For example, the Inflation Reduction Act of 2022 (IRA) enacted on August 16, 2022, seeks to reduce prescription drug costs by, among other provisions, allowing Medicare to negotiate prices for certain high-cost prescription drugs in Medicare Parts B and D, imposing an excise tax on pharmaceutical manufacturers that refuse to negotiate pricing with Medicare, and requiring inflation rebates to limit annual drug price increases in Medicare. These provisions began taking effect progressively starting in 2023, and, in January 2026, CMS announced the 15 drugs selected for the third cycle of Medicare drug price negotiations. Beginning in 2025, the IRA also eliminated the coverage gap under Medicare Part D by significantly lowering the enrollee maximum out-of-pocket cost and imposing a new manufacturer discount program. However, various industry stakeholders, including certain pharmaceutical companies and industry trade organizations have initiated lawsuits against the federal government asserting that the price negotiation provisions of the IRA are unconstitutional.
