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Medicare Price Negotiations: Will Big Pharma’s Opposition Push Back Future Drug Releases?


Inflation Reduction Act expected to reduce maximum achievable revenues for many top selling products.

Inflation reduction Act law concept. Fat lay of text, american flag and dollar banknotes

Image Credit: Adobe Stock Images/Formatoriginal

Back in August, the Biden Administration revealed the first 10 drugs they had chosen for price negotiations with Medicare under the Inflation Reduction Act (IRA) of 2022. Despite the good intentions of the act, there are some in the industry who believe reduced revenues from Medicare will slow and distort the pace of innovation, negatively impacting both patients and profits as a result.1

First signed into law in August 2022, the IRA aims to allocate federal spending to reduce carbon emissions, lower health care costs, provide funding for the IRS, and strengthen taxpayer compliance. As a result, the provision grants Medicare the authority to negotiate drug prices directly with biopharma and biotech companies. In order for a drug to be eligible for negotiation, it must be among the top of the list in terms of Medicare expenditure, lack any generic or biosimilar equivalents, and have already been on the market for a set number of years.2

Alexander Hardy, CEO of Greentech (now owned by Roche), recently revealed that unless the IRA is repealed or a new version is implemented, the company may delay seeking approval for a new ovarian cancer treatment until it also completes trials of the same drug in prostate cancer, which will require an additional 3 years. Additionally, Roche alleges that delaying the ovarian cancer launch would allow it 9 years of Medicare sales for both ovarian and prostate cancer before negotiated prices take effect. On the other hand, pursuing a traditional, sequential approval strategy would reportedly allow for 9 years of Medicare sales at monopoly prices for ovarian cancer but only 6 years for prostate cancer, which has a higher prevalence.1

According to the Council for Affordable Health Coverage, the law’s intent was to continue to incentivize drug development for rare diseases by not having products that treat rare diseases subject to price controls. Despite this, it is common for drug developers to continue research on approved products for other indications and conditions. The council further states that under the IRA, if a product were used to treat one disease and then further research indicated treatment for another, the product could be subject to price limits, which it believes eliminates the incentive to study approved products on additional patient populations and disease groups.3

Multiple pharma companies have announced intentions to halt research as a result of IRA price controls. In October 2022, Alnylam Pharmaceuticals stopped working on a potential indication for Amvuttra, previously approved for the treatment of a rare disease called transthyretin-mediated amyloidosis. Based on current regulations, finding a second use for the drug would disqualify it from orphan status and potentially open it up to price negotiations.3

In a conversation with Endpoints, a spokesperson for Eli Lilly also pointed to the IRA for pushing back drug releases. The company cited it as the reason for pulling the plug on a $40 million cancer drug that focuses on multiple blood cancers.4

“The IRA changes many dynamics for small molecules in oncology and when we integrated those changes with this program and its competitive landscape, the program’s future investment no longer met our threshold,” the spokesperson said in the Endpoints report. “In light of the Inflation Reduction Act, this program no longer met our threshold for continued investment.”


1. Will Medicare Price Negotiation Delay Cancer-Drug Launches? The New England Journal of Medicine. Accessed November 3, 2023 https://www.nejm.org/doi/full/10.1056/NEJMp2310269

2.Navigating the Inflation Reduction Act’s Impact on Drug Pricing and Innovation. BCG. September 14, 2023. Accessed November 6, 2023. https://www.bcg.com/publications/2023/navigating-inflation-reduction-act-impact-on-drug-pricing-innovation

3. HOW THE INFLATION REDUCTION ACT IS IMPACTING RARE DISEASE PATIENTS. Council for Affordable Health Coverage. Accessed November 6, 2023. https://cahc.net/how-the-inflation-reduction-act-is-impacting-rare-disease-patients/#:~:text=Eli%20Lilly%20also%20cited%20the,small%20molecule%20research%20and%20development.

4. Eli Lilly blames Biden's IRA for cancer drug discontinuation as the new pharma playbook takes shape. Endpoints. November 1, 2022. Accessed November 6, 2023. https://endpts.com/eli-lilly-rolls-snake-eyes-as-it-axes-two-early-stage-drugs-including-a-40m-cancer-therapy-from-fosun/

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