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Pharma to face more pricing pain as new legislation expands scope of Inflation Reduction Act: GlobalData

Any successful legislation that builds off from the Inflation Reduction Act could signal further policy changes for US drug pricing

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The global pharma industry is bracing itself for more headaches in its most profitable market as US House Democratic health leaders introduce new legislation, which would expand the Inflation Reduction Act and further lower prescription drug prices. House Democrats Frank Pallone Jr., Richard Neal, and Robert Scott unveiled the Lowering Drug Costs for American Families Act, in an effort to build on the Inflation Reduction Act and further lower healthcare and prescription drug costs for Americans. As a result, the pharma industry is set to face more pricing pain going forward, says GlobalData.

Cyrus Fan, Pharma Analyst at GlobalData, comments, “The Lowering Drug Costs for American Families Act proposes to expand the Inflation Reduction Act through three different ways. The bill proposes to expand the drug price negotiation program to all Americans with private health coverage, apply the inflation rebates under the Inflation Reduction Act to individuals covered by private health plans, and increase the number of prescription drugs selected for negotiation from 20 to 50 drugs.”

Gustav Ando, VP of Pricing and Market Access at GlobalData, continues, “In a double whammy, the proposal would double the number of drugs that would face price negotiations, and expand the scope into the private insurance market. It shows that far from being scarred by recent litigation from the pharma industry against the original legislation, the government is aiming to go even further in cutting US drug prices, which are typically the highest in the world.”

Fan continues, “An expansion of the Inflation Reduction Act is unsurprising from the Democrats, given the possible significant savings it will generate to Medicare. The legislation is another attempt by the Democrats to lower the costs of prescription drugs for more Americans. This time, the legislation targets the private sector, which would include 164 million people and their families and 26 million on marketplace coverage, along with those under Medicare coverage. The extension on the inflation rebates could also mean privately covered US workers can save a possible $40 billion over the next 10 years.”

However, the pharma industry has already reacted negatively to the legislation, citing that these proposals will give the government full control over the US healthcare system—including the private market. Further claims have included that the legislation will harm US patients by restricting access to treatments and also further impact pharma companies’ R&D decisions.

Fan concludes, “Given the current lawsuits the pharma industry has already launched against the Biden Administration over the Inflation Reduction Act, it’s unsurprising the new proposed legislation has quickly come under scrutiny from the pharmaceutical industry. The industry will have some relief from the fact that the US House of Representatives is controlled by the Republicans. Many Republicans had voiced opposition to the Inflation Reduction Act last year and the House Democrats will have difficulties passing the legislation through the House. Any successful legislation that builds off from the Inflation Reduction Act could signal further policy changes for US drug pricing.”

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