So-Called “Inflation Reduction Act” Reduces Incentive for Pharma Firms to Seek Approval for New Uses of Drugs


(p. A17) It may take years before we can fully appreciate the impact of the Inflation Reduction Act on the pharmaceutical industry, but we’re already getting signs of the damage. While Democrats boast that they’ve given Medicare the power to “negotiate” drug prices, the effect has been to saddle manufacturers with a complex and ill-conceived price-setting scheme. In response, many have canceled drug-development programs, resulting in an unfortunate but predictable loss for patients nationwide.

One poorly crafted provision is driving companies away from research into treating rare diseases. In its Oct. 27 earnings statement, Alnylam announced it is suspending development of a treatment for Stargardt disease, a rare eye disorder, because of the company’s need “to evaluate impact of the Inflation Reduction Act.” Alnylam’s decision turns on a provision in the Democrats’ bill that exempts from price-setting negotiations drugs that treat only one rare disease. The company’s drug is currently marketed as treating only amyloidosis, and thus is exempt from Medicare’s price setting. If Alnylam proceeded with research into treating Stargardt, it would lose its exemption.

That disincentive might be most pronounced in cancer treatments. On Tuesday [Nov. 1, 2022], Eli Lilly announced it is canceling work on a drug that had been undergoing studies for certain blood cancers. “In light of the Inflation Reduction Act,” the company wrote to Endpoints News, “this program no longer met our threshold for continued investment.”

. . .

Nearly 60% of oncology medications approved a decade ago received additional approvals in later years. The new law eliminates the incentive to conduct additional research, because its price-setting mechanisms kick in after nine years for small-molecule drugs and 13 years for biologics, regardless of how much research companies conduct after the drug’s initial approval.

For the full commentary, see:

Joe Grogan. “The Inflation Reduction Act Is Already Killing Potential Cures.” The Wall Street Journal (Saturday, Nov. 4, 2022): A17.

(Note: ellipsis, and bracketed date, added.)

(Note: the online version of the commentary has the date November 3, 2022, and has the same title as the print version.)

Leave a Reply

Your email address will not be published. Required fields are marked *