Drug Development in America is Strong, but the IRA Unintentionally Weakens It

 Americans today are benefiting from significant innovation across multiple therapeutic areas. We are on the cusp of highly effective treatments in obesity and important progress is being made in the fight against notoriously challenging diseases like Alzheimer’s. The state of drug development in America is strong. But we cannot take it for granted and we must protect it against short-sighted policies not in the best interest of patients.

In President Biden’s State of the Union address, he touted the Inflation Reduction Act (IRA) as a major legislative accomplishment. However, within this sweeping legislation, the IRA fails by placing a drastic penalty on small molecule drug discovery, penalizing patient care along with it. Perhaps this was done out of legislative accident, but the fact remains that bad public policy is a great threat to biomedical innovation.

As part of the IRA’s Medicare price control provisions, negotiation for small molecule medicines is allowed 9 years after U.S. Food and Drug Administration (FDA) approval compared to 13 years for large molecule biologics. This distinction – for which there is no legitimate scientific or policy reason – shifts economic incentives away from small molecules which have important patient benefits over large molecule biologics. 

Unlike biologics that are injectables or infusions, small molecules drugs are pills that can be taken orally. Pills are easier for patients to pick up from their local pharmacy or have delivered to their home, which means they don’t need transportation to an infusion clinic or physician’s office. Importantly, this ease of administration helps patients stay adherent. 

Further, small molecule drug discovery has advanced tremendously over the past decades, including the creation of precision medicines that disrupt disease processes and reach previously believed “undruggable” targets that large molecules cannot. There are certain conditions where the biology of the disease can only be targeted with a small molecule. For example, due to their “small” size, they can be delivered to the brain and central nervous system enabling them to treat diseases that might otherwise be intractable. Patients with certain cancers and rare diseases are already benefiting from breakthrough small molecule medicines.

So why does IRA make this distinction? It’s not entirely clear. Lawmakers may have simply overlooked the scientific advances that have resulted in these precision small molecule medicines – which are just as complex to discover as large molecule biologics. Unfortunately, this “oversight” is already having a real impact as companies are forced to recalibrate how they make business decisions about its R&D programs. There will be cases where companies opt against pursuing the research needed for additional indications.

In a retrospective example, FDA approved Lilly's CDK4/6 inhibitor in 2017 to treat advanced metastatic breast cancer. Lilly then invested in post-approval studies and in 2021 FDA approved the same product in combination with endocrine therapy to treat early-stage high-risk breast cancer in 2021. This approval marked the first treatment advancement in the early breast cancer setting in nearly 20 years. Had IRA been in-place four years earlier, Lilly would have been navigating a very different set of considerations. With effectively less than a 9-year horizon to recoup R&D costs, calculations could have potentially disfavored making the investment in clinical trials that led to an important advance in patient care. 

At Lilly, small molecule treatments represent 40% of our overall portfolio and the majority of our oncology pipeline. Industry-wide, small molecules still dominate R&D and, in 2020, represented 75% of all new medicines approved in the U.S. However, these numbers are set to shift dramatically. A recent survey found 63% of biopharmaceutical companies reporting that under this provision, all else being equal, they expect to shift R&D investment focus away from small molecule toward biologic medicines.

Based on the same survey, more than 80% of companies expect “substantial impacts” on the cancer, cardiovascular, mental health, neurology, and rare disease R&D projects in their pipelines.

As the IRA continues to reshape the biomedical innovation ecosystem, we will see how much of it will be to the detriment of patients.

But this path doesn’t need to be the reality. Congress can fix this needless penalty and establish parity for Medicare negotiation at 13 years for both small and large molecule drugs, creating a level playing field for the development of these different modalities. Science and patient need – not bad policy – should dictate the path for drug development. Patients don’t care whether a drug is “small or large.” They just need treatment options that make their lives better. 

Shawn O’Neail is senior vice president of global government affairs at Eli Lilly and Company.

https://www.realclearpolicy.com/articles/2023/02/15/the_state_of_drug_development_in_america_is_strong_but_the_ira_unintentionally_weakens_it_882012.html