The Inflation Reduction Act's Modeled Impacts upon Late-Stage R&D

The impact of the Inflation Reduction Act (IRA) upon late-stage developments has assumed to be limited. The Congressional Budget Office's IRA analysis excluded post-approval innovation, potentially overlooking substantial economic risks to drug developers and declines in the availability of treatments in areas of high unmet medical need such as oncology.

A total of 1148 secondary trials from 364 FDA-approved medicines, published from 2018 to 2025, were obtained from Biomedtracker and clinicaltrials.gov. We use fractional logit regression to model the number of studies and use fractional multinomial logit regression to model the share distribution of secondary indication studies across 19 disease groups to identify any change in the share distribution post-IRA .

We find that, after the IRA's introduction, small molecule follow-on studies in oncology exhibited a statistically significant 37% decline (p < 0.05), lead indication small molecule oncology approvals exhibited a statistically significant 27% decline (p < 0.05), and the share of orphan oncology studies exhibited a statistically significant 14% decline (p < 0.05).

This study's results call into question claims that the IRA would have minimal negative effects upon late-stage biopharmaceutical R&D, as the introduction of the IRA is associated with a decline in small molecule oncology studies. We hope this study reinvigorates debate about the law's possible unintended consequences and encourages thoughtful policy solutions, as the IRA appears to negatively impact patients seeking needed new medicines, particularly those addressing metastatic late-stage cancers with a small molecule modality.