Inflation Reduction Act May Accelerate Generic And Biosimilar Market Entry, But Questions Remain Around CMS Guidance

WASHINGTON, DC – AUGUST 16, 2022: President Joe Biden (C) signs the Inflation Reduction Act with … [+] (L-R) Sen. Joe Manchin (D-WV), Senate Majority Leader Charles Schumer (D-NY), House Majority Whip James Clyburn (D-SC), Rep. Frank Pallone (D-NJ) and Rep. Kathy Catsor (D-FL) in the State Dining Room of the White House. The $737 billion bill focuses on climate change, lower healthcare costs and creating clean energy jobs.(Photo by Drew Angerer/Getty Images)Getty ImagesLast week, the Centers for Medicare and Medicaid Services announced its selection of the first 10 prescription drugs that will be subject to Medicare price negotiations under the Inflation Reduction Act. Conspicuously, four of the drugs CMS included in the first batch of 10 face generic or biosimilar competition before or during 2026 when the “maximum fair prices” will get implemented. Another pharmaceutical which CMS chose is more than 25 years past its initial date of approval by the Food and Drug Administration.

Going forward the IRA may de facto alter the incentives pharmaceutical companies have to pursue evergreening strategies, as having generic or biosimilar competition can exempt a drug from selection for price negotiation. However, questions remain regarding CMS guidance on what is termed “meaningful” competition.

Though not explicitly stated in the IRA, lawmakers have expressed concern about some of the barriers to competition which originator drug companies have established. These includes strategies such as patent “evergreening. This term refers to the continuing …

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