Congress Must Act Now to Preserve Drug Innovation
President Trump announced his intention last month to peg U.S. drug prices to those that foreign governments have set within their borders.
The very same day, federal officials said they'd reveal in February 2026 a list of 15 drugs subject to price controls through Medicare's Part B outpatient benefit and Part D prescription drug benefit starting in 2028.
The widespread embrace of price controls in Washington is bad news for patients.
It's already choking off investment in the next generation of lifesaving medicines.
Congress must take action to mitigate the impact of these price controls — or risk consigning patients today and tomorrow to undue suffering.
The appeal of price controls on prescription drugs is understandable. People think drug prices are too high, and they tend to blame drug companies.
President Biden capitalized on that angst by signing the 2022 Inflation Reduction Act (IRA) into law.
It gave Medicare the power to dictate what it would pay for a growing list of brand-name drugs each year. The first round of price caps takes effect in 2026, targeting 10 medications covered by Medicare Part D.
But these price controls have far-reaching negative consequences.
For starters, they will not do anything to make drugs more affordable for most Medicare beneficiaries.
A study published last year found that most enrollees in Medicare's Part D prescription drug benefit who take medications singled out for price controls will see their out-of-pocket costs increase from 2025 to 2026.
Additionally, seniors could find it more difficult to access drugs subject to this regime.
Pharmacy benefit managers typically demand rebates and discounts from drug makers in exchange for favorable placement on an insurer's formulary, or list of covered drugs.
A government price cap will leave much less space for these rebates.
So insurers may give preferential treatment to a drug that is not subject to the price controls — and pays a higher rebate.
Seniors may have to jump through bureaucratic hoops to get the price-controlled medicine their doctor has prescribed.
The looming price controls' effect on innovation is most troubling. By effectively capping drug companies' revenues, the IRA makes developing new therapies far riskier.
It takes $2.6 billion and more than a decade, on average, to bring a single new drug to market. Only about 12% of drug candidates successfully make their way through the approval process.
Once a brand-name drug is approved, companies have a short window of exclusive sales in which to earn a return before facing generic competition.
Price controls shrink that window.
Drug makers will respond by cutting back on research and development.
A study from the research group Vital Transformation estimates that as many as 139 drugs are at risk of not being developed over the next 10 years.
Small-molecule drugs — typically pills taken orally — are especially vulnerable. The IRA exempts them from price controls for just nine years following approval.
Biologics — medicines synthesized from living organisms — get 13 years.
This four-year "pill penalty" discourages investment in small-molecule drugs, which are often easier for patients to take. Patients with diseases that are good targets for small-molecule drugs — including cancer — could see fewer new therapies.
Given the harm these price controls are causing, the best thing Congress could do is repeal them altogether.
Failing that, lawmakers should eliminate the pill penalty and give small-molecule drugs the same 13 years of freedom from price controls that biologics have.
Bipartisan legislation that would do just that — the Ensuring Pathways to Innovative Cures, or EPIC Act — has been introduced in both the House and Senate. It deserves swift consideration.
Price controls on prescription drugs chill investment in biomedical research and development — which literally saves lives.
For the sake of patients now and in the future, Congress must step in to ward off their worst effects.
Sally C. Pipes is President, CEO, and Thomas W. Smith Fellow in Health Care Policy at the Pacific Research Institute. Her latest book is "The World's Medicine Chest: How America Achieved Pharmaceutical Supremacy — and How to Keep It" (Encounter 2025). Follow her on X @sallypipes. Read Sally Pipes' Reports — More Here.
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