Guest Column: The Impact of IRA’s Drug Price Controls

Inflation Reduction Act: Impact on Pharmaceutical Research and Development

Published 11:23 pm Monday, October 5, 2026

Four years have passed since the implementation of the Inflation Reduction Act (IRA) signed by President Joe Biden.

From the outset, both supporters and critics of the IRA agreed that imposing price controls on prescription drugs could potentially hinder biotech research investments. The controversy arose over the predicted number of new drugs that would be deterred due to this law.

According to the Congressional Budget Office (CBO), which I oversaw during the presidencies of Bill Clinton and George W. Bush from 1999 to 2002, we could expect 13 fewer drugs to hit the market over the next thirty years as a result of the IRA’s price controls. This is one of the more conservative estimates of the law’s impact.

On the other end of the spectrum, two economists from the University of Chicago projected a more drastic outcome, suggesting that the IRA could prevent 135 new drugs from reaching the market by 2039.

Four years on, we can now examine actual data rather than relying solely on predictions to evaluate the IRA’s effect on research and development (R&D) investment.

The preliminary data unfortunately indicates a decline in R&D, particularly for certain drugs aimed at specific diseases. It would be prudent for Congress and the White House to reassess the IRA’s impact before contemplating further expansion.

Recent studies provide clear evidence for these concerns.

A peer-reviewed analysis in 2025 revealed a 38% drop in the monthly number of industry-sponsored “post-approval” trials – research conducted to explore new uses or updated versions of existing medicines – following the enactment of the IRA. For small-molecule drugs, which are subject to IRA price controls sooner than large-molecule biologic drugs, post-approval trials saw a steeper decline of 47%.

Further evidence comes from the Incubate Coalition, a trade group for biotech venture capitalists, which has recorded 26 experimental drugs and 56 research programs that were abandoned after the IRA came into effect. Many biotech companies directly attributed these cutbacks to the IRA.

Despite these cautionary findings, policymakers are considering increasing the scope of the IRA’s price controls. Senate Finance Committee members are mulling over the idea of extending price controls to a wider range of drugs each year, implementing price controls sooner after a drug’s release, and linking Medicare’s negotiated prices to the lower reimbursements offered in foreign countries.

In line with these discussions, Medicare officials are proposing a rule that would categorize fixed combination drugs (drugs implementing a new delivery method) as older therapies if they share a common active ingredient. This could subject new treatments, such as those enabling cancer patients to receive injections in minutes instead of enduring hours-long IV drips, to price controls sooner, potentially discouraging their development.

Tracking investments and academic studies reveal that the IRA has had a significant impact on pharmaceutical R&D, particularly on small-molecule and post-approval therapies for cancer and the elderly, which are most susceptible to price controls. Before implementing further policy expansions, our leaders should thoroughly review these findings to ensure that short-term cost savings do not compromise future medical advancements.

Former director of the Congressional Budget Office, Dan Crippen, contributed to this column. Originally published at DCJournal.com. Contact him via email through Greta Timmins at greta@keybridge.biz.