This Vital Health Podcast was recorded at the BIO international Conference on the afternoon of the release of Vital Transformation’s research study outlining the impacts of the Inflation Reduction Act on U.S. biopharma innovation. It features Duane Schulthess, Nick Shipley, the Executive Vice President of BIO, and Joe Hammang, Vital Transformation’s U.S. Business Director.
The podcast provides an overview of the IRA’s chilling effect on R&D in orphan oncology, and how mandated negotiations at year 9 for small molecules will create an exodus of research funding in neurological disorders, a therapeutic area of high unmet medical need. The discussion also touches on Merck’s lawsuit challenging the legality of the IRA in Federal court, as well as the potential changes that need to be made to the law in the near term to minimize the IRA’s many negative unintended consequences for patients.
The Impact of IRA Policy Expansion Proposals on the US Biopharma Ecosystem
- Vital Transformation (VT) modeled the impacts of the drug pricing provisions of President Biden’s 2024 Budget, now proposed by Senator Baldwin as the “Smart Prices Act (SPA)”, which would impose government price setting for selected Medicare drugs at only 5 years after initial FDA approval.
- We modeled the impacts on industry revenues and future R&D investments and estimated future lost innovation impacts including the impact on industry jobs.
- We estimate a loss of between 146,000 – 223,000 direct biopharmaceutical industry jobs and a total of 730,000 – 1,100,000 U.S. jobs across the economy if the proposed IRA expansion were to be implemented.
- Looking forward, we estimate that the expanded government price setting could result in roughly 230 fewer FDA approvals of new medicines over a ten-year period, once the impacts are fully reflected in the pipeline.
- Impacts will be felt most heavily in many areas of unmet need, including in rare disease, oncology, neurology, and infectious disease.
- The most significant ecosystem impacts would be concentrated primarily in CA, MA, and NY.
- Had the drug pricing provisions of the SPA been in place prior to the development of today’s top-selling medicines, we estimate that 82 of the 121 therapies we identified as selected for price setting would likely have not been developed.