March 23, 2023

RA Capital’s Peter Kolchinsky and OrbiMed’s Peter Thompson joined their voices to underscore the magnitude of the Inflation Reduction Act’s (IRA’s) impact on the economics of drug development, especially for age-related diseases.

Bottom line: Unless our industry unites to call on Congress to fix the IRA’s discrepancy in market-based pricing periods before CMS steps in (nine years for small molecules vs. thirteen years for biologics), otherwise-investable programs will no longer merit investors’ backing and overall funding for innovative small molecule programs will likely undergo a significant decline.

Read the full letter at No Patient Left Behind. And if you agree, please add your name to our list of co-signers.

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To all our friends and peers in biotech, especially CEOs,

The treatment of NDA-path drugs in the Inflation Reduction Act materially degrades the investment case for these treatments in age-related diseases and thus jeopardizes future biotechnology progress and the health of America’s seniors. We worry that many people in our own industry fail to see the magnitude of the IRA’s impact on the economics of drug development.

Some executives may think that fixing the IRA’s nine-year provision isn’t a priority for them. Their companies might be working on drugs for younger populations, so the IRA is at worst a glancing blow. Or they work on biologics, which enjoy 13 years of market pricing before CMS steps in. Or they are targeting a single orphan indication and are for now exempt from the IRA’s price setting.

But we are more than our jobs. We are members of society with friends and families that suffer from diseases and we are privileged with the knowledge of how to mitigate that suffering. We will also be burdened by the knowledge of what could have been.

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