While the former Biden administration showcased the Inflation Reduction Act as a key victory in the fight over high drug prices in the U.S., Trump has so far been mum on how the controversial law could evolve in the coming years.
Last August, in the midst of a heated presidential campaign, then-President Joe Biden and Vice President Kamala Harris declared victory at a campaign event the day the new prices for the first 10 drugs negotiated between Centers for Medicare & Medicaid Services and drugmakers under the Inflation Reduction Act were released. It also happened to be the second anniversary of Biden’s signing the IRA into law. Then, on Biden’s last Friday in office, CMS named the next 15 drug products up for negotiations under the IRA—two weeks ahead of its Feb. 1 deadline.
The intention, it seemed, was to highlight the administration’s apparent success in pushing through legislation that will limit the high costs of prescription drugs for the millions of Americans on Medicare. In the wake of President Donald Trump’s election, however, questions have swirled about the future of the IRA.
Project 2025, widely cited as the blueprint for a potential second Trump term despite the president’s efforts to distance himself from it in the run-up to the election, calls for repealing the IRA. Certainly, Trump has shown a penchant for striking down policies put in place by the Biden administration. Most industry analysts have argued that a full repeal is unlikely, however.
“We think it’s very difficult to repeal the IRA,” policy analyst Ethan Siegal, founder of The Washington Exchange, said on a conference call with Guggenheim Securities last year. “Congress may make some smaller tinkering changes. . . . We don’t see Trump outright repealing the law.”
What, then, will change?
One of the more controversial elements of the IRA—the so-called pill penalty due to small molecules being exempt from negotiations for only 9 years, compared with the 13 years grace period granted to biologics—may be on the chopping block. If passed, the Ensuring Pathways to Innovative Cures (EPIC) Act would extend small molecules’ negotiation protection period to the 13 years to provide parity between the two drug classes. There’s also The Orphan Cures Act that aims to expand orphan drug exemption.
“I do feel that Congress wants to provide relief with regard to orphan drugs, and with regards to small molecule drugs and the timeframe that they qualify to be reviewed,” Siegal said on the Guggenheim call. “So I do think those two items could hitch a ride on the tax budget reconciliation bill.”
A third piece of legislation, The MINI Act, which seeks 13 years of protection for genetically targeted medicines that are currently grouped with small molecules, has also received bipartisan support.
But again, the new Trump administration has said very little directly on these matters. While Trump this week did revoke an executive order from Biden called “Lowering Prescription Drug Costs for Americans,” he has yet to make moves to reverse or alter the IRA.
In his confirmation hearings before the Senate this week, Robert F. Kennedy Jr. did field some questions about the IRA. But while he said he was supportive of Trump’s executive orders and of drug price negotiations under the IRA, he did not provide specifics regarding the future of the policy, Jefferies analysts wrote in notes to investors Wednesday and Thursday.
On Wednesday, CMS put out a very brief statement that simply acknowledged “[l]owering the cost of prescription drugs for Americans is a top priority of President Trump and his administration.” The statement also mentioned “incorporating lessons learned to date” and “bring[ing] greater transparency” to the negotiations.
These comments are seemingly an attempt to address the pushback this law has gotten from the biopharma industry since its inception. While Big Pharma execs have largely downplayed the risk that IRA-scripted drug price negotiations will have on their bottom lines, several companies, industry associations and other parties filed lawsuits in the months leading up to the first batch of drugs named for price negotiations and 87% of pharma companies are adjusting product launch plans due to potential IRA impacts, according to Model N’s annual State of Revenue Report.
These legal challenges have argued variously that the program would violate the First and Fifth Amendments by forcing companies to negotiate prices below market value for drugs covered by Medicare and that the program is not a genuine negotiation and would result in the unconstitutional seizure of company products. While most have been denied, as recently as November 2024, AstraZeneca, Bristol Myers Squibb and Johnson & Johnson appeared before a U.S. Court of Appeals to again plead their cases.
This week, following the naming of its blockbuster GLP-1s Wegovy, Ozempic and Rybelsus in the second round of IRA drug price negotiations, Novo Nordisk asked the courts to accelerate an ongoing legal complaint that was first defeated in August 2024 but which the company has appealed. Among its complaints, Novo argues that CMS should not be able to consider its three products as a single entry in the list of drugs up for negotiations.
Thus, as with most politically charged issues facing the biopharma industry right now, we will have to wait and see how this plays out. Companies whose drugs were listed among the 15 to be negotiated as part of this second round, prices that will go into effect in 2027, have until the end of February to decide if they will participate.
