# Inflation Reduction Act 2022: Medicare drug price negotiation

Source: https://onco.cc/terms/inflation-reduction-act/  
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## TL;DR

The 2022 US law that for the first time lets Medicare negotiate prices for top-selling drugs, capped what older patients pay for prescriptions at 2,000 dollars a year, and exempted drugs approved only for rare diseases, an exemption widened in 2025.

## Summary

United States, federal statute. The Inflation Reduction Act was signed on 16 August 2022 (Public Law 117-169). Its prescription drug title created the Medicare Drug Price Negotiation Program (Social Security Act sections 1191 to 1198), inflation rebates, and a redesign of Part D. Primary text: the Congress.gov record of H.R.5376; the Centers for Medicare and Medicaid Services publish the programme pages and negotiated prices.

What it changed: Medicare selects high-spending drugs that have been on the market without generic or biosimilar competition for at least seven years (small molecules) or eleven years (biologics) and negotiates a 'maximum fair price' that takes effect two years later. The first ten drugs, including the BTK inhibitor ibrutinib, had negotiated prices from 1 January 2026; the second list of fifteen, with prices from 2027, included the cancer drugs palbociclib, enzalutamide, pomalidomide and acalabrutinib. Part D out-of-pocket spending was capped at 2,000 dollars a year from 2025, which for patients on oral cancer drugs replaced bills of ten thousand dollars or more. Drugs with a single orphan designation and no other approved use were excluded; the One Big Beautiful Bill Act of July 2025 (Public Law 119-21) broadened that exclusion to drugs with multiple orphan-only indications and restarted the clock at the first non-orphan approval.

The arguments: manufacturers sued (unsuccessfully so far) and warned of fewer small-molecule cancer drugs, the 'pill penalty' of nine versus thirteen years; supporters point to the caps and the first negotiated savings. Oncology is disproportionately affected because cancer drugs dominate the highest-spending lists, and the orphan exclusion shapes which indications companies pursue first.

## Fields

- Kind: Term
- Last checked: 2026-09-17
- Also known as: Inflation Reduction Act; IRA drug negotiation; Medicare Drug Price Negotiation Program; Medicare negotiation; maximum fair price; orphan exclusion; ORPHAN Cures Act; pill penalty; Part D out-of-pocket cap; inflation rebates
- Tags: law; us

## Sources

- Wikipedia: https://en.wikipedia.org/wiki/Inflation_Reduction_Act
- Wikipedia: https://en.wikipedia.org/wiki/Inflation_Reduction_Act
- Congress.gov: H.R.5376, Inflation Reduction Act of 2022 (Public Law 117-169): https://www.congress.gov/bill/117th-congress/house-bill/5376
- CMS: Medicare Drug Price Negotiation Program: https://www.cms.gov/initiatives/medicare-prescription-drug-affordability/overview/medicare-drug-price-negotiation-program

## Connected records

- terms: [340B Drug Pricing Program](https://onco.cc/terms/340b-program/), [AMNOG (Germany, 2011)](https://onco.cc/terms/amnog/), [Biologics Price Competition and Innovation Act 2010](https://onco.cc/terms/bpcia/), [Biosimilar](https://onco.cc/terms/biosimilar/), [China National Reimbursement Drug List negotiation and volume-based procurement](https://onco.cc/terms/china-vbp-nrdl/), [EU HTA Regulation (EU) 2021/2282: joint clinical assessments](https://onco.cc/terms/eu-hta-regulation/), [Financial toxicity](https://onco.cc/terms/financial-toxicity/), [Hatch-Waxman Act 1984](https://onco.cc/terms/hatch-waxman/), [Health technology assessment (HTA), reimbursement and QALYs](https://onco.cc/terms/hta/), [Medicare coverage with evidence development](https://onco.cc/terms/medicare-ced/), [Oncology drug pricing and price transparency](https://onco.cc/terms/drug-price-transparency/), [Orphan Drug Act 1983](https://onco.cc/terms/orphan-drug-act/), [Orphan drug designation](https://onco.cc/terms/orphan-designation/), [US regulatory exclusivity periods](https://onco.cc/terms/us-regulatory-exclusivity/)
- drugs: [Enzalutamide](https://onco.cc/drugs/enzalutamide/), [Ibrutinib](https://onco.cc/drugs/ibrutinib/)
- bottlenecks: [Incentives reward me-too drugs and marginal gains](https://onco.cc/bottlenecks/b-incentive-misalignment/), [Prices and value](https://onco.cc/bottlenecks/b-drug-pricing/)

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