Dr Julie Patterson Discusses Potential Unintended Effects of the IRA on Drug Development

Julie Patterson, PharmD, PhD, senior director of research at the National Pharmaceutical Council, discussed the findings of a study published in the February issue of The American Journal of Managed Care^® (AJMC^®). The study, "Unintended Consequences of the Inflation Reduction Act: Clinical Development Toward Subsequent Indications," was co-authored by Patterson; James Motyka, PharmD; and John Michael O’Brien, PharmD, MPH, and discussed the potential impact of the Inflation Reduction Act of 2022 (IRA) on small molecule drug research and development investments toward subsequent indications.

Transcript

Can you briefly discuss the aspects of small molecule innovation that may be most at risk under the IRA based on your research?

There are still so many uncertainties about the Inflation Reduction Act's Medicare Drug Price Negotiation Program, both in how it will be implemented and and how it will impact patients' access to innovation. What we found was concerning. The research published in AJMC show that the IRA may delay access to brand new medicines and may lead to fewer diseases and patient populations getting additional FDA-approved treatment options.

So, let's unpack that. First, we looked at the 30 small molecule drugs that Medicare Part D spends a lot on and are approved for more than one indication. In many drugs, the research towards a second or third indication starts before a drug is initially approved by the FDA. In those cases, the second approval often happened shortly after the initial launch of the drug. Now, the IRA starts a 7-year countdown clock from when a drug is first approved by the FDA toward when a drug is eligible to be selected for price setting. In doing so, the law creates an incentive to wait to launch a new drug until multiple indications are ready for approval at the same time, particularly if, as we found, those indications are likely to be approved shortly after initial approval. This ultimately means that the IRA may delay the launch of many new medicines.

Second, most drugs began to generate evidence required for an FDA approved use of an existing medicine for another disease or patient population, so a subsequent indication, within 3 years of their initial approval. However, those subsequent indications, on average, didn't receive FDA approval until more than 7 years after the drug was first approved. Now that the IRA allows the government to select small molecule drugs for price setting just 7 years after initial approvals, it reduces the incentive to conduct additional research and development needed for subsequent indications. This suggests the IRA may reduce the number of diseases and patient populations that see additional FDA-approved treatment options.