The Inflation Reduction Act Could Have Unintended Consequences

This Law360 article analyzes the potential unintended economic impacts of the Inflation Reduction Act on the pharmaceutical industry.

The Inflation Reduction Act (IRA) was signed into law in August 2022 with the goal of curbing inflation by, among other things, lowering prescription drug prices. Notable prescription drug provisions of the IRA include the introduction of Medicare drug price negotiations, Medicare inflation rebates, and a redesign of the Medicare Part D benefit structure. Since the law’s passage, the Centers for Medicare & Medicaid Services (CMS) has issued a series of guidance memorandums on how these various provisions will be implemented. For example, in March 2023 CMS provided initial guidance on the Medicare negotiation process, and more recently in May 2023, CMS released guidance on how the updated benefit design for Medicare Part D will impact the statutory discounts required of pharmaceutical manufacturers.

Despite CMS providing some insights on the IRA’s implementation through these guidance memorandums, the full economic impact of the IRA on the pharmaceutical industry remains uncertain. In particular, there may be several unintended economic impacts on pricing, drug access, benefit design, innovation, and competition, particularly for biologics and biosimilar drugs. Authors Alice Chen of the University of Southern California and Andrew Elzinga and Penka Kovacheva of Cornerstone Research discuss these potential impacts in an article for Law360.

This article was originally published by Law360 in June 2023.

Drug Pricing Law Could Have Unintended Consequences


Alice Chen

Associate Professor,
Sol Price School of Public Policy;
Senior Fellow,
Leonard D. Schaeffer Center for Health Policy and Economics,
University of Southern California

  • Boston

Andrew Elzinga


  • Los Angeles

Penka Kovacheva

Vice President