in place prior to the development of today’s top-selling medicines, we estimate that 76 of the 198 therapies we identified as selected for Medicare price setting would likely have not been developed.
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