“PILLS, PROFITS, AND POLITICS: BIG PHARMA’S INFLUENCE IN THE AGE OF THE INFLATION REDUCTION ACT”

Abstract

This study examines how pharmaceutical companies strategically adjust their lobbying activities in response to regulatory threats, explicitly focusing on the Inflation Reduction Act (IRA) of 2022. Using a difference-in-differences methodology comparing firms directly affected by Medicare price controls against less-affected peers, the research demonstrates that companies with products subject to IRA price negotiations significantly increased their lobbying expenditures by approximately $636,460 per quarter following the legislation's passage. Analysis of quarterly lobbying data from 2018-2025 for the top 20 U.S. pharmaceutical firms reveals that affected companies concentrated their lobbying efforts after the IRA's enactment, emphasizing ex-post influence over implementation details rather than prevention. A detailed case study comparing Pfizer and Sanofi illustrates how lobbying intensity directly correlates with regulatory exposure: Pfizer, with multiple products targeted for price negotiations, dramatically escalated its political engagement across multiple channels, while Sanofi, facing minimal immediate impact, maintained relatively stable lobbying activities. These findings contribute to understanding corporate political strategy by demonstrating that regulatory exposure drives lobbying intensity in a proportional, targeted manner. The research suggests that pharmaceutical pricing reform triggers sophisticated multi-channel political mobilization to shape implementation to mitigate financial impacts. This explains historical difficulties in achieving meaningful drug pricing reform and has implications for designing more effective healthcare policy that minimizes vulnerability to industry influence.