On Thursday, August 15th, the Biden Administration announced prices for the 10 drugs that have been negotiated by the government to save patients money at the pharmacy counter. The Associated Press (AP) said that this came “after months of negotiations” where 10 of the more expensive drugs used by those on Medicare (such as blood thinners, diabetes drugs, and certain blood cancer medications) will see price reductions. The reductions, according to the AP, will range between 38% and 79% and take effect in 2026.
These negotiations were a result of the Inflation Reduction Act (IRA) of 2022. Although the IRA did many good things for patients, such as capping out-of-pocket costs, it also will have a negative impact on the drug discovery pipeline—and that is a tragedy for all patients now and in the future who are battling lethal and chronic diseases. This negative impact on the drug discovery pipeline is due to the IRA’s effect on new investment, new treatments, and new cures.
Specifically, the IRA created a huge disincentive to fund research in small molecule drugs by treating them differently than biologics. Currently, most drugs on the market are small molecule drugs. They are (usually) those that can be taken orally, as opposed to biologics that are normally injected or infused in a doctor’s office. Under the IRA, small molecule drugs are subject to price negotiations seven years after approval by the Food and Drug Administration (FDA), with the price control taking effect in the ninth year. Biologics are subject to price negotiations 11 years after FDA approval, with the price control taking effect in the 13th year. That difference of four years can have a profound effect on decisions taken by drug developers and investors.
Dr. Steven Potts, the Chair of ICAN’s Drug Development Council, and a noted drug developer and Arizona entrepreneur, testified before the House Energy and Commerce Committee on the impact of the IRA on investment in drug development. Dr. Potts had conducted a survey of venture capitalists and biotech executives and found that a move away from small molecule drugs was in the plans for more than half of those who responded. The bottom line: to get new cures and treatments to the market, you need extensive research and development. To get extensive research and development, you need funding. With so many funding sources moving away from small molecule drugs, their future is very much in doubt. (Dr. Potts’s testimony can be found here, beginning at 31:40).
It’s important to remember everything that is at stake on this issue, for patients and for Arizona. Arizona is a growing state when it comes to biotech investment. Under the leadership of Joan Koerber-Walker, the president of AZBio, we have made great strides and are trending up in the biotech field. To enable this, elected officials from both sides of the aisle in Arizona have fostered a tremendous environment where small biotech firms that rely on relatively few products can prosper. We cannot let this misguided federal policy get in the way of that continued growth and development. We need to fix the small molecule penalty.
That is what we need to focus on now. We have worked with both of our Senators, Kyrsten Sinema and Mark Kelly, and the Arizona Congressional delegation to inform them of these problems because we are facing a future where drugs and groundbreaking cures never see the light of day for reasons that simply have to do with arbitrary legislation. There is a bipartisan fix for the small molecule penalty that has been drafted in the House, H.R. 7174, the Ensuring Pathways to Innovative Cures (EPIC) Act, to align the price-setting timelines for both small molecule drugs and biologics at 13 years. We hope that all members of Arizona’s Congressional delegation will enthusiastically support it.
Research in both small molecule drugs and biologics is critical to provide the cures that patients hope and expect in the future. Drug development should not be based on an arbitrary time distinction between when classes of drugs will be subject to price negotiation and price controls, but rather on what is most likely to be successful in treating and, ultimately, curing disease.
