HARRISBURG, Pa. — President Joe Biden signed the Inflation Reduction Act into law on Tuesday.
The measures included in the bill went through several versions and major changes over years of debate. The final law—a hulking 755 pages—has major implications for health care and climate policy in the United States.
In health care, several measures aim to lower patient costs. The federal government will be required to negotiate prices for some high-cost drugs covered by Medicare and Medicaid.
The pharmaceutical industry opposes the plan, with a statement the Pharmaceutical Research and Manufacturers of America (PhRMA) saying it will stifle the development of new drugs.
But the nonpartisan Congressional Budget Office estimates the law will prevent 15 out of 1,300 drugs, or about 1% from coming to market over the next 30 years.
“Manufacturers will still have an opportunity to generate revenue based on the latest and greatest drugs that come to market,” Juliette Cubanski of the Kaiser Family Foundation said during an online panel on Aug. 11. “Those drugs won’t be selected for negotiation or eligible for selection for several years. We’re talking nine years for brand name drugs and 13 years for biologics.”
Drug price reductions won’t be felt for some years, as negotiations for 10 drugs start in 2026, followed by 15 drugs in 2027 and 20 drugs annually after 2029. The negotiations only apply to Medicare and Medicaid patients, but are also likely to lower drug prices for the people with private insurance.
In terms of energy, several measures aim to reduce U.S. carbon emissions by 40% from their 2005 levels by 2030.
The measures include a series of sticks and carrots for the oil and gas industry. For example, more offshore oil and gas drilling will be allowed, but taxed at a higher rate.
The oil and gas industry responded to the law with mixed reviews. The American Petroleum Institute opposes more taxes but supports other measures that subsidize building more green energy capacity through hydrogen power and carbon capture and storage.
Consumers, meanwhile, will now get tax credits to buy energy efficient appliances and electric vehicles.
While the bill does little to actually reduce inflation, the Congressional Budget Office estimates it will save the federal government $102 billion by 2031.