“Millions of Part D patients who rely on price-controlled drugs will see their out-of-pocket … [+]
Just three days before President Biden left office, his appointees tried to tie incoming Trump staffers’ hands on a health policy decision that affects millions of Americans and tens of billions in federal spending.
On January 17, the Centers for Medicare & Medicaid Services announced a new list of 15 drugs under Medicare Part D that will be subjected to price controls under the Inflation Reduction Act on January 1, 2027. The list was announced this month despite the IRA not requiring, under the statute, such a decision until February 1st.
And here’s the kicker: while the IRA, signed into law in August 2022, required CMS to pick 15 medicines, Biden’s CMS actually selected 19 distinct medications.
Despite their affinity for Common Core math, Democrat-appointed bureaucrats aren’t actually that bad at counting. Rather, they classified several distinct therapies—most notably the injectable diabetes treatment Ozempic, the injectable weight-loss treatment Wegovy, and the tablet diabetes treatment Rybelsus—together as a single drug because they share the same active ingredient, the GLP-1 receptor semaglutide. CMS likewise lumped together two different treatments for Huntington’s disease and two different treatments for diabetes.
The early announcement was a deliberate attempt to prevent the Trump administration from charting a more moderate course. Fortunately, the Trump White House doesn’t have to accept the decision as a fait accompli.
Courts routinely allow incoming administrations to pause outgoing ones’ actions for further review. Surely, a federal agency’s decision to redefine how to count merits additional scrutiny—especially since the chosen medicines are taken by 5.3 million Medicare beneficiaries and account for about 14% of Medicare Part D’s total gross drug costs.
Of course, even if the Trump administration is able to pare back the list to 15 distinct drugs, it’ll only reduce the IRA’s mounting damage at the margins. Far more extensive reforms, or wholesale repeal by Congress, are necessary.
Consider how, even before price controls kick in next year on the first 10 Medicare drugs, the IRA’s most immediate effect has been steep premium increases within Medicare Part D. Average monthly premiums jumped 21% between 2023 and 2024, while the number of drug plans on offer fell by 11%. They would have gone up even more in 2025 had the Biden administration not engineered a multi-billion-dollar bailout of insurers this past summer.
There’s worse to come. A recent report from the consulting firm Milliman found that millions of Part D patients who rely on price-controlled drugs will see their out-of-pocket medication costs increase, rather than decrease, in 2026 due to the law’s restructuring of Medicare drug benefits.
Seniors will also need to jump through more hoops to access the medications they need. Part D insurers will almost certainly restrict access to additional medicines in response to the benefit restructuring and price controls.
Perhaps the IRA’s most destructive consequence, however, is the slowdown in drug innovation. Now that the government is free to dictate lower prices for the latest medicines, the financial risks of developing a breakthrough treatment have increased considerably.
Lawmakers implicitly acknowledged this problem when hastily cobbling the IRA together. They gave drugs a period of exemption from price controls following FDA approval. But they botched their own patch.
The IRA arbitrarily gives so-called small molecule drugs, which typically come in pill or tablet form, an exemption from price controls for nine years after FDA approval. That’s four years shorter than the 13-year exemption for large molecule drugs, known as “biologics.” Predictably, companies are already shifting away from small molecule research. Economists at the University of Chicago found this “pill penalty” could result in 188 fewer new small-molecule drugs and follow-on FDA indications over the next 20 years.
Congress is considering legislation, the EPIC Act, to fix the pill penalty. That’d be a great start—as would the Trump administration pausing the price-control process for a thorough review of the recent selections.
But ultimately, the only way to fully prevent the IRA’s harms is to neuter the law itself.
Please rephrase this sentence.
