The Inflation Reduction Act (IRA) will introduce arbitrary changes in drug development as pharma companies are forced to work with complex new regulations that make it harder to meet patient needs, said investors and drug makers at a June 7 panel at the 2023 Biotechnology Innovation Organization (BIO) International Convention.
Another panel at the convention that day looked at the IRA from patients’ perspectives.
The IRA discourages development of small-molecule drugs, incremental improvements, and other good practices—while encouraging decisions that can make drugs harder to develop, administer, and afford, said participants in a panel called The Inflation Reduction Act – A Market-Driven Event Impacting the Development of New Treatment. It was moderated by Nick Shipley, BIO’s Chief Advocacy Officer.
“I think what we see from this policy is a real misunderstanding of the value of medicines and the investment that is required to really get medicines to market,” said panelist Tess Cameron of RA Capital Management, L.P., which invests in drug development. She said the policy puts in distortions, such as giving 13 years of market protections for biologics as opposed to nine years of protection for small molecules.
“We’ve had seed-stage companies where the discussion in the boardroom is, ‘You have this innovation as a small molecule. Could you make it a more complex biologic, because that’s the only way that you’re going to get funded.’ That’s really a kind of distorted,” Cameron said. “Biologic discovery and development can actually, ultimately, end up being more expensive for society.”
Another example of a provision that alters calculations by drug makers gives drugs administered by a doctor, and therefore covered under Medicare Part B, nine years of protection from forced price “negotiations” while self-administered drugs covered under Medicare Part D are only protected for seven years, said J. Lance Grady, Practice Director, Market Access, Avalere Health.
“One of the benefits to Part D drugs is that they are oral or self-administered, and you’d like to think CMS [Centers for Medicare & Medicaid Services] would know, on the heels of a public health emergency, that they might not want their patients to ambulate—that they might want patients to self-administer. Another benefit [of self-administering] is the affordability,” Grady said.
According to Robert Truckenmiller, Senior Vice President and Head of U.S. Market Access at GSK, there are still a lot of unknowns about how the law will be implemented and how other factors that impact drug revenues, such as the 340B program, will work alongside drug price controls.
“We don’t know, and it’s really hard to predict what is going to happen from a competitive situation, what’s going to happen when you see products that are negotiated,” he said. “How does that impact the cost and how do you navigate that?”
Dealing with the unknowns will require both drug developers and investors to be ready to identify new opportunities and build business models that take advantage of opportunities, said Amanda Mott, Vice President, U.S. Market Access, ViiV Healthcare.
“We’re going to have to really be following along as this works through both the legislative piece as well as the regulatory environment. So, be flexible and think about how you need to pivot,” Mott said. “Revisit expectations that you have on pricing on sequencing of indications—all of that. You need to go back, and you need to really think about it under this lens of what should our expectations should be, making sure you bring investors along in that journey.”
The patient perspective on price controls
Another June 7 panel, entitled Stand Up For Patients: Patient and Innovator Perspectives on IRA Implementation, included Jamie Sullivan, Senior Director of Policy, Advocacy, & Patient Engagement of the EveryLife Foundation for Rare Diseases; Eric Gascho, Vice President of Policy and Government Affairs at the National Health Council; Scott Weintraub, SVP, U.S. Commercial Operations, Alexion, AstraZeneca Rare Disease; and Michael Ward, Vice President of Public Policy and Government Relations of the Alliance for Aging Research.
The panelists noted IRA’s cost-smoothing provisions, which allow patients to spread out insurance costs over the year. The $2,000 cap on out-of-pocket costs for Medicare Part D is beneficial, but they listed a lot of concerns about how IRA will hinder drug development.
They agreed that a lot of the impacts have yet to become clear and are dependent on a host of decisions being made during implementation.
“Right now, we’re in the process of seeing in real time how the agency plans to roll out what is probably the most impactful law on the patient and manufacturing community since the passage of affordable care,” said BIO Chief Policy Officer John Murphy, who moderated the panel.
