WASHINGTON — The Inflation Reduction Act (IRA), passed in 2022, changed the way the federal government handles prescription drug prices. The law allows Medicare to negotiate the price of certain high-cost drugs for the first time. Supporters say this will help lower costs for seniors and people with disabilities. However, some experts warn that the law could also create long-term challenges for new medical innovation, the growing biosimilar market, and patient access to future treatments.

One major part of the law gives Medicare the power to negotiate prices for some of the most expensive drugs covered under Medicare Part D and Part B. The Centers for Medicare & Medicaid Services (CMS) announced the first group of drugs selected for negotiation in 2023, and the new prices are expected to take effect in 2026. The law also limits out-of-pocket prescription drug costs for Medicare beneficiaries and caps insulin at $35 per month for many seniors.

Many health advocates support these changes. High prescription drug prices have placed a heavy burden on older Americans for years. According to the U.S. Department of Health and Human Services, millions of Medicare beneficiaries are expected to save money because of the law. Lowering drug costs is especially important for Black and Latino communities, which face higher rates of chronic illnesses such as diabetes, heart disease, and cancer. These communities are more likely to struggle with high medical bills and limited access to care.

At the same time, some researchers and economists have raised concerns about how the law might affect the future of drug development. Developing a new medicine can take more than a decade and cost billions of dollars. Drug companies rely on revenue from successful products to fund research on future treatments. The Congressional Budget Office estimated that the IRA’s drug pricing rules could lead to fewer new drugs being developed over the next 30 years. While the projected decrease is relatively small compared to the total number of drugs expected to be developed, some experts say even small changes in financial incentives can influence what kinds of treatments companies decide to invest in.

Another concern involves the biosimilar market. Biosimilars are medications that are highly similar to existing biologic drugs, which are complex treatments often used for cancer, autoimmune diseases, and other serious conditions. Biosimilars are designed to increase competition and lower prices once a brand-name biologic has been on the market for several years.

Some industry analysts worry that if Medicare negotiates prices for certain biologic drugs before or around the time biosimilars enter the market, it could reduce the financial rewards that encourage companies to develop both original biologics and biosimilars. If profits shrink too much, companies may be less willing to invest in these areas. On the other hand, supporters of the IRA argue that price negotiation applies only to a limited number of high-cost drugs and that competition from generics and biosimilars will still play an important role in lowering prices.

Patient advocacy groups are also watching closely. While many patients welcome lower costs today, some worry about whether future treatments could be affected. This is especially important for communities of color, which already face barriers to accessing new therapies and clinical trials. Black Americans, for example, have higher death rates from heart disease and certain cancers. Slower innovation or reduced competition in the drug market could widen existing health gaps if not carefully managed.

Federal officials say the law is designed to balance affordability and innovation. CMS has stated that the negotiation process considers factors such as clinical benefit and research costs. Lawmakers who support the IRA argue that the United States can reduce drug prices while still encouraging companies to develop life-saving treatments.

As the first negotiated prices move closer to taking effect, experts say it will take years to fully understand the law’s impact. The immediate goal is to reduce the financial strain on patients. However, the long-term challenge will be making sure that cost savings do not limit medical innovation, weaken the biosimilar market, or reduce access to future treatments.

For patients and families across the country, especially in underserved communities, the debate highlights a difficult balance. Lower drug prices today can improve access and reduce stress. But protecting the future of medical breakthroughs and ensuring fair access to new treatments will remain an important part of the conversation.