LDI Executive Director Rachel Werner welcomes attendees to the Institute’s first post-pandemic in-person conference. (Photo: Hoag Levins) Also, see conference photo page.

More than a dozen speakers held forth on May 5 at the Leonard Davis Institute of Health Economics (LDI) conference,  “A Prescription for the Future of Drug Pricing.” And while there was a spirited debate over the role of Pharmacy Benefit Managers and other issues, there was wide agreement that drug pricing is poised to enter a new era in the U.S.

“Our goal for this conference was to shine a light on policies to address drug pricing. Our speakers ably met that challenge, tackling the financial complexities of the pharmaceutical market, the potential impact of impending regulatory changes, and the politics behind this moment,” said Rachel M. Werner, MD, PhD, LDI Executive Director.

The Inflation Reduction Act (IRA) will enable the government to negotiate Medicare drug prices for the first time. Some experts said the act’s new consumer-friendly features for the Part D program – including a $2,000 annual cap for beneficiaries’ out-of-pocket costs – could have a larger impact than the government’s ability to negotiate drug prices.

“We’re likely to see consumers as the winner in the end,” said James McSpadden, MDiv, MA, Senior Policy Advisor at the AARP Public Policy Institute.

Critics, however, said the measure could put a crimp on innovation, and lead to fewer traditional small molecule drugs, which would have only nine years of patent protection compared to 13 years for biologics.

“I feel like we’re really close to hitting an artery,” said John O’Brien, PharmD, MPH, CEO of The National Pharmaceutical Council. “What is this going to do to innovation and development? The IRA will cause people to move away from developing small molecule drugs. It’s also going to have a deleterious effect on cancer care.”  

Other speakers said that there remains sufficient financial reward to keep innovation strong. The new drug price regulations put the U.S. more in line with European nations where drugs cost 1/3rd to 1/4th of what they cost in the states. Pharma firms are international and are used to regulation.

But the new system should be transparent and uncomplicated.

“The first thing about drug pricing reform: keep it simple,” said James Robinson, PhD, MPH, Director of the Center for Health Technology at the University of California, Berkeley.

Still, it’s likely that the bill will get massively tested in the courts before its novel provisions take effect.

“The industry is going to fight this with everything they have,” said Stacie Dusetzina, PhD, Professor of Health Policy and Cancer Research at the Vanderbilt University School of Medicine.   

Another concern is the short time that the government has to implement the new law. In his keynote address, Mark McClellan, MD, PhD who oversaw Part D’s implementation as CMS Administrator and is the founding Director of the Duke-Margolis Center for Health Policy, pointed to current CMS Deputy Administrator Meena Seshamani, MD, PhD a fellow panelist in the audience, and said “Please be sure to give her your sympathy. They have like six months from now to implement this [new drug] program. We had two years between when the Medicare Modernization Act passed and when drug coverage was supposed to be up and running.”

The debate was lively. Here are 10 takeaways from the day.

Inflation Reduction Act: Seismic Change for the U.S. Drug Market, if it Stays Intact

Alternative Payment Models Might Fill Gaps Left by the IRA

Experts Debate the Role of PBMs

A Closing Point on the IRA


Colonial Penn Center entrance

LDI Staff

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