EPIC Act a Good First Step Toward Undoing the Damage Biden’s IRA Did to Medicare

by Newt Gingrich

President Joe Biden left the new Trump administration with a lot of messes to clean up.

Between open borders, sky-high inflation, a weaponized IRS, a degraded military, wasteful green energy spending, and other special interest handouts—it is hard to keep track. But one of Biden’s most egregious efforts was the scheme to covertly manipulate and financially drain Medicare—and American seniors’ wallets—to help pay for his handlers’ misguided political agenda.

Biden, through the intentionally misnamed Inflation Reduction Act (IRA) spending plan, broke Medicare. Seniors’ health care costs have gone up, not down. And patients’ access to care has decreased, not increased as promised. President Donald Trump now has a mandate to fix this. More broadly, he has pledged to lower costs, improve the quality of care deserved by older Americans in Medicare, and usher in a new era of life-saving innovation. There is much to be done to save Medicare and help Make America Healthy Again, including halting any further implementation of the IRA. But Congress should take immediate action to eliminate what has become known as the Biden “pill penalty.”

The pill penalty refers to the unequal treatment small molecule drugs—medications in pill or tablet form—are given under the IRA’s so-called Medicare price negotiation. The provision is really government price fixing. This anti-consumer, anti-patient strategy gives new drugs a certain number of years of patent exclusivity on the market. Then the bureaucrat-set price kicks in. Drug manufacturers are forced to abide by the government’s price mandate or face tax penalties of up to 95 percent. These penalties kill business and opportunities for research and development.

Under the IRA, medications in pill or tablet form are given four fewer years of exclusivity than biologic drugs, which are often injected in clinical facilities. As a result, drug developers big and small have recently shelved countless investments in new therapies and clinical trials. All told, the University of Chicago conducted research that indicated the pill penalty alone would cause research and development investments in new medicines to decrease by $232 billion. This would result in the loss of 79 new small molecule drugs and 188 potential treatments.

The politics of this failed Biden policy are as simple as they are sinister. It’s all about money—not money to make medicines less expensive for those Medicare, but rather to show phantom projected Medicare savings. These billions in supposed savings could then be redirected to green energy tax credits, insurer subsidies, and other unrelated liberal pet projects.

Small molecule drugs were targeted because they are more common. Most patients with chronic and rare diseases prefer pills they can take at home over scheduled injections and infusions administered at health care facilities. Targeting more plentiful medicines means the government can impose more price controls, levy more taxes, and generate more government revenue.  

To put this in perspective, late last year the Biden administration oddly boasted how its IRA drug price negotiations for Medicare would produce a miniscule $1.5 billion in direct patient savings. That averages out to about $22 dollars per beneficiary when spread across the 67 million people in Medicare. Further, those tiny savings would not even be applied until 2026. Meanwhile, the same Biden administration applauded how in 2023 alone roughly $10 billion was immediately diverted from the IRA’s phantom Medicare savings to pay for electric vehicle and solar panel tax credits. All told, the Biden IRA spending plan raided more than $260 billion in phony projected Medicare savings for such nonsense.

No matter what Democrats claim, the IRA was not designed to make Medicare more affordable or effective for seniors. In fact, two years after its implementation, recent polling shows nearly 75 percent of older Americans now consider the IRA to be a failure. Two-thirds say they’ve seen their own Medicare costs increase. It also shows most now want President Trump to pause further implementation of Biden’s IRA until the new administration and Congress can assess its impact on Medicare and Americans who rely on it.

Congressional Republicans in both the House and Senate recently introduced bipartisan versions of the Ensuring Pathways to Innovative Cures Act (EPIC) to address the Biden “pill penalty.”

The bill would equalize the time before price controls kick in at 13 years for small molecule drugs and biologics. It’s a much-needed initial step, and one that should be retroactive to undo some of the damage done by President Biden’s IRA.

Making the EPIC Act into law would help President Trump fix Medicare, safeguard long-term incentives for American innovation and investment, and improve and save countless lives in the future. Congress should get this done.

Gingrich 360 consults with various companies in the health care industry which are affected by the small molecule drugs provisions in the Inflation Reduction Act.

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