'Debate Whether IRA Provisions Stifle Pharma Innovation at Senate Hearing'

 The Inflation Reduction Act (IRA) provisions aimed at lowering prescription drug prices will lead to more pharmaceutical innovation, not less, one witness said at a Senate Finance Committee hearing.

"These reforms support innovation in a number of ways -- first, by expanding the use of drugs, greater profits in the industry should follow," Rena Conti, PhD, associate professor of markets, public policy, and law at Boston University, said Tuesday at a hearing on lowering Americans' healthcare costsopens in a new tab or window. "Second, by creating stronger incentives for long-lived brand drugs to go generic, competition will induce companies to innovate [in order] to grow."

Conti also noted that the IRA already exempts numerous biotech companies and certain types of drugs from price negotiation.

Congress passed the IRAopens in a new tab or window in 2022, granting Medicare the authority to negotiate the price of some of the most costly single-sourced, brand-name drugs. The negotiated prices for the first 10 drugs selected -- for being costly, widely used, or both -- were unveiled last monthopens in a new tab or window.

One witness at Tuesday's hearing, retired RN and patient Judy Aiken of Portland, Maine, testified that the IRA was crucial in allowing her to afford her medications, including etanercept (Enbrel) for her psoriatic arthritis, which currently costs $7,106 per month but is slated to decrease to $2,355 in January 2026 under the negotiated terms.

"As a nurse, I spent years counseling patients on the importance of taking their medications consistently, but the cruel irony is that I've sometimes found myself skipping doses, unable to follow my own advice due to the prohibitive cost," Aiken said.

Then the IRA was passed. "This year, I braced for another 12 months of expensive pharmacy visits, but after paying $2,150 in January and $1,141 in February, the real shock came in March," she said. "I went to pick up my prescription and discovered my out-of-pocket cost was zero for the rest of the year. I nearly cried at the pharmacy counter, and I'll say the pharmacy staff did too."

This change occurred because the IRA capped out-of-pocket costs for Medicare beneficiaries enrolled in the Part D prescription drug program at $3,300 in 2024; the cap drops to $2,000 starting in 2025.

Conti stressed that "American support for innovation -- namely, subsidies for insurance coverage, NIH support for basic science in universities, strong intellectual property protections, high-quality manufacturing and safety standards, and targeted incentives to bring new drugs to market for rare disease and cancer -- are untouched" by the IRA's reforms.

But not everyone agreed.

Swift Disagreement

"When considering whether to invest in the cost of a clinical development program, this decision hinges on two unknowns: is there a potential for a safe and effective therapeutic effect, and will there be a financial success?" said Kirsten Axelsen, a nonresident fellow at the American Enterprise Institute, a conservative think tank in Washington. "Some biopharmaceutical company leaders have reassured their investors that they can manage the Inflation Reduction Act. But that does not mean the law is benign. In any business, when revenues decline, effort is shifted away from that activity."

"Post-marketing studies like the ones that demonstrate a drug has multiple uses for different diseases, or that a drug can be taken less frequently, or that a drug can be used effectively in children, are the type of clinical study that is most affected by the IRA," Axelsen said. "They will be reduced, but managing through the Inflation Reduction Act's impact is harder for smaller -- particularly single-product -- biotech companies that are working on drug candidates for older and disabled people."

Sen. Mike Crapo (R-Idaho), the committee's ranking member, concurred.

"The implications for the therapeutic R&D [research and development] pipeline are already apparent, with at least 21 drugs and 36 research programs discontinued since the law's enactment," Crapo said, appearing to cite this estimateopens in a new tab or window of discontinued drugs and programs from Incubate, a trade group for venture capital firms specializing in new drug development.

"Even for approved drugs, delays and denials in care have started to skyrocket -- and yet the Biden-Harris administration inexplicably excluded medications from its prior authorization reforms," he added.

Sen. James Lankford (R-Okla.) argued that a key problem with the current payment system is the "patent thicket" that allows brand-name drugmakers to make slight changes to dosage or administration of a drug in order to keep an exclusivity patent on it and forestall the entrance of generic versions to the market. "Congress needs to be able to fix that," he said.

Lankford then turned to pharmacy benefit managers (PBMs), industry middlemen that have come under a lot of criticism over their handling of rebates from drug companies.

He cited a bipartisan billopens in a new tab or window that the Finance Committee passed unanimously last yearopens in a new tab or window that would rein in some controversial PBM practices, such as not passing on drug rebates to patients. The bill has not been brought to the floor, he noted.

Risk Pool Proposal Panned

Drug prices weren't the only healthcare aspect discussed at the hearing.

Committee chair Sen. Ron Wyden (D-Ore.) also was concerned about remarks by Republican vice presidential candidate Sen. JD Vance (R-Ohio) suggesting that among other reforms of the Affordable Care Act he'd like to see, people should be able to get put into different risk pools.

"The Vance idea is bureaucratic lingo for an idea that should alarm millions of Americans," Wyden said in his opening statement. "Here's what it means: if you have a preexisting condition or if you are at high risk of developing a chronic illness, insurance companies will be allowed to isolate you from younger and healthier Americans. That means they'll only sell you insurance that's prohibitively expensive or limited in benefits. In my view, the concepts proposed by JD Vance are a prescription for discriminating against those with preexisting conditions."

Jeanne Lambrew, PhD, director of healthcare reform at the Century Foundation in New York City, also panned the idea.

"We know from experience that having separate risk pools often leaves people with preexisting conditions to pay higher premiums for their insurance -- often being priced out of that coverage altogether," she said. "That means a person with cancer can't get their chemotherapy."

"People will not get needed care, they will experience worse health, and they could prematurely die. We also know that separate risk pools may seem like a good deal for somebody who is young or healthy, but when they have an accident or an unexpected illness, those plans often don't cover the care that they need, leaving them worse off," she added.

https://www.medpagetoday.com/publichealthpolicy/healthpolicy/112019