Congress is considering a bipartisan bill that would correct a seemingly minor -- but in reality quite significant -- oversight in the Inflation Reduction Act. The legislation would protect patients' access to life-saving new drugs for cancer, heart disease, diabetes, mental illnesses, and many other chronic conditions.
The IRA included several important reforms that make healthcare more affordable. The law capped out-of-pocket spending in Medicare Part D, thereby giving millions of seniors much-needed relief at the pharmacy counter. Similarly, the law limited co-pays for insulin to $35 a month -- a move that could save people with diabetes hundreds of dollars annually.
But no law is ever perfect. And one provision in the IRA could end up hurting the very people it's intending to help.
The law permits Medicare to set prices for certain top-selling, and most prescribed, medications. To help ensure developers can recoup their R&D investments, lawmakers exempted newly launched drugs from price controls for a specified number of years.
The problem is that the law made an arbitrary distinction between two classes of medicines. Newly approved "small molecule" drugs, which typically come in the form of pills or tablets, have nine years of protection from pricing-setting. Larger molecule "biologics" get 13 years.
This discrepancy might seem trivial, but it will have a notable impact on which kinds of drugs developers choose to research. Since the IRA affords biologics a much longer exemption period from price controls, many manufacturers will choose to shift resources away from promising small molecule development efforts in favor of biologics.
While biologics and small molecule medicines are equally important treatment options, favoring one over the other could have serious unintended consequences. Small molecule medicines often provide the most convenient option for managing chronic conditions from heart disease to diabetes.
Many come in easy-to-use pill form that patients can pick up from their local pharmacy and take at home. Small molecules also show immense promise in fighting cancers and can come with fewer side effects than traditional biologic therapies. These are all important considerations for patients and their families or caregivers who are managing one, and often multiple, chronic conditions.
Biologics, by contrast, are typically administered through regular injections or infusions at a clinic under medical supervision. For certain patient groups, such as rural individuals and those without reliable access to transportation, this can be a real barrier to treatment.
The IRA's impact on the small molecule pipeline isn't theoretical; it's already a reality. Compounding the significant patient access concerns, multiple manufacturers have announced plans to reevaluate their R&D portfolios in light of the IRA. In recent years, venture financing for biologics has outpaced that of small molecules by roughly 20%. The IRA's disparate treatment of the two drug categories could make this investment chasm even wider.
A slowdown in small molecule innovation would have severe consequences for public health, according to a recent University of Chicago analysis. The study found that the nine-year price-setting timeline for small molecules is projected to cut industry R&D spending by 12.3%. Such an R&D decline would translate to nearly 80 fewer small molecule medicines coming to market over the next two decades, resulting in an estimated 116 million life-years lost.
Aside from the health impacts, substituting biologics for small molecules could end up erasing some of the long-term savings the IRA was meant to generate. Biologics tend to be much more expensive than small molecules. An artificial bias in favor of biologic development will undoubtedly lead to higher costs down the road.
Fortunately, the recently introduced, bipartisan Ensuring Pathways to Innovative Cures (EPIC) Act could put an end to the harmful "small molecule penalty." It puts small molecules and biologics on an equal footing, giving them both 13 years of protection from price-setting. That ensures biotech companies, and their investors, make decisions about where to allocate research dollars based on a molecule's scientific merit, rather than its molecular weight.
The small molecule penalty inadvertently undermines lawmakers' goals of making health care more affordable and accessible. It's time for Congress to correct this error -- by passing the EPIC Act.
Kenneth E. Thorpe, PhD, is chair of the Department of Health Policy and Management at the Rollins School of Public Health, Emory University. He is also chairman of the Partnership to Fight Chronic Disease.
