Updated National Pharmaceutical Council analysis finds sustained decline in industry-funded trials following implementation of the Inflation Reduction Act

A new analysis from the National Pharmaceutical Council (NPC) revisits earlier research examining the potential impact of the Inflation Reduction Act (IRA) on clinical development involving approved drugs, incorporating an additional 10 months of post-IRA data to assess whether previously observed trends have persisted.

The Baseline

• A new NPC analysis extends earlier research examining potential impacts of the IRA on clinical development activity by incorporating an additional 10 months of post-IRA data.
• The findings suggest a continued decline in industry-funded Phase 1–3 trials involving approved drugs, while government-funded trial activity did not show a similar statistically significant trend.
• The analysis also found a greater decline in oncology trials involving small molecule drugs than biologics, contributing to ongoing discussions about how the IRA may influence post-approval research and development.

The analysis focuses on the IRA's Drug Price Negotiation Program (DPNP), which introduced new timelines under which eligible medicines may be selected for Medicare price negotiation. Since the legislation was enacted in 2022, questions have been raised about whether these provisions could influence investment decisions related to ongoing clinical development, particularly for approved products seeking additional indications.

To evaluate these questions, NPC extended two previously published analyses using data from Citeline's Trialtrove database. The study included Phase 1–3 clinical trials initiated between July 2014 and June 2025 in which the primary tested drug had received approval by March 2026. Vaccine-related trials and studies focused on the prevention or treatment of COVID-19 were excluded. By incorporating a longer post-IRA observation period, the authors sought to assess whether the trends identified in earlier analyses remain evident as additional data become available.

The first analysis examined trends in clinical trial initiation among approved drugs by comparing industry-funded and government-funded studies. The dataset included 17,194 industry-funded trials and 2288 government-funded trials initiated during the study period.

Across all therapeutic areas, the average monthly number of industry-sponsored trials declined from 144.2 before the IRA to 91.5 afterward, representing a 36.6% reduction. An interrupted time series analysis found that “the IRA's passage was associated with an immediate drop of 11.9 industry-funded trials, followed by an additional downward trend of 1.4 trials per month post-IRA.”

Government-funded trials served as a comparison group because they were not expected to be directly affected by the legislation. While the average number of government-funded trials also declined over the study period, the authors reported that:

“The IRA's passage was not associated with a statistically significant drop or downward trend post-IRA for government-funded trials.”

The IRA establishes different timelines for DPNP eligibility, with small molecule drugs becoming eligible for potential selection sooner than biologic products. This has led to concerns that the legislation may affect incentives for continued development differently across product types, with a potentially greater impact on small molecule therapies.

The researchers then conducted a separate oncology-focused analysis to examine whether trends differed between small molecule drugs and biologics. This analysis included 4820 industry-funded Phase 1-3 oncology trials involving approved drugs, of which 2780 primarily evaluated small molecules and 2040 primarily evaluated biologics.

Monthly oncology trial initiations declined for both molecule types following the IRA. The average monthly number of trials fell by 40.7% for small molecule drugs and 36.3% for biologics. Using a difference-in-differences analysis, the researchers estimated that small molecule oncology drugs experienced “an additional reduction of 3.4 trials per month” relative to biologics.

Summarizing the findings, NPC stated:

"Updated investigation of early signals of the IRA's impact on clinical development shows a sustained decline in industry-funded Phase 1–3 trials of approved drugs across therapeutic areas associated with the IRA, with a disproportionately greater decline in small molecule oncology drugs."

The authors acknowledged that the analysis does not establish a causal relationship and is subject to several methodological limitations. Nevertheless, they concluded that the findings add to the growing body of evidence examining how the IRA may influence post-approval research, development of subsequent indications, and broader debates surrounding healthcare and innovation policy.