Drug price controls in the Inflation Reduction Act (IRA) harm the development of new drugs, according to Sept. 20 testimony in Congress from John Crowley, CEO of Amicus Therapeutics and Vice Chair of the Board of the Biotechnology Innovation Organization (BIO).
“Exciting new therapies, like gene editing, gene therapies and precision-based small molecules offer hope today where for so many, for so many years, there has been none,” said Crowley’s written testimony for the hearing, “How the IRA’s Price Setting Scheme Means Fewer Cures for Patients,” at the House Energy & Commerce Oversight and Investigations Subcommittee.
“We need to break down barriers, encourage massive private capital flows to fund biotech entrepreneurs (and) incentivize our largest biopharmaceuticals companies to invest in rare disease programs,” Crowley testified. “We are instead now facing a massive headwind brought about by an ill-conceived drug control pricing law with consequences—some intended, some unintended—that are instead curtailing funding, further closing avenues of research and, tragically, taking away hope for many who are most in need.”
Crowley explained how the IRA’s price-setting provisions harm drug research in general. He detailed problems the law causes for rare disease research and development of small molecule drugs, in particular. He also noted how price controls dramatically reduced biotech innovation in Europe and said the Centers for Medicare & Medicaid Services (CMS) is mishandling the implementation of price controls.
Members of Congress agree on impact of price controls
Several Members of Congress concurred with Crowley’s assessment.
“The IRA’s drug pricing provisions harm patients by crushing innovation. Some companies have already stopped their clinical trials because of IRA price negotiations, including trials for additional indications. Americans deserve the earliest access possible to the most effective innovations,” said Energy & Commerce Chair Cathy McMorris Rodgers (R-WA). “Citizens of other countries with price-setting schemes cannot access the same medications as Americans. The IRA gives bureaucrats virtually unlimited discretion to dictate drug prices.”
Subcommittee Chair Morgan Griffith (R-VA) said most of the drug pricing provisions in the IRA are concerning or, as written, unconstitutional. He added companies have virtually no option but to accept the price that is dictated to them.
Rep. Debbie Lesko (R-AZ) agreed drug companies are powerless to push back, so the price “negotiation” program is not a real negotiation. She said 24 companies have already curtailed drug development because of the IRA.
The rare disease challenge
Crowley said he got into the biotech field for personal reasons.
“Twenty-five years ago, our family’s life changed. First, our then 15-month-old daughter Megan was diagnosed with Pompe disease, a rare and fatal neuromuscular genetic disorder,” according to his written testimony. “I quit my job, took a home equity loan and cash advances on our credit card and together with a pioneering researcher, I co-founded a small biotechnology company to develop a medicine for Pompe.” His second child, Patrick, was also diagnosed with the disease.
His team developed a life-saving enzyme that his children started taking in 2003. They are doing well, even though doctors expected they would not survive childhood.
Millions suffer from rare diseases, but the IRA is creating an obstacle to developing the orphan drugs that treat those diseases, Crowley said.
“There are nearly ten thousand rare diseases, only a few of which, like cystic fibrosis and hemophilia, are well known to the wider public,” said Crowley. “Collectively they afflict almost 30 million people in this country. About 95% of these disorders have no treatment, and many are not even being researched. This is a public health crisis of epic proportions.”
Crowley noted the challenges of drug development. Only 12% of drug candidates promising enough to enter clinical trials ultimately receive approval, and development costs averaging more than $2.5 billion.
“Now consider rare diseases—which in some cases afflict just a few hundred people. Such a small patient population makes it extraordinarily difficult for biotech companies to justify the massive R&D costs required to develop a new treatment. Even if a rare disease therapy proves successful and receives FDA approval, firms often struggle to earn back their upfront investments,” his testimony said.
The 40-year-old Orphan Drug Act has supported the development of drugs for rare diseases, but the price controls counter the law’s intentions, Crowley said.
“Instead of building on the successes of the Orphan Drug Act, many policymakers have done a U-turn, pursuing policies that punish—rather than reward—companies trying to find novel treatments for rare diseases,” he said.
Crowley explained the IRA essentially punishes drug makers for investigating whether an orphan drug might be used for a second indication. “That’s a big problem. Drug makers routinely investigate whether a drug already approved to treat one rare condition could possibly treat another. Historically, this ‘follow-on’ research has provided transformational cures,” he said. “One biotech company already stopped a late-stage clinical trial that would have determined whether a rare heart disease drug would also work for a rare eye condition.”
In response to questions during the hearing from Rep. Scott Peters (D-CA), about how to incentivize orphan drug development, Crowley explained the IRA actually discourages their development.
One solution proposed to revive orphan drug incentives is the ORPHAN Cures Act, introduced Sept. 18 by Rep. John Joyce (R-PA) and Wiley Nickel (D-NC). During the hearing, Rep. Joyce criticized the IRA, noting 25% of all orphan drugs in the U.S. market have a second orphan indication.
Harming small molecule development
Crowley’s testimony also addressed the IRA’s disincentive to invest in small molecule drugs, instead of large-molecule biologics.
“Small molecule drugs account for about 90% of approved medicines. They’re often more convenient because they can be taken orally, whereas biologics are delivered by injection or infusion,” he said. “One is not ‘better’ than the other,” and for patients needing cures, any drug is welcome.
“Yet the IRA says the government can intervene in the market and set prices on small molecule medicines starting just nine years after FDA approval, compared to 13 years for biologics,” he said. “This policy slashes the value of any new small molecule drug. That’s because about half of drug sales occur between 10 and 13 years after FDA approval.”
CMS makes things worse
“Beyond the problems inherent in the statute itself,” CMS, which is overseeing the “negotiation” process is doing more harm to drug innovation through their implementation of the IRA, according to Crowley.
“CMS has stepped well beyond its statutory authority to significantly over-impose the IRA’s price control provisions on new and novel products that have not yet even hit the statutory market maturity levels outlined in the statute,” according to his testimony.
One problem is that CMS’s actions are unpredictable, which sows uncertainty among investors.
“CMS must also clarify how its review of the evidence will inform its setting of the maximum fair price (‘MFP’) for a drug selected for negotiation. CMS’s approach remains unclear and presents untenable levels of uncertainty,” he said.
Another problem is that the CMS decided to group together all drugs with the same “active moiety/active ingredient” when determining which drugs are eligible for negotiation.
This disincentivizes “sustained and continuous improvements to molecules, pathways and modes of administration to achieve maximum clinical benefit for patients,” even though drug development relies heavily on such incremental improvements,” he said.
Due to the challenges of CMS implementation, “Congress should increase its oversight of the Centers for Medicare & Medicaid Services (CMS) as the Agency moves forward in implementing the IRA’s price negotiation program,” Crowley said.