The pharmaceutical industry, grappling with new government limits on drug prices, is focusing its requests for president-elect Donald Trump and Congress on “fixing” a Biden-era law allowing the Medicare health plan to negotiate prices for its costliest medicines along with insurance changes.
“The IRA price setting process is dangerous for millions of Americans who rely on innovative treatments and created unnecessary, costly bureaucracy. In rushing out this list in their final days, the Biden administration once again fails to address the true challenges facing seniors and Medicare’, Pharmaceutical Research and Manufacturers of America (PhRMA) President and CEO Stephen J. Ubl said in his statement in response to the Centers for Medicare & Medicaid Services (CMS) releasing the second list of medicines in Medicare to be subject to government price setting.
“Over half the medicines selected for price setting by the Biden Administration are being targeted because of the ‘pill penalty’ included in the IRA, which lets the government set the price of medicines that often come in pill form much earlier than other types of medicines. The pill penalty sends a clear message to innovators to stop developing these medicines even though they may be the most effective, convenient, and lowest cost option for patients. In fact, recent research found that early-stage funding for small molecule drug development has fallen 70% since the IRA was enacted. Even worse, Medicare patients are facing higher costs, fewer plan options and more access barriers because the IRA failed to rein in abusive practices from PBMs and insurers, which are the real drivers of high out of pocket costs for seniors,’, Stephen J. Ubl said.
“We are eager to work with the new administration and Congress to fix the pill penalty and ensure Americans are not harmed by other flaws in the IRA.”
Congress passed the Inflation Reduction Act (IRA) with the intent of helping Americans facing the highest inflation rates in decades, but the law’s policies for medicines covered by Medicare could have negative consequences for patients, one of the largest U.S. Pharmaceutical company Pfizer believes.
“For example, the IRA created a “pill penalty” that could discourage the development of medicines that typically come in pill or capsule form. It allows the government to start the price-setting process for pills and capsules seven years after small molecule medicines (e.g., tablets, capsules, and pills) are initially approved by the Food and Drug Administration (FDA). This time frame is roughly half of the current average time frame of 13–14 years before patents and exclusivities expire on medicines and generic competitors emerge. The significantly shorter time frame discourages innovation and risks leaving patients without the treatment options they desperately need.
Consequences of this pill penalty include:
Less access to the benefits of small molecule medicines. They’re small, but mighty: Small molecule medicines have significant therapeutic benefits for hard-to-treat diseases like cancer. They also have a unique ability to reach therapeutic targets inside the brain, which means they serve a critical role in the treatment of health conditions affecting the central nervous system, such as mental illness, stroke, epilepsy, and various neurodegenerative diseases.
In addition, because small molecule medicines come in a variety of pill forms, such as tablets or capsules, they are easier to take and patients often prefer them. Having the option of a pill form may improve adherence, potentially keeping patients healthier.
Fewer new medicines for patients who need them. Innovation doesn’t stop when the FDA approves a new prescription medicine. Biopharmaceutical companies continue to research treatments after FDA approval, as researchers learn more and follow scientific leads after initial approval to see if these treatments can be used in new ways to improve patient care. The investments in research and development (R&D) after medicines are approved represent important advances for patients, including the development of new uses to treat a different medical condition, new patient populations such as children or seniors, new formulas, and new dosage forms.
Recent research shows how the pill penalty can discourage critical post-approval R&D — hindering innovation to fight cancer and rare diseases and disincentivizing other treatment advances. For example:
One study of small molecule medicines approved from 2006 through 2012 found that more than half received at least one additional indication after the initial FDA approval. Of these post-approval indications, 45% were approved seven or more years after initial approval and 63% were approved five or more years after approval.
Another study estimates that as many as 139 drugs over the next 10 years are at risk of not being developed because of the dangerous price-setting policies in the IRA.
In addition, there will be an estimated 40% reduction in new medicines being brought to market in the next 10 years
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