Published
December 04, 2025
Why it matters: The Inflation Reduction Act (IRA) of 2022, with its Medicare drug price negotiation provisions, is reshaping the landscape of life science innovation. By shortening market exclusivity periods—nine years for small-molecule drugs and thirteen for biologics—the IRA's price controls undermine the financial incentives that drive groundbreaking medical advancements.
Driving the news: A recent study in Health Affairs highlights the critical role of follow-on oncology drugs, which often target earlier disease stages and offer greater therapeutic potential. Among 184 cancer drugs analyzed, nearly 60% of follow-on approvals focused on earlier-stage cancers, where treatment success is more likely. However, the IRA’s compressed exclusivity timelines threaten this depth-oriented innovation.
The big picture: Follow-on drug development is essential for advancing patient care. These innovations often expand treatment options, improve outcomes, and address unmet needs in areas like cancer, rare diseases, and chronic conditions. Yet, the IRA’s price controls are already discouraging investment in these high-risk, high-reward endeavors. The study reveals that small-molecule drugs, which rely heavily on sequential, indication-by-indication development, are particularly vulnerable. With 86% of follow-on approvals occurring within nine years, the IRA’s shortened timelines leave little room for the incremental advancements that define precision medicine.
Between the lines: The IRA’s approach mirrors the pitfalls of price control policies in other countries, where patients face fewer drug launches and longer wait times for new treatments. For example, in Europe, only 58% of new oncology drugs are launched compared to 80% in the U.S., with delays of up to 500 days in some cases.
What’s next: Policymakers must reconsider the IRA’s framework to avoid turning America’s innovation oasis into a research desert. By restoring incentives for follow-on development and embracing market-driven solutions, the U.S. can safeguard its leadership in medical innovation while ensuring patients have timely access to life-saving treatments.
The bottom line: The IRA’s price controls jeopardize the very ecosystem that has made the U.S. a global leader in biopharmaceutical innovation. Without urgent course correction, patients will have fewer cures, longer wait times, and diminished hope for the future.
About the author
Brad Watts
Brad Watts is the Senior Vice President at the U.S. Chamber of Commerce's Global Innovation Policy Center (GIPC). He works with U.S. Chamber members to foster a political, legal, and economic environment where innovators and creators can invest in the next big thing for the benefit of Americans and the world.
