The Inflation Reduction Act let Medicare dictate prices on brand-name drugs, with promises of $100B+ in savings. University of Chicago economist Tomas Philipson’s research finds the opposite for the first 25 drugs selected: average lifetime prices end up higher.
Why it backfires: Cutting brand revenues now makes those markets less attractive to generic and biosimilar makers later. Fewer competitors after exclusivity ends means prices don’t fall as far. (One generic keeps prices near 79% of brand; 10+ drops them to ~16%.) The study estimates a big drop in future entrants and ~45% higher post-patent prices, for a net ~19–21% higher average over decades.
Classic government “fix”: short-term optics, long-term higher costs.
Real competition—not bureaucrats—is what drives prices down.
Read the full article by Sally Pipes on Forbes.
