Lawmakers, policy experts spar over the Inflation Reduction Act in Senate hearing

Tuesday's Senate Committee on Finance hearing on the Inflation Reduction Act (IRA) featured both proponents and critics of recent health policy decisions throwing punches, many of which have been publicly litigated ad nauseam.

IRA supporters defended President Joe Biden’s term-defining legislation because of its ability to reduce price increases for specialty drugs, cap out-of-pocket prescription costs, allow the government to negotiate with pharma companies and lower the nation’s uninsurance rate. They said the law is a good first step that needs further refinement.

IRA skeptics said the law has unintended side effects that will incentivize drug production practices that are less innovative. It's also led to an increase in prior authorization and step therapy delays, they said, and forced the Centers for Medicare & Medicaid Services to implement the Part D Premium Stabilization Demonstration, a short-term fix to premiums that were set to soar.

Both sides surely have heard each other’s arguments, and accompanying data, countless times.

“We’ve had a lot of numbers being thrown around here,” said Sen. Ron Wyden, D-Oregon, after witness testimonies. “It’s pretty much root canal work comparing everybody’s numbers.”

Wyden stressed that, despite all the noise, the law is helping seniors.

Judy Aiken, a 70-year-old retired nurse from Maine, told the committee she paid over $9,000 out of pocket and skipped doses for Enbrel, a drug used to treat psoriatic arthritis and psoriasis. Now, her out-of-pocket costs have been capped at $3,300, which will lower to $2,000 for everyone on Part D next year. In 2026, the drug will be reduced in price by 67% because of the drug price negotiation program.

In submitted comments, the Pharmaceutical Research and Manufacturers of America (PhRMA), a drugmaker lobbying group, pointed to a collection of reports that argue the IRA will ultimately increase costs for seniors, including one analysis showing 3.5 million Part D patients that could see increased out-of-pocket costs in 2026.

Wyden also chose to highlight recent comments from former President Donald Trump and vice presidential nominee JD Vance.

In the televised debate between Trump and Vice President Kamala Harris, Trump said he has the “concepts of a plan” to replace the Affordable Care Act. And last weekend, Vance promoted the idea of establishing different risk pools, potentially turning back the clock on preexisting condition coverage. Wyden called the policy a “de-facto repeal” of these critical protections.

“We know from experience that having separate risk pools often leaves people with preexisting conditions to pay higher premiums for health insurance, often being priced out of that coverage altogether,” said Jeanne Lambrew, director of healthcare reform and senior fellow at The Century Foundation. “People will not get needed care, they will experience worse health and they could prematurely die.

“I think, senator, you're right that this policy of separate risk pools, coupled with not extending the IRA tax credits, would significantly undermine the risk pool, raise premiums, cause more people to become uninsured, cause more hospitals to struggle to pay for that uncompensated care and effectively repeal the Affordable Care Act,” she added.

Another oft-repeated topic in the hearing concerned extending the Affordable Care Act (ACA) enhanced subsidies permanently beyond 2025. Ranking member Mike Crapo, R-Idaho, said doing so would increase the deficit by more than $325 billion in 10 years. 

The extensions have been largely supported by healthcare industry groups, from payers to hospitals.

“Now more than ever, a record number of patients benefit from access to affordable, quality health coverage thanks to enhanced tax credits, but if Congress fails to act, these Americans will see their premiums skyrocket—or lose coverage completely,” warned Charlene MacDonald, vice president of public affairs for the Federation of American Hospitals, in a statement ahead of the hearing.

Theo Merkel, a senior research fellow at the Paragon Health Institute, said the ACA’s popularity is largely because the health plans with $0 premiums are subsidized by the government, but the underlying plan designs are not high quality.

“The result is, over time, the ACA market has looked more and more like Medicaid managed care,” he said.

Seemingly not a day goes by where PBMs don’t catch flak for their role in the healthcare unaffordability crisis. Tuesday's hearing was no exception, with senators underscoring the importance in passing PBM reform.

Wyden said he’s optimistic PBM legislation will advanced during the lame duck session. He also said he believes Biden would sign a bill reining in PBMs.

As for the pharma industry’s claims that innovation will be stifled because of the IRA, Rena Conti, associate professor of markets, public policy and law at Boston University, said the data don't show this to be true.

She noted that the stock prices, merger and acquisition activity and venture capital spending are all increasing since the law was enacted. Additionally, corporations are continuing to issue stock buybacks and dividend payments, just as they did before the law took effect.

“What’s happening is the exact opposite of what pharma is claiming in court,” said Sen. Elizabeth Warren, D-Massachusetts, adding that Bristol Myers Squibb tells its investors a completely different story.

Bristol Myers Squibb made more than $12 billion last year on blood thinner drug Eliquis, but the company’s CEO told shareholders they are confident the company can navigate the IRA’s impact on the drug, Warren explained.