Senate Bill Seeks to Spare Small Biotechs from IRA’s Drug Price Negotiations

 

While unlikely to pass this year, given the Democrats’ control over the White House and Senate, the proposed legislation might be a harbinger of the Republicans’ agenda next year for the Inflation Reduction Act should they win the November elections.

Sen. Bill Cassidy (R-La.) has filed a bill that would give small biotech companies a reprieve from the Medicare Drug Price Negotiation Program under the Inflation Reduction Act.

The legislative proposal, dubbed the Small Biotech Innovation Act, seeks to exempt small R&D-intensive companies from drug price negotiations starting in 2029 and beyond. The current Inflation Reduction Act (IRA) program already excludes these firms through 2028.

However, Cassidy’s bill introduces a new definition scheme for small biotechs, relying on a company’s R&D expense relative to the number of its single-source products, or drugs that only it can manufacture. According to the proposed legislation, a small biotech company is defined as a “manufacturer that has five or less qualifying single source drugs.”

At this level, a company must invest in R&D at least 70% of its net revenue from the average of the previous three years to qualify for exemption, according to Cassidy’s bill.

While the bill is unlikely to pass this year, given the Democrats’ control over the White House and Senate, it might be a sign of what Republicans are gearing up for should they win the November elections.

Axios reported earlier this week that “multiple high-ranking Republicans” want to scrap the IRA’s drug price negotiations program if they win the elections. “I would try to remove that and replace it,” Sen. Mike Crapo (R-Idaho) told Axios, however noting that he can’t say yet how exactly the negotiation program could change. Crapo is projected to be the next chairperson of the Senate Finance Committee if Republicans become the majority in the legislative body.

Cassidy’s bill comes weeks after the Centers for Medicare and Medicaid Services (CMS) unveiled the results of the first round of drug price negotiations with manufacturers. After months of back-and-forth, CMS negotiated lower prices for some of the most widely prescribed medicines, including AstraZeneca’s Farxiga, J&J’s Stelara and BMS’ Eliquis.

While the White House initially hailed the negotiations as a huge victory—claiming that it would save the government about $6 billion just in its first year of implementation—analysts and industry observers quickly voiced their skepticism, pointing out that many of these initial 10 drugs were already selling well below their list prices.

Last month, the Brookings Institution released a report noting that the bulk of CMS’ estimated $6 billion savings will come from just three drugs: Eliquis, Stelara and Amgen’s Enbrel (etanercept). Meanwhile, drugs that already had large rebates before the IRA were only minimally affected by the negotiations. The savings that Medicare beneficiaries would see as a result of the negotiations remain unclear.

https://www.biospace.com/policy/senate-bill-seeks-to-spare-small-biotechs-from-iras-drug-price-negotiations