Experts talk IRA impacts as CMS announces it will publish first 10 drugs up for negotiation in September

Experts went back and forth on the impacts of the Inflation Reduction Act, or IRA, on the biopharma industry in a virtual panel hosted by Endpoints News at JP Morgan Wednesday.

The major drug pricing reform passed last year and allowed Medicare drug price negotiations for the first time ever. It also capped senior drug expenses at $2,000 a year and insulin costs at $35 a month.

Chiquita Brooks-LaSure

Wednesday morning, the Centers for Medicare & Medicaid Services (CMS) announced its timeline for negotiations. In a media call, CMS administrator Chiquita Brooks-LaSure said, “Our actions this year will culminate in the announcement of a list of 10 part D, high-spend brand name drugs to participate in the negotiation program.”

CMS plans to publish that list in September. After that, it will negotiate with drug manufacturers, and in September 2024, CMS expects to publish its maximum fair prices for said drugs, which will be effective in 2026.

Experts on Endpoints’ IRA panel noted that they were watching what maximum fair prices will look like. Manatt Health senior advisor Ian Spatz said, “Are we cutting off the entire tail of revenue after nine years for a small molecule drug and 13 for a biologic? We don’t know that today because we don’t know what a maximum fair price is going to be.” Under the IRA, new small molecule drugs will have nine years before they can be sold at a CMS-negotiated price, while biologics have 13 years.

Stacie Dusetzina

Notably, drug launch prices are untouched by the act. Vanderbilt University Medical Center health policy professor Stacie Dusetzina said, “This is a really important area that I think we’re all going to be watching, but companies may be thinking about if price increases limited to inflation. Launch price is where I think we’ll see a lot of response from industry because they think [they] may be selected later on.”

Biopharma companies are already citing the IRA as a reason for stopping development on drugs. In October, Alnylam pointed to the act when it dropped plans for a Phase III trial for its recently approved drug, vutrisiran, in Stargardt disease, a rare genetic eye condition. Vutrisiran, marketed as Amvuttra, is currently indicated for ATTR with polyneuropathy. In November, Eli Lilly said it scrapped an early-stage cancer candidate in reaction to the act as well.

During the panel, Tufts Medical Center professor Dan Ollendorf commented that Alnylam’s use of the IRA in this case “seems to be a bit of subterfuge.”

Chris Garabedian

Xontogeny CEO Chris Garabedian commented that biotech R&D teams would work “on how to drive drug development to work around being on that list that ultimately gets picked for price negotiation.” Spatz noted a number of strategies companies may use, including starting with larger indications instead of smaller ones, making one product companies, and having multiple products that are only slightly different, which he dubbed “the breakfast cereal strategy.”

ATI Advisory’s Anna Kaltenboeck said what exactly defines a drug in negotiations will be important. “How are they going to aggregate different formulations, different extensions of the same product or related products into one in order to assess whether or not it meets the threshold for negotiation or qualifies for it?” she said. “I think that’s another one that’s going to be very, very important in terms of the potential industry responses and decisions related to R&D investment.”

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