For the first time, the federal government has negotiated directly with pharmaceutical companies over the prices for a handful of drugs. The new prices, which were announced mid-August, take effect in January 2026, and they will help the Medicare program cap what individual patients spend out of pocket on their prescriptions in a year at $2,000.
The historic policy, which has been floating around for decades, was long opposed by “Big Pharma” until Democrats in Congress passed and President Joe Biden signed the Inflation Reduction Act in 2022.
Pharma tried to stop the negotiation policy in courts after it became law. Their concerns — namely, that these “price controls” will stifle innovation — have been echoed by Republicans and policy commentators with the recent finalization of the negotiated prices. With less profit, companies like Pfizer and Merck argue, it will be harder to hire scientists, invest in laboratory space, and set up clinical trials to test the medications of the future.
