Pill penalty will devastate cancer research
The Biden administration just announced a new initiative to improve cancer outcomes in low-income communities across the United States. It’s sorely needed. Research shows cancer mortality is more than 10 percent higher in communities experiencing persistent poverty compared to those that aren’t.
The initiative also marks a critical step toward meeting the broader goals of President Biden’s Cancer Moonshot, which aims to cut the cancer death rate in half by 2047 and improve the lives of cancer patients and survivors.
But every step forward will be met with two steps back, thanks to a provision of the Inflation Reduction Act.
President Biden signed the IRA into law last August. It includes some of the most significant investments in health care in our nation’s history — and helps reduce drug costs for seniors by capping out-of-pocket drug spending and limiting the out-of-pocket cost of insulin to $35 per month. The legislation also extended subsidies to help Americans afford health insurance.
Yet the legislation’s effort to subject certain drugs to price controls will stifle the development of new medicines by limiting investors’ opportunities to earn back their upfront investments in developing medical breakthroughs. These price controls could devastate cancer research because of a provision best described as a “pill penalty.”
The law subjects small molecule drugs, which are typically pills, to price controls only nine years after FDA approval. Meanwhile, biologics, which are usually injections or infusions, are exempt from price controls for 13 years.
In other words, investors have four fewer years to earn a return on a successful pill than they do on a biologic. Companies are responding accordingly. A recent survey of investors revealed that 85 percent are noticing less funding flowing to small molecule medicines as opposed to biologics than before the IRA.
Millions of Americans with cancer, and their families, will suffer the consequences.
Many of the most innovative cancer therapies to debut in recent years have been small molecule drugs. That’s because small molecules are tiny enough to target and enter cancer cells, disarming them without impacting surrounding cells.
The pill penalty is forcing companies to pivot away from
these sorts of breakthroughs — medicines that might otherwise have cut the cancer death rate and advanced the Cancer Moonshot. The CEO of Novartis, for instance, recently announced the company was nixing some cancer medications from its pipeline because it no longer made financial sense to pursue them post-ira.
Some are sounding alarms about the pill penalty’s impact on post-approval research. Often times, companies find that an existing medication can treat another form of cancer years down the road. But successes like those require additional research, which can be costly. And many firms are realizing that, with only nine years to turn a profit, the
math no longer adds up.
Others have changed their launch strategies to account for the pill penalty. Genentech, for example, developed a medication that treats both ovarian cancer and prostate cancer. Though it could get the medicine to patients sooner if it’s approved first as an ovarian cancer therapy, the company is considering waiting to launch it as a prostate cancer therapy.
The reason? Prostate cancer is a larger market. And under the pill penalty, companies have to recoup as much of a return as possible in the nine short years they have before potential price controls begin.
In any case, the pill penalty will delay or deny Americans with
cancer access to the medication that could save their lives. And it could worsen cancer outcomes for the very low-income patients President Biden is sincerely trying to help.
Biologics are typically more expensive than small molecules. And rather than being taken in the comfort of a patient’s home, biologics must be administered by a doctor. Those upfront costs, often including travel expenses, could prove prohibitive for low-income or rural cancer patients. But they’ll have few other options — aside from foregoing care entirely — as the pill penalty continues to incentivize development of costlier biologics.
Without a legislative fix, the IRA will be the Achilles heel of the critically important Cancer Moonshot. Luckily, that fix is relatively simple. Congress must afford small molecule drugs the same 13-year protection as biologics.
More than two million Americans will receive a cancer diagnosis this year. Each of them deserves a shot at life, as President Biden rightly recognizes. To ensure every American has the best shot at beating cancer, the pill penalty must go.