IRA: Three Letters That Undermine Two Urgent Priorities — Fostering Innovation in Healthcare and Accelerating Economic Growth

By Tom Kowalski, WWFH Co-Chair

Chronic disease has contributed to declining life expectancy in the United States, a disturbing pattern that began even before the COVID-19 pandemic. Healthcare has too many access barriers, particularly for patients in rural and underserved communities. Meanwhile, amid rising costs in goods like groceries and services like childcare, working families are struggling financially.

Public health advancement and economic prosperity, however, are not competing priorities — they are complementary goals that can and should be addressed simultaneously.

As we celebrate World IP Day, let’s take a look at the efforts of We Work For Health and others in the life sciences industry as well as the unintended consequences with a negative impact on fostering innovation and accelerating economic growth.

We Work For Health works with local and national stakeholders to help protect the discovery and delivery of life-saving medicine. Last year, we gathered data that found U.S. biopharmaceutical companies were responsible for 4.9 million U.S. jobs in 2022. This figure represents direct jobs within the innovative life science industry as well as jobs tied to sectors that support it – such as construction, transportation and other support services.

Growing and supporting such a robust ecosystem requires the building of research facilities and manufacturing plants that activate workers with specialized skills. Imagine the gains for both our health and economy if this industry was empowered to reach its full potential.

Today, the life sciences sector is held back by misguided legislation that discourages innovators.

The Unintended Consequences of the IRA

A provision of the Inflation Reduction Act created a significant imbalance in pharmaceutical innovation through what industry experts have termed the "pill penalty." This provision subjects small-molecule drugs—which constitute more than 90% of all prescriptions—to price negotiations four years earlier than biologics (9 years vs. 13 years). Small-molecule medications, typically delivered as pills, tablets, or capsules, represent the most accessible and convenient treatment options for conditions including heart disease, diabetes, and mental health disorders.

This inequitable framework threatens the future of treatments that millions of Americans depend on daily. The IRA has already prompted several drugs to be pulled from clinical trials while not providing a dollar of real-world savings for patients and consumers.

Consider this. Since 2021, venture capital investments in biopharma have dropped by 50% while

successful IPOs for biopharma firms are down 70%. Much of that impact has been felt on

investments targeting cancer treatments, according to a recent Vital Transformation

study that reviewed noninstitutional investments under $2 billion.

Meanwhile, last year, the IQVIA Institute for Human Data Science concluded that government price negotiations are "unlikely” to produce consistent reductions in patient cost sharing. To the contrary, many patients will experience negligible savings or even higher out-of-pocket costs. The group of 10 Medicare drugs selected for the first wave of federal price controls – they take effect in 2026 – were already subject to rebates and aggressive negotiations. Other adverse market variables loom, including potential premium hikes from insurance companies to protect profit margins and possible changes in how medications are tiered on the formulary.

The EPIC Act: A Necessary Correction

Thankfully, policymakers in the White House and in Congress have an opportunity to correct course.

The Ensuring Pathways to Innovative Cures (EPIC) Act, which was recently re-introduced in both chambers of Congress, offers a critical solution to this challenge. The bill would fix the “pill penalty” by ensuring both small molecules and biologic drugs receive the same number of years on the market before price negotiations can start. This common-sense, tactical change to the IRA will ensure patients can experience savings without jeopardizing the nation’s standing as a global leader in innovation.

Passing the EPIC Act would be an important step toward boosting the health of Americans and their economy.