Medicare Negotiations Won’t Keep Pharma From Making a Fortune
Based on the average R&D costs in producing a drug, the first 10 medications selected will still garner big revenue.
Up for negotiation.
Photographer: Scott Olson/Getty Images
The prescription drug provisions of the Inflation Reduction Act have generated a deluge of doomsday predictions from the pharmaceutical industry regarding drug innovation. Big Pharma has focused on the provision requiring the federal government to negotiate prices for selected eligible drugs covered under Medicare Part B and Part D with the highest total spending, beginning in 2026. On Tuesday, we got the list of the first 10 medications that will be up for negotiation.
The industry claims the process will make those drugs unprofitable and that, as a result, it will have little impetus to invest in drug development. The chief executive officer of the trade group PhRMA predicted “a nuclear winter for innovation” prior to the passage of the law.