Myth vs Fact: How US government price setting impacts innovation

As the debate over how to lower US drug prices continues, the Inflation Reduction Act (IRA) drug price-setting provisions should serve as a cautionary tale, says the trade group Pharmaceutical Research and Manufacturers of America (PhRMA).

Three years into implementation and the evidence is clear: government price-setting is chilling medical innovation, halting clinical trials and undermining patient access to innovative treatments. It’s time to set the record straight and dig into the harmful realities of government price setting.

Myth #1: Allowing the government to set the price of medicines will lower drug costs without affecting research and development.
Fact: The IRA’s price-setting mechanisms are already discouraging investment in new treatments.
Since the IRA was introduced, investments in early stage small-molecule medicines have dropped nearly 70%, according to an analysis by Vital Transformation. That’s because the IRA allows the government to prematurely set the price for certain medicines long before their therapeutic value can be fully realized.