Most of the cancer medicines approved by the Food and Drug Administration are pills and tablets as opposed to biologic drugs. A significant amount of progress made in cancer care has involved research done after these medicines are approved.
Now, the pharma industry has said both are at risk under the drug-price provisions of the Inflation Reduction Act (IRA) and a recent analysis helps put that risk into perspective.
Oncology led the list of the most common therapeutic areas vying for post-approval indications, with 61% of the 31 cancer drugs approved from 2006 to 2012 receiving at least one such indication, researchers found. About 40% of the time, these indications came in year seven or later after the medicines were initially greenlit by regulators.
Under the IRA, small-molecule drugs become eligible for price negotiation nine years after approval, versus 13 years for biologics, a policy that manufacturers refer to as “the IRA penalty.”
Because of this, as many companies have been contending over the past year, we’re seeing an increasing number of cases where that research isn’t getting done. For instance, pharma CEOs have blamed the IRA for making them less likely to pursue follow-on indications for oncology drugs or launch new cancer meds. When the Pharmaceutical Research and Manufacturers of America polled its members, 63% said they expected to shift at least some of their R&D away from small molecules.
“If those studies are occurring several years after initial approval and [when] the clock starts for government price-setting, it’s awfully hard to see companies pursuing those studies with one or two years with which to recoup their investment,” PhRMA CEO Steve Ubl told reporters during a press briefing Friday, a day before the annual American Society of Clinical Oncology (ASCO) meeting was set to get underway.
Others have warned that the skewing of incentives away from investing in small-molecule drugs and more toward biologics, which are typically pricier, might end up being the biggest unintended consequence of the law. Those effects would hit especially hard in the cancer space, as many tumor types are best treated with small molecules.
To have the largest benefit, drug companies typically start by testing a drug in the sickest patients, then work their way to earlier cancer settings. Per the analysis, conducted by a group known as Partnership for Health Analytic Research (PHAR), 17% of post-approval indications were for earlier intervention in the progression of the cancer.
The law “will make this extremely hard,” Genentech CEO Alexander Hardy told reporters Friday. “The clock [set by IRA] is too short for many new modalities to be established and thus will dissuade companies from investing in breakthrough research.”
He added that small molecules are also “very important to providing accessible, easy-to-take treatments, addressing issues of health equity that we know we have a problem with in our system. And yet we will penalize them.”
At the briefing, Novartis CEO Vas Narasimhan said that, of the four cancer drug programs his company planned to highlight at ASCO, three of them – ranging from drugs treating breast and prostate cancer to a pan-tumor KRAS inhibitor – would be impacted by the IRA policies.
“It’s not negotiation; it’s price-setting,” Narasimhan said of the law. The Centers for Medicare and Medicaid Services, he said, “can go to a 95% price cut and not explain it.”
From an investment standpoint, he said, one has to assume CMS would go that far. “I would challenge that we have a system of fair negotiation. It’s draconian.”
PHAR’s analysis further quantifies the amount of post-approval R&D that could be at risk. About 60% of the small-molecule cancer products in the study received at least one post-approval indication and 22% received more than three.
Nearly 40% of such indications for cancer meds were for new disease targets, typically a different type or subtype of cancer. Meanwhile, nearly half the indications were for a new age group or other expanded population, such as patients with different comorbidities.
Despite the industry’s vocal objections, others have pushed back on the notion that small-molecule drug research will crater as a result of the law.
In totality, the IRA is “a pretty balanced approach to try to make sure people can afford drugs available now while we continue to incentivize innovation,” said David Mitchell, founder and CEO of the group Patients for Affordable Drugs.
The law, Mitchell pointed out, allows for negotiations over a limited set of the costliest drugs for Medicare beneficiaries, and only those drugs that should have competition but don’t. According to his analysis, based on the total number of drugs approved by FDA per year (43 in 2022), the law would impact just 16% of the drugs introduced over a nine-year period.
“That’s a very measured approach that PhRMA is trying to turn into an armageddon,” he asserted.
Nor does the IRA constrain companies from earning money in the private sector or impinge upon their discretion to set launch prices.
Industry, Mitchell said, “wants to be able to charge whatever they want to for as long a period as possible and don’t like it that the people of the United States, through this legislation, have said, ‘We need a more balanced approach.’ And this is it.”
That said, Narasimhan, who is also the new PhRMA chair, has made nullifying the nine-year timeline for small molecules his top policy priority. Drugmakers would like to see the clock shift to 13 years for both small and large molecules.
“Unless the policy is corrected, we’ll be at a crisis and be scrambling at the end of this decade for ‘How did this happen?’” he warned.
