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DRUGMAKERS say a new US law aimed at cutting prices on top-selling medicines after they have been on the market for several years has them stuck in limbo.
One after another, company executives at the JPMorgan Healthcare Conference in San Francisco cited the same problem: How do you figure out which drugs to invest in, without knowing how much money they will make years down the road? Some say the uncertainty has had a chilling effect on deals, normally a hallmark of this conference, and a sign of the industry’s buoyancy.
The focus of their consternation is the Inflation Reduction Act (IRA), President Joe Biden’s economic stimulus law that contains provisions aimed at reducing healthcare costs in Medicare, the federal health programme for older Americans. At various points through 2026, the law will allow the government to negotiate prices for some drugs, charge rebates to companies that increase prices faster than inflation, and set a hard cap on patients’ out-of-pocket spending in Part D, Medicare’s outpatient prescription drug programme.
At a kick-off conference reception held by Pharmaceutical Research and Manufacturers of America on Sunday night, Novartis chief executive officer Vas Narasimhan compared the passage of the IRA to landmark pieces of legislation that created the drug approval process, paved the way for low-cost generic medications, and changed the way Medicare pays for prescriptions.
“This year, the priority is going to be – how do we shape an IRA that will not punish innovation?” said Narasimhan, who is also chair-elect of the lobbying group.
The drug industry has long been in the crosshairs of the debate over healthcare costs in America. In response, some companies have pulled back on the frequency of their price hikes, which were once customarily biannual.