As it was predicted, Patients are paying the price to the Inflation Relief Act's Drug Reform
It's been three months now since president Biden has signed into law his Inflation Reduction Act (IRA) and, so far the rules for pricing drugs have caused a significant setback to medical researchbigger than what its advocates acknowledged as well as the Congressional Budget Office forecast.
Since the announcement, many biopharmaceutical companies have announced the end of drug development programs, citing the IRA as one of the reasons. In the current rate even the most significant predicted reductions in innovation prove to be too little.
This was a likely result. It shouldn't come as a shock that directing the government to arbitrarily set prices disincentivizes research-and-development investments. The end result is that those who have to be without revolutionary therapies and cures will be the ones to pay the most for these dangerous, ineffective "reforms."
Cutbacks in drug development are growing rapidly.
Then, in October Alnylam made it clear that they will not be working on the development of a new treatment for the Stargardt disease due to the consequences on the IRA. Then, in November Eli Lilly told Endpoints News that it was resigning from its work on a blood cancer drug due to this new legislation. According to an earlier Horizon story, biotech company Insmed as well as Acadia Pharmaceuticals are expected to stop working on the bronchiectasis medication brensocatib as well as the treatment for psychosis pimavanserin respectively. In a report to the Securities and Exchange Commission (SEC), Protagonist Therapeutics cited the IRA as one of the factors behind the decision to stop efforts to find other applications for the drug Rusfertide.
The problem doesn't end there. AstraZeneca Chief Executive Officer Pascal Soriot recently said the company might stop launching new cancer treatments on the United States because of the IRA. Bristol Myers Squibb expects to end funding for a variety of drug development programs, with the most likely being cancer treatments , or for certain "small molecules" drugs. In the latest SEC reports, Merck, Amgen, and Sanofi warned that the IRA could reduce revenues and profits and will ultimately hinder the development of new pharmaceuticals. A number of other biopharmaceutical companies have warned that a decline in research is coming due to the same reason.
There are those who see these alarming announcements as attempts by the industry to denigrate the IRA as well as the Biden administration as a kind of "retaliation" against drug price controls. However, such claims aren't up to the scrutiny of a simple inquiry.
It is important to note that the majority of these announcements took place in calls between companies with public markets as well as their shareholders. A recent report from an advisory firm for government relations documented not less than 26 earnings conferences in which the companies specifically addressed the issue of IRA-related earnings with investors. Intentionally misleading investors could make executives liable to accusations of securities fraud, an offense that is punishable by both criminal and civil penalties, which include penalties of fines and even imprisonment. It's difficult to imagine a CEO putting himself in danger of prison time to voice disapproval from the political sphere.
Even regulators are worried. Patrizia Cavazzoni who is the director of the FDA's Center for Drug Evaluation and Research has recently stated that FDA officials are "very concerned" that the IRA could harm the development of drugs and access, specifically for biosimilar and generic drugs.
The whole thing was predicable. A study of a drug-pricing policy that was similar to the IRA that I supervised in the University of Chicago, predicted that 135 drugs would be less likely to be launched in 2039. Consider a drug-manufacturer-revenue loss of 15 percent from the IRA, which is close to both our projections and the CBO's. If this turns out to be true we expect a equal reduction in R&D and the development of new drugs. In particular the cut of 15 percent in the predicted 45 new medicines per year could mean approximately 6.8 less drugs per year, resulting in 121 lost over an 18-year timeframe.
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