As President Joe Biden signs the Inflation Reduction Act into law, drugmakers in the USA are poring over the likely impact on drug prices, and how best to respond to its enactment.

The legislation passed in the US Congress with Vice President Kamala Harris casting the decisive vote in an otherwise deadlocked Senate.

That evident lack of bipartisanship put the kibosh on Democrats’ more ambitious plans, with the new law representing a greatly watered down version of the original $3.5 trillion Build Back Better plan.

Democrats have had to scrap limits on certain drug price increases above inflation, for example, with this provision applying only to drugs paid for by the federal insurance fund Medicare.

Nonetheless, the Inflation Reduction Act is a very significant piece of legislation, unlocking subsidies for so-called Obamacare recipients in order to reduce annual premiums by $800 for around 13 million people.

The new law also finally realizes a long-held ambition for Democrats, empowering Medicare’s administrators to negotiate certain drug prices directly, up to a point.

In this week's episode of The Pharma Letter Podcast, we take a quick look at the Act’s provisions and the likely impact on drugmakers with Stephanie Kennan, a senior member of the Federal Public Affairs group at McGuireWoods Consulting.