Pharmaceutical companies are delaying, or outright canceling, the development of new medicines following new drug rules signed into law by President Joe Biden, Bloomberg reported.
The Inflation Reduction Act (IRA), which passed along partisan lines in Congress August 2022, introduced provisions that allow Medicare to negotiate prices for new pills nine years after they’ve hit the market and new biologic drugs after 13 years on the market. While policymakers intended for the negotiations to reduce healthcare costs for elderly Americans on Medicare, the negotiations are also delaying the release of new drugs.
Treatments for ovarian cancer, Stargardt Disease, bile duct cancer, bladder cancer, multiple myeloma, mesothelioma, different kinds of blood cancer and hemochromatosis are among the diseases being slow-walked or canceled by drug companies, according to Bloomberg. (RELATED: AARP Spent Millions Advocating For New Laws That Likely Benefit A Major Corporate Backer)
The Medicare negotiations introduced under the IRA compel drug companies to accept offers made by the government to buy their drugs. If companies refuse the government’s price, they face an excise tax of up to 95% on sales of that drug, according to KFF News.
“One of the reasons why senior citizens are living longer in retirement is the fact that the United States is the leader in biomedical research and breakthroughs in new therapies,” Senior Research Fellow at the Heritage Foundation’s Center for Health and Welfare Policy Bob Moffit told the Daily Caller News Foundation. “When we are going to have fewer approvals for new medicines for patients battling neurological diseases or cancer or certain types of infectious disease, that is going to affect people on Medicare.”
Students at the University of Arizona College of Medicine – Phoenix campus (Screenshot/YouTube/UA College of Medicine – Phoenix)
Relay Therapeutics, which was developing a treatment to address bile duct cancer, announced it would be pivoting to a broader assortment of cancers, Bloomberg reported. As a consequence of broadening the scope of their drug, it will take longer for their product to become available to patients.
“The IRA favors accessing larger opportunities initially versus the conventional approach of speed to market with smaller indications,” Relay CEO Sanjiv Patel said during an earnings call this year.
Seagen, which is owned by Pfizer, has also ended research on a cancer drug over the IRA’s price negotiations, according to Bloomberg. The company was seeking approval for an existing drug to treat bladder cancer, but determined spending money on the necessary studies would not be profitable, as the drug would be subject to price negotiations around the time they expected approval.
Alnylam Pharmaceuticals, which was planning on testing a treatment for a rare disease that causes vision loss, abandoned plans to enter into a final stage study so the firm could consider the implications of the IRA.
A Congressional Budget Office estimate released one month after the IRA went into effect projected that 13 fewer new drugs would be made available over the next 30 years due to the legislation.
Scholars at the University of Chicago estimated that 79 fewer new drugs would come to market over the next 20 years because of the IRA. The health consultancy firm Vital Transformation, meanwhile, projected there would be up to 139 fewer new therapies over the next 10 years as a result of the legislation.
Pharmaceutical Research and Manufacturers of America, a drug manufacturer trade association, found that 78% of its members were expecting to cancel some of their drug development projects in a 2022 survey it issued following the IRA’s passage.
The Centers for Medicare and Medicaid Services did not respond to the DCNF’s request for comment.
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