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Inflation Reduction is Having an Unintended Impact on Cancer Medication

— April 25, 2023

Well-intended, the act could cause trouble for cancer drugs.

The Inflation Reduction Act of 2022 has some well-meaning provisions, as it aims to fight inflation, invest in domestic energy and manufacturing, and reduce carbon emissions. It also includes prescription drug pricing reform, as Senate Democrats state that the bill will “finally allow Medicare to negotiate for prescription drug prices.” This sounds great on the surface, but there is increasing concern that the prescription drug pricing reform portion of the bill will have major negative effects on the development and availability of cancer drugs, in particular.

The issue resides in the differences the Inflation Reduction Act imposes on pricing restrictions for small-molecule drugs versus large-molecule drugs. The bill exempts small-molecule drugs from Medicare price setting for 9 years after approval from the FDA, but that period is 13 years for large-molecule drugs. The four-year difference is significant enough that it is already leading drug makers, such as Eli Lilly, to shift focus away from small-molecule drug research and development and toward large-molecule drugs, or biologics, because they say 9 years is not enough time to recoup the significant costs associated with R&D.

Guess which class of drugs typically makes up those leading advancements in the fight against cancer and neurological conditions? That’s right, small-molecule drugs.

Small-molecule drugs are often available in pill form, making them available at pharmacies and for at-home use. Large-molecule drugs, also known as biologics or biopharmaceuticals, often must be administered by a health professional. This seemingly small distinction could easily and quickly become a barrier to treatment for many people who need or want to be able to take their medicines at home.

Inflation Reduction is Having an Unintended Impact on Cancer Medication
Photo by Miguel á Padriñán from Pexels

The challenge for drug makers, and their investors, is that the prescription drug pricing reform portion of the Inflation Reduction Act incentivizes one type of drug development over another. Put another way, drug companies are seeing the IRA’s prescription drug pricing reform as penalizing the research and development of small-molecule drugs.

Neither should be the case; drug companies should be incentivized to follow the most promising and most beneficial advancements in medicine, regardless of whether those are drugs with low molecular weight.

For its part, Eli Lilly has already made an unfortunate adjustment as a result of the Inflation Reduction Act becoming law. The company had been in the early clinical stages of a treatment for certain blood cancers but discontinued the program after assessing the impact the Inflation Reduction Act would have. Translation: they weren’t going to be able to recoup enough of the cost to continue testing and developing the drug, so they shelved it.

Eli Lilly states that 40% of its overall portfolio is made up of small-molecule treatments, including the majority of its oncology pipeline. What the future holds for small-molecule R&D at Eli Lilly and other drug makers is unclear, but the writing is on the wall and the shift has already begun at some companies, as they move away from small-molecule treatments.

The Inflation Reduction Act undoubtedly includes some adjustments that will prove beneficial to many Americans within its prescription drug pricing reform section. For example, beginning in 2025, Medicare patients will see their prescription drug costs capped at $2,000 per year. And the more than 3 million Medicare patients who take insulin will certainly benefit from a new $35 monthly price cap on the drug.

However, the potential reduction in development and availability of small-molecule drugs could hamper treatment for many individuals in ways that aren’t quite yet clear.


Klietmann: Inflation Reduction Act puts cancer drugs in jeopardy

Summary: The Inflation Reduction Act of 2022

Explaining the Prescription Drug Provisions in the Inflation Reduction Act

How the Inflation Reduction Act will impact oncology stakeholders

The Inflation Reduction Act’s Impact on Drug Discovery and Development

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