From full page ads in the Boston Globe to panels of thought leaders at BIO 2025,and podcasts, leaders are highlighting the problems being created by the Pill Penalty that is part of the Inflation Reduction Act. As Congress works through the Budget Reconciliation Process, the EPIC Act could be a solution.
The pill penalty, which allows the government to set the price of pills and other small molecule treatments years before other drugs, is already driving investors away from funding the early development of these vital medicines, according to a report by health consulting firm Vital Transformation.
The report, which was published in the Journal Therapeutic Innovation and Regulatory Science, analyzed the impact of the IRA on investment in drug development since the law’s introduction in 2021. Its findings are stark:
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The world’s leading innovators are here today to pursue the medicines of tomorrow.
But we can’t do it alone.
Congress must pass the EPIC Act and restore small-molecule innovation.
R&D investments declined markedly for small molecule medicines. The study found that among smaller, early-stage biopharma companies – companies valued at less than $2 billion – small molecule R&D investments dropped by nearly 70%. These emerging companies are an important early source of new treatment advances, and these investment declines signal that over time, fewer and fewer of these medicines will be available to patients.
- The negative impacts were focused on medicines taken by seniors. R&D in disease areas most prevalent in the Medicare-aged population saw a median investment decline of 74%, with large impacts in conditions including Alzheimer’s, heart failure, and numerous types of cancer. Seniors rely on continued innovation from all kinds of medicines. This includes pills and other small molecule drugs, which are typically among the most convenient and affordable treatment options for patients, and which often target common chronic conditions including mental illness and cardiovascular disease that impact millions of Americans.
As over 20,000 life science leaders converged in Boston for the BIO International Convention (BIO 2025), the Boston Globe went to press with full page ads signed by 50 life science leaders imploring our elected leaders in Washington, D.C. to pass the EPIC Act and put an end to the “Pill Penalty” that is stifling health innovation. The 50 signatories included the CEO’s of life science associations in Arizona, California, Colorado, Florida, Georgia, Illinois, Indiana, Massachusetts, Michigan, New Jersey, North Carolina, Pennsylvania, Puerto Rico, Tennessee, Ohio, and Texas. Together these states represented a total of 1,541,948 life science jobs in 2023. Jobs that could be at risk if negative impact of the Pill Penalty and other federal policies that discourage investors from investing in future treatments and cures continue.
Over at BIO 2025, the conversations continued. A panel of patient advocates and physicians, came together to discuss Physician and Patient Perspectives on the Impact of the Inflation Reduction Act on Drug Development, Access, and Innovation. The panel included (pictured left to right) Gunnar Esiason, MBA, MPH, Head of Patient Engagement and Patient-Centered Innovation at RA Ventures; Duane Schulthess, CEO of Vital Transformation; Bob Hanlon, PhD, Co-founder and chairman of the Exon 20 Group; and Steven Potts, PhD, MBA, Chair, Drug Development Council at the International Cancer Advocacy Network. Rounding out the panel via Zoom were Rafael Fonseca, MD, Interim Director Comprehensive Cancer Center, Mayo Clinic, Arizona; and Barbara L.. McAneny, MD, Former President of the American Medical Association, CEO of New Mexico Oncology Hematology Consultants Ltd, and Co-Chair of the ONCare Alliance.
While there have been many discussions from policy leaders and the pharmaceutical industry, what has been missing is a clear discussion with practicing clinicians and patients about the actual impact of the IRA.
The Inflation Reduction Act (IRA) has caused strong disruption to innovation in drug development, and this impact is falling heaviest on oncology and neuroscience. The discussion focused on how current public policy is impacting oncology, neurosciences, and the adoption of novel therapies and slowing down the development of new therapies that patients are waiting for.
The Vital Health Podcast provided a platform for more conversations on how these policies impact patients, entrepreneurs, and the long-term economic impact of good policy and bad.