Congress Should Pass the EPIC Act to Fix Incentives for Small-Molecule Drugs; New Report Shows IRA Undermines Pharmaceutical Innovation

WASHINGTON—The Biden-era Inflation Reduction Act (IRA) undermines incentives to produce new innovations in small-molecule drugs and therefore could slow advances to treat diseases and conditions ranging from high blood pressure to Parkinson’s, according to a new report from the Information Technology and Innovation Foundation (ITIF), the leading think tank for science and technology policy.

ITIF’s report urges Congress to address the issue by passing the bipartisan EPIC Act, which would fix a disparity that currently subjects chemically derived small-molecule drugs to price controls after 9 years on the market, whereas large-molecule biologics have 13 years of market-based pricing.

“Partly because of their size, small-molecule drugs can target a tremendous range of medical conditions, so the reduced innovation incentive in the IRA will turn back the clock on medical progress if we don’t correct course,” said Stephen Ezell, vice president for global innovation policy and the director for ITIF’s Center for Life Sciences Innovation. “Price controls harm innovation and policymakers should eschew them altogether, but a first step to remedying the IRA’s harm on drug innovation is to at least apply them evenly . As such, the EPIC Act is an essential first step. It removes the IRA’s arbitrary penalty on small-molecule drugs, but broader reforms are needed to fully restore incentives for life-saving R&D. Patients can’t afford to wait.”

The bipartisan Ensuring Pathways to Innovative Cures (EPIC) Act aims to fix one of the most damaging aspects of the IRA by extending small-molecule drugs’ period of market exclusivity from 9 years to 13 years—matching the protection that biologics receive. This adjustment would:

• Restore balance to drug development incentives, ensuring small-molecule therapies remain a viable investment for pharmaceutical companies.
• Preserve patient access to a full range of treatments, particularly for conditions where small molecules play a crucial role, such as cancer, neurological disorders, and cardiovascular disease.
• Support continued research and development (R&D) in small-molecule innovation, which accounts for the vast majority of FDA-approved drugs and offers cost-effective, accessible treatment options.

“Drug development is already a high-risk, high-cost venture, and the IRA’s policies make it even harder to justify investing in small-molecule innovation,” said Sandra Barbosu, associate director of ITIF’s Center for Life Sciences Innovation. “By shortening the window for market exclusivity, the law shifts funding away from small-molecule research, leading to fewer breakthroughs, fewer treatment options, and ultimately, worse patient outcomes. We need policies that encourage—not discourage—scientific advancement.”

Ezell concluded, “The EPIC Act rights a major wrong by leveling the playing field, but it’s only the beginning. The IRA’s flawed approach to drug pricing is steering pharmaceutical innovation off course, putting critical medical breakthroughs at risk. Without broader reforms, America’s leadership in life sciences—and the future of cutting-edge treatments—hangs in the balance. Congress must act now to ensure policies fuel, rather than stifle, the next generation of life-saving cures.”