Does Medicare’s drug price negotiation disincentivize biosimilar development?

The Inflation Reduction Act’s Medicare drug price negotiation program may provide disincentives for the development of biosimilar development, James D. Chambers, Ph.D., a professor at Tufts University School of Medicine and an investigator at Tufts Medical Center, said in an interview. Chambers is a health economist and leads the Specialty Drug Evidence and Coverage (SPEC) Database.

“It’s incumbent on policymakers to make sure the right incentives exist so we get a sufficient number of biosimilars entering the space,” he said. “I’m doing the work now to examine pre- and post-IRA to see if we see if there's been a change in the volume of biosimilar development to see if there’s a signal.”

Chambers co-authored a paper published in November 2025 in Health Affairs Scholar that examined the unintended consequences of the Inflation Reduction Act’s Medicare price negotiation on biosimilars.

The concern, he said, is that by subjecting a biologic to Medicare price negotiation, the law can undercut the commercial rationale for a company to invest in developing a biosimilar competitor in the first place. He said the policy shift stands in contrast to pre-IRA efforts to promote biosimilar competition, which he characterized as broadly positive for the market.

Biosimilars are exerting real downward pressure on biologic drug prices across the healthcare system. “What we really need is to use the IRA to focus on therapies that we're not expecting biosimilar competition for and take advantage of the biosimilar competition to drive down price,” Chambers said. “With biosimilars driving down the costs of biologics, there’s an opportunity to shift biologics earlier in the treatment pathway in a manner that aligns use with guidelines.”

In this interview, Chambers discusses the unintended consequences of the IRA on biosimilars.