Drugmakers have years to skirt the Inflation Reduction Act, experts warn

Pharmaceutical companies have years to find loopholes in the Inflation Reduction Act — a law recently signed that aims to lower drug costs — and legal experts say the delayed implementation could hinder its goals, NBC News reported Sept. 20. 

The legislation, totalling $739 billion, was signed into law Aug. 16. Its terms include capping Medicare's insulin prices at $35 per month starting in 2023, limiting out-of-pocket Medicare costs to $2,000 per month in 2025 and allowing the FDA to negotiate prices for 10 drugs in 2026. 

Because it will take four years for the IRA to be fully implemented, some health policy experts are concerned about the various strategies drugmakers can use to bypass the law.

"Trying to reform the system is like playing three-dimensional chess," Robin Feldman, a pharmaceutical and intellectual property law expert at UC San Francisco, told NBC News. "Whatever move the government makes, companies will move on three different levels to try to get around it."

The IRA specifies that drugs up for potential negotiation have to be on the market for nine years and not have a generic option, meaning that pharmaceutical companies can ramp up efforts to test, manufacture and sell generics for their most expensive treatments covered by Medicare. With this tactic, drug companies can earn profits from the new generic versions and keep their brand name drugs highly priced, NBC News reported. 

Another way to skirt the nine-year rule is by discontinuing its product and adjusting the drug before selling it commercially again — a strategy known as "product hopping" that would restart the clock. 

Starting next year, drugmakers can face a tax penalty if their drugs' prices rise faster than normal inflation rates, but they can offset these by simply rolling out their new therapies with bigger price tags. 

"I think it's fair to say that drug companies have an incentive to maximize revenue and prices," Tricia Neuman, a Medicare expert with the Kaiser Family Foundation, told NBC News.

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