Amgen and AbbVie reported that the Inflation Reduction Act’s (IRA) new drug price negotiations dented their first-quarter sales, marking one of the earliest concrete financial impacts from the landmark healthcare law. The companies disclosed the effects after negotiated prices for the first set of drugs took effect in January.
The IRA, signed into law in 2022, empowers Medicare to negotiate lower prices for certain high-cost drugs. These quarterly results offer an early glimpse into how the policy reshapes revenue streams for pharmaceutical firms, particularly those reliant on top-selling medications that now face federal price caps.
Amgen noted that the negotiations affected sales of its blockbuster drugs, though the company did not specify exact dollar amounts. AbbVie similarly cited the policy as a headwind, adding pressure to its earnings amid competition from cheaper biosimilars. Both drugmakers are expected to provide more granular data in upcoming filings.
The impact could deepen as Medicare expands the list of negotiated drugs in subsequent years, potentially squeezing margins for a broader swath of the industry. For now, companies are adjusting pricing strategies and supply-chain logistics to mitigate the law’s bite, while investors monitor how quickly these changes erode market share.
Critics argue the negotiations may stifle innovation by reducing future revenue expectations. However, proponents counter that lower drug prices are necessary to improve patient access and control federal healthcare spending.