President Biden's push to let Medicare negotiate the prices of more drugs sooner after they come to market won't become law any time soon. But some experts say even raising the topic could scare off investment into new treatments.
President Biden's push to let Medicare negotiate the prices of more drugs sooner after they come to market won't become law any time soon. But some experts say even raising the topic could scare off investment into new treatments.The possibility of Medicare having even more negotiating power increases uncertainty around future returns on today's R&D, and some economists argue that may ultimately make some investments too risky.
That includes allowing the program "to negotiate prices for more drugs and bringing drugs into negotiation sooner after they launch," although it doesn't offer any more detail. The Inflation Reduction Act limited negotiations to certain drugs that have been on the market for several years but don't have competition from generics. The federal health department in September will reveal the first 10 that will be subject to talks with manufacturers, with new prices to take effect at the beginning of 2026."Investing in risky assets with long development times is all about expectations.
"All else equal, more uncertainty is costly," Ippolito said. The uncertainty exists partly "because policymakers are sure to push for expansions of the policy. But even independent of those changes, different administrations could conceivably use their authority in different ways."Biden's proposal for expanded price negotiations shouldn't really surprise anyone, investors included.
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