TITLE:
A Study on the Inflation Reduction Act (2022) and Its Impact on Pharmaceutical Pricing
AUTHORS:
Anand Subhash Waghmare
KEYWORDS:
Inflation Reduction Act, Inflation Rebates, Medicare Drug Price Negotiations, Out-of-Pocket Caps, Pharmaceutical Pricing
JOURNAL NAME:
Theoretical Economics Letters,
Vol.16 No.2,
April
10,
2026
ABSTRACT: In 2022, the Inflation Reduction Act (IRA) marked a pivotal shift in U.S. healthcare reform, particularly targeting the escalating costs of prescription drugs. The IRA aims to reduce prescription drug costs, expand benefits, and improve federal healthcare’s sustainability by introducing inflation rebates, Medicare Part D redesign, and allowing price negotiations for expensive prescription drugs (American Action Forum, 2022; KFF, 2024). This paper evaluates the IRA’s impact on Medicare beneficiaries, drug manufacturers, generic markets, and future pharmaceutical innovation. It also analyzes the legal difficulties aroused by stakeholders in the pharmaceutical industry and estimates potential extended outcomes for the U.S. healthcare and pharmaceutical landscape. Drawing on global pricing strategies, this analysis also highlights how U.S. policy innovations align or diverge from international regulatory frameworks (Sarnak et al., 2017; Tevis et al., 2024). This research paper also comments on how the IRA is incorporating financial policy tools with directives of public health, possibly working as an example for value-driven compensation in countries with wealth. The law’s conceptual framework merges market corrective methods aimed to settle pricing transparency and asymmetry in information in the pharmaceutical industry using Keynesian interventionist principles. The act could be the catalyst in the creation of private-public partnerships to reconsider the cycle, such as the innovation-to-market for vital drugs.