Pharma, patient advocates clash over Inflation Reduction Act

The Inflation Reduction Act, which became US law in August 2022, has invited its fair share of critics and supporters over its drug pricing provisions. At a lively panel at Financial Times US Pharma and Biotech Summit on May 16, panellists were at odds over whether the new legislation would improve treatment affordability or stifle pharma innovation.

At the core of the debate was a new provision allowing the US Centers for Medicare & Medicaid Services (CMS) to negotiate prices with pharmaceutical companies for a select number of drugs. While negotiating drug prices is common practice in other major markets, CMS had not previously held the legal authority to do so.

Merith Basey, the executive director of the advocacy group Patients for Affordable Drugs, said that CMS’s lack of negotiating power is a key reason that US patients pay up to four times as much for drugs as patients in other countries. However, Randy Burkholder, vice president of policy and research for the industry group Pharmaceutical Research and Manufacturers of America (PhRMA), said this provision amounted to government “price setting” that would harm future research and development efforts.

Meanwhile, the panellists also discussed how the Inflation Reduction Act, or the IRA, would impact drug development for rare diseases. Lukasz Jarzyna, President of Global Value, Access, and Pricing at Alexion Pharmaceuticals, a subsidiary of AstraZeneca, said the legislation lacked clear guidance on how it would impact therapies with a US Food and Drug Administration (FDA) orphan drug designation.

Specifically, pharma companies are uncertain about when orphan drug exemptions begin, which Jarzyna said could adversely affect innovation. While there is a comment period designed to give stakeholders the chance to comment on the implementation of the Act, Burkholder added the process has been overly rushed and is “not going great”.

Difficult conversations

The at-times tense panel took place in the backdrop of an increasingly polarised US political environment where drug pricing issues have remained at the fore. Insulin affordability has continued to prove a hot button topic as major pricing reforms are on the way. Meanwhile, the pharma industry is contending with a tough economic climate and a series of inflationary and supply chain pressures.

During one back-and-forth, Basey and Burkholder clashed over how the Inflation Reduction Act, or the IRA, would impact patients. “Let’s monitor and evaluate very carefully what the impacts of this unprecedented new authority are going to be before we rush to expand it,” Burkholder said. But Basey countered that there is a need for urgency: “Millions of people today in this country are already dying because they can’t afford access to basic medicine.”