Mitigating the Inflation Reduction Act’s Adverse Impacts on the Prescription Drug Market
April 26, 2023DownloadsDownload Whitepaper
A new USC Schaeffer Center white paper co-authored by Jason Shafrin, PhD and Kyi-Sin Than of FTI Consulting’s Center for Healthcare Economics and Policy recommends three strategies to mitigate potential unintended consequences of the IRA.
This whitepaper from USC Shaeffer was published on April 13, 2023. The entire publication is available at: https://healthpolicy.usc.edu/research/mitigating-the-inflation-reduction-acts-potential-adverse-impacts-on-the-prescription-drug-market/
“The Inflation Reduction Act of 2022 (IRA) includes several consequential provisions aimed at reducing drug spending and increasing access to pharmaceuticals for millions of Americans. However, the provisions also limit insurers’ ability to implement cost containment measures and may discourage investments in new drugs and indications. We offer three recommendations to mitigate these potential unintended consequences. First, the calculation of a “maximum fair price” for drugs should be transparent and focus on measured social value rather than price minimization. Second, post-market approval of new indications should be encouraged by delaying the government price-setting process when new indications are approved. Third, the government should exempt manufacturers from inflation rebate penalties if additional information (e.g., real-world evidence, new clinical trial data, or new indication approvals) demonstrates more value in a drug post-approval. Implementing these three strategies would balance the competing goals of incentivizing innovation, increasing patient access and reducing spending.”
This article was reprinted with permission from USC Schaeffer.