How the IRA is impacting the US generic drug market

For more than four decades since the passage of the Hatch-Waxman Act, the US generic drug market has provided patients with low-cost alternatives to brand-name medicines, saving the health care system billions while preserving incentives for biopharmaceutical innovation.

Today, low-cost generics account for nine out of every 10 prescriptions dispensed in the USA and come with an average copay of about six dollars, according to trade group Pharmaceutical Research and Manufacturers of America (PhRMA).

Unfortunately, the Inflation Reduction Act’s (IRA) price-setting provisions are a step backwards from the progress ushered in by the Hatch-Waxman framework and will disrupt the delicate balance that’s made the generic drug market so robust in the U.S. By forcing generics to compete with a government-set price, the IRA undercuts their incentive to enter the market in the first place.