Drugmakers are slow-walking products to market to get around President Joe Biden’s plan to lower medication prices.
Companies from Roche Holding AG to biotech Alnylam Pharmaceuticals Inc. are among those delaying or evaluating therapies in light of the government’s new ability to negotiate for lower prices. Firms that normally try to sell drugs as soon as possible are suspending clinical trials and shifting timelines, while patient groups are demanding change.
Intended to trim costs for Medicare, the U.S. health program for seniors, Biden’s Inflation Reduction Act has sparked both ire and lawsuits from manufacturers claiming it will eat into the vital cash they need to develop new medicines. They’re moving to maximize drugs’ revenue potential, even if it means patients will have to wait longer for new therapies.
Roche has a pill in mid-stage studies aimed at treating ovarian cancer, which strikes about 20,000 Americans annually. The company said it may put off seeking approval in that area until the drug is approved for prostate cancer, with almost 300,000 new U.S. patients each year. While that could mean greater revenue for Roche before the drug becomes eligible for IRA price talks, it would delay use in ovarian cancer by three years.
Drugmakers are “openly saying, ‘We have this product that helps patients but we’re choosing not to bring it to market because our bottom line matters more,'” said Leigh Purvis, prescription drug policy director at AARP, the largest organization representing U.S. seniors. “That is frankly reprehensible behavior.”
The IRA adds complexity to drug development, “and we must now consider the impact of the legislation on our development and launch strategies,” Roche said in an email. The company said it has yet to make definitive decisions about the impact on its clinical drug development program.
Drugmakers have a number of strategies for propping up prices as long as possible. For example, a U.S. House Committee on Oversight and Reform report found that AbbVie Inc. settled with generic companies to deter competition from cheaper copies of its arthritis drug Humira that would have saved the U.S. health-care system at least $19 billion from 2016 to 2023. AbbVie declined to comment.
The IRA aims to cut through these defenses. Rather than waiting for patent maneuvers to play out, the law allows Medicare to begin negotiating prices after a specific amount of market time—nine years for pills and 13 for biologic drugs. That’s pushing drugmakers to delay marketing products for small populations and maximize opportunities to treat more patients before prices are reduced, according to Bloomberg Intelligence analyst Duane Wright.
“I worry about patients who are dependent on future innovation who are in the Medicare population,” said Scott Gottlieb, a former Food and Drug Administration commissioner who’s now a partner at New Enterprise Associates and a Pfizer board member.
Since 2020, Relay Therapeutics Inc. has been studying RLY-4008, a drug that if approved could treat about 1,000 Americans annually with a form of bile duct cancer. Citing the IRA, Relay refocused its efforts on a wider range of cancers that could allow use in about 20,000 U.S. patients annually. That means an extended enrollment period for a larger study.
“The IRA favors accessing larger opportunities initially versus the conventional approach of speed to market with smaller indications,” Chief Executive Officer Sanjiv Patel said on an earnings call earlier this year. “This clearly pushes out our investment on commercial readiness.”
Off the table
Pfizer Inc.’s latest acquisition, Seagen, has said it’s ending research on treating a form of bladder cancer with one of its top drugs, Padcev, because of impending price negotiations. The company is considering a shift to a similar drug for the same form of cancer. Yet the second drug is in an earlier stage of study, meaning more time and research before it’s available to patients.
The alternative drug may be delayed as long as three years, said David Epstein, Seagen’s former CEO. Pfizer said it will decide on Padcev along with partner Astellas Pharma Inc., which said it’s evaluating the impact of the IRA and hasn’t made final decisions about its bladder cancer studies.
“But it’s hard for me to imagine it will be much different” than the approach Seagen had planned, Epstein said in an interview. “IRA has made perverse incentives, so certain things don’t work anymore from a financial perspective.”
Alnylam was planning to study Amvuttra—approved to treat a rare, inherited accumulation of abnormal proteins called hATTR—for use in a rare cause of vision loss, called Stargardt disease. But there’s a catch: Drugs that treat one rare disease are exempt from IRA negotiations, but those that treat two or more remain eligible.
The company said that it took its plans for a final-stage study in Stargardt off the table to evaluate the impact of the IRA. Alnylam said it hasn’t announced its plans in Stargardt disease and is “assessing our options to bring forward a medicine to this underserved population.”
The overall impact remains to be seen. A Congressional Budget Office analysis predicts the law will result in just one fewer drug coming to the US market through 2032, about five in the subsequent decade, and about seven over the decade after that—a total of 13 fewer drugs over the next 30 years.
However, pharma researcher Vital Transformation, whose clients include some of the world’s biggest manufacturers, estimates that from 2026 to 2035 the IRA will result in potentially 139 fewer drugs for that decade alone.
Some patient advocacy groups have joined with companies in demanding change. Earlier this month, about 170 groups wrote a letter asking Congressional leaders to expand the exemption for rare-disease treatments.
“If these technical changes are not made it’ll be devastating to families,” said Cheryl Herbert, a spokesperson for the National Organization for Rare Disorders. “It will cost lives.”