Alex Keeton, Executive Director, Biosimilars Council
In 2022, Congress passed the Inflation Reduction Act (IRA), directing Medicare to “negotiate” drug prices through a new, opaque government process. As implementation of the legislation unfolds, so does its complexity – as well as its unintended consequences.
Originally, the Medicare Drug Price Negotiation Program (MDPNP) excluded products with indication(s) approved under a single orphan drug designation. However, the One Big Beautiful Bill Act (OBBBA), which passed in July 2025, reshapes the MDPNP by expanding exemptions for orphan drugs.
This shift reveals an important truth: the IRA can, and should, be amended. If it can be modified to keep incentives in place for orphan drug development, it can, and should, evolve further – especially to promote more robust biosimilar competition.
Biosimilars are lower-cost versions of expensive biologic medicines. They are approved by the Food and Drug Administration (FDA) as highly similar to, and with no clinically meaningful differences from, an existing FDA-approved biologic. Biosimilars are one of our most powerful tools to reduce drug costs and ensure life-saving treatments are more accessible to patients. They are driving prices as much as 80 percent less than their corresponding reference products.
Biosimilars have been used in 2.7 billion days of patient therapy with no clinically meaningful differences in safety or efficacy. Patients have received 495 million more days of therapy than if no biosimilar was available. Put simply, biosimilars are making it possible for more patients to receive care.
Because the IRA did not fully account for the realities of biosimilar development timelines, it inadvertently threatens the likelihood of biosimilar competition, instead of encouraging it. Although the IRA’s authors exempted products from negotiation when a generic or biosimilar was approved and marketed, the law explicitly starts the negotiation process before biosimilar competition ever has a chance to begin.
The IRA institutes the price control process when a biologic has been licensed for 11 years, with the option to delay to 13 years. However, the average time for the first biosimilar to launch is 18 years, and the earliest a biosimilar has ever entered the market is just under 13 years – and that product launched at risk. The data makes it clear: preempting lower-cost competition through price controls is a feature, not a bug, of the IRA.
Developing a new biosimilar takes time and money – up to $300 million and nine years. The decision to invest in a new biosimilar occurs years before the IRA price-setting process begins, meaning that a biosimilar manufacturer has no way to predict the potential market when considering an investment of such magnitude. Instead of taking this chance, manufacturers will likely choose not to pursue these products.
Fewer biosimilars in development and less competition means reduced access to affordable medicines. Already, nearly 90 percent of brand biologics losing exclusivity in the next decade don’t have biosimilars in the pipeline. This is a policy failure in slow motion.
The OBBBA has shown that it is possible to amend the IRA’s negotiation timelines, moving some products off the 2028 negotiating table thanks to expanded exemptions for orphan drug products. If Congress can make this exception for brand drugs, it certainly can create breathing room for biosimilars that will imminently enter the market.
Let’s not undermine the engine that drives innovation, lowers cost, and expands access. Competition works if policymakers let it. Amend the IRA to allow biosimilars to come to the market and provide true cost relief before drug price negotiations go into effect.
