First Drugs Subject to Inflation Reduction Act Price Provisions

August 28, 2024

CMS Unveils Drug Price Cuts Amid Concerns for Medicare and Innovation

The Centers for Medicare & Medicaid Services (CMS) announced recently the prices that they have set for the first 10 medications as an outcome of the Inflation Reduction Act’s drug provisions.


For the first time, the law provides Medicare the ability to directly “negotiate” (in effect, set, as otherwise significant penalties are imposed) the prices of certain high expenditure, single source drugs without generic or biosimilar competition.


These prices will go into effect by 2026 for patients enrolled in Medicare prescription drug coverage, with an estimated $1.5 billion in overall savings expected under the standard benefit design.


The Biotechnology Innovation Organization (BIO), of which MichBio is a state affiliate of, issued a statement regarding CMS’ announcement. Despite CMS claims regarding savings, the impact of negotiated prices on patients at the pharmacy counter is currently unclear. CMS did not disclose what evidence was used when setting prices, what stakeholders it sought input from, or whether it has plan to protect patient access and out-of-pocket spending. The concern is that price setting could potentially impact investment decisions in new medicines and prices charged by private payers.


MichBio, along with its national partners, BIO and PhRMA will continue to advocate for the adoption of efforts to mitigate some of the most fundamentally damaging provisions of the Inflation Reduction Act, including the EPIC Act and ORPHAN Cures Act, to ensure that the IRA legislation does not further diminish the development of sorely needed drug treatments.

RECENT ARTICLES

MichBio Hiring: Intern, Association Membership & Resource Analytics

April 15, 2025
MichBio seeks a highly motivated individual who can work creatively in a small team environment and assist in data mining, compilation, and research.

Bio Survey Underscores Impacts of Tariffs for Businesses

April 11, 2025
The Biotechnology Innovation Organization (BIO), of which MichBio is a state affiliate recently released the results of a survey of its members, noting that “U.S. Biotechs Sound the Alarm” on tariff impacts. The findings include: Tariffs on European Union and Canadian imports would increase manufacturing costs for 94% and 82% of biotech firms, respectively. 70% of companies anticipate higher manufacturing costs due to tariffs on China. Tariffs on the European Union would force 50% of biotech firms to identify new research and manufacturing partners. More than 50% of biotech firms predict “increased difficulty” in funding and conducting research if EU tariffs are enacted. 80% of biotech firms would need at least 12 months to find alternative suppliers; 44% would need over two years. The survey noted that sudden tariffs would fundamentally punish American companies, threaten vital research projects and imperil United States leadership in biomedical science. Read BIO’s press release , along with an one-pager summarizing the survey results. 

Amid Proposed Cuts, Commission Calls For $15B NIH Support

April 10, 2025
A federal commission, in a new report , is calling for $15 billion in new financing to reinforce the United States’ biotech leadership amid encroaching competition from China. This comes against a backdrop where the Trump Administration has proposed severe cuts to NIH operations and funding. The National Security Commission on Emerging Biotechnology was created by Congress in 2022 to explore how biotechnology advancements could shape the economy and national security. The body quickly focused on China, as that government has gone about gathering Americans’ genetic information and intellectual property in the biotech space and resourcing their cluster’s rapid growth. The report’s 49 recommendations, organized across six strategic pillars, offer a bold and actionable framework to protect U.S. biotech intellectual property and bolster drug development, agriculture, and biological weapons defense: Prioritize biotechnology at the national level Mobilize the private sector to get U.S. products to scale Maximize the benefits of biotechnology for defense Out-innovate our strategic competitors Build the biotechnology workforce of the future Mobilize the collective strengths of our allies and partners The report calls for $1 billion to create an investment fund, more than $6 billion for large-scale research challenges, and a build-up of biomanufacturing sites across the country. Also, it calls for new legislation barring companies that work with U.S. national security agencies or health agencies from using certain Chinese biotech suppliers. The commission doesn’t have the power to authorize any changes but can make recommendations and advise members of Congress. BIO issued a statement in support.