The Inflation Reduction Act (IRA) has faced heavy criticism for redirecting billions from Medicare prescription drug spending to fund green energy initiatives and other Democratic special interests. Less discussed, however, is a provision within the law that unfairly targets small molecule drugs—those in pill, capsule, and tablet form—by subjecting them to price controls four years earlier than biotech drugs. This so-called “pill penalty” threatens medical innovation and patient access to life-saving medications.
The IRA establishes different market protections for pharmaceuticals based on their form. Small molecule drugs can be subjected to government price controls just nine years after FDA approval, whereas larger molecule biologics—typically injectable or intravenous treatments—receive a 13-year market window before price controls take effect.
This policy creates a clear incentive for pharmaceutical companies to prioritize investment in biotech drugs over traditional pills, as the latter will face profitability constraints much sooner. Given that drug development costs often exceed $1 billion, the pill penalty discourages research into groundbreaking small molecule treatments for major diseases such as cancer, diabetes, and cardiovascular conditions.
A study from the University of Chicago estimates that the pill penalty could diminish pharmaceutical research and development (R&D) investments by more than $230 billion, leading to the loss of an estimated 79 new drugs. The study further warns that these lost innovations could cost patients a staggering 116 million life years.
Despite claims that the IRA would reduce drug costs for seniors, the savings from Medicare price controls are not being reinvested into Medicare itself. Instead, funds are being redirected to electric vehicle manufacturers, health insurance companies benefiting from expanded Obamacare subsidies, and other Democratic interest groups.
To address this harmful provision, Rep. Greg Murphy (R-NC) has introduced the Ensuring Pathways to Innovative Cures (EPIC) Act, which would eliminate the pill penalty and grant small molecule drugs the same 13-year market window as biologics. This simple, two-page bill would restore fairness in pharmaceutical R&D and ensure continued investment in widely used and essential pill-form medications.
Recent polling underscores strong public support for eliminating the pill penalty. A survey conducted by the Commitment to Seniors project found that 86% of likely voters over the age of 55 were concerned about the policy’s impact on drug innovation. More than 75% of respondents supported fixing the pill penalty, while over 80% backed the EPIC Act as a solution.
While full repeal of the Inflation Reduction Act remains the ideal goal, removing the pill penalty is an urgent and necessary step. Congress must act swiftly to protect pharmaceutical innovation and ensure that patients continue to have access to life-saving medications. Including the EPIC Act in the upcoming reconciliation package should be a top priority for lawmakers committed to medical progress and patient care.
