The IRA’s healthcare pricing rules reflect good intentions but faulty logic, leading to long-term harm for many categories of patients, especially those with rare diseases. Biotech innovators need to help official decision-makers better understand how the Inflation Reduction Act’s (IRA) drug pricing requirements are already deterring investment in future medical innovation and help correct this situation.
Biotech Must Outrun a Perfect Storm
Next-generation drugs and medicines face strong demand and headwinds. Data projects an aging U.S. population to have a greater incidence of chronic disease. A still-stagnant IPO market, with activity down 36 percent year-over-year, limits the flow of critical immediate and long-term sector funding. And, as drug science grows in complexity, so too does the ability to recruit and sustain the economic and political support that drug makers need.
Despite these obstacles, we need long–term innovation to create more treatment options to incentivize lower costs and discover new therapies and cures for deadly diseases. That requires enormous financial investment.
Yet, four out of five Americans believe prescription drug costs are unreasonable and that drug company profits are a major contributing factor. This significant public sentiment aligns with the new drug price negotiation regime in the IRA. A key IRA provision limits small-molecule drugs (chemically simple and typically oral medications) to a shorter, nine-year post-approval window before they can be considered for Medicare price negotiation, compared with 13 years for biologics (complex medical substances, often administered through injection or infusion). IRA advocates argue the law will put downward pressure on consumer prices.
So What’s the Problem?
The nine-year period falls well short of the 10-15 years on average to develop a new medicine. Beyond the economic arguments, data points, and political strategies to reform this IRA time horizon, drug companies must pull the communications lever to win public opinion. Below are essential tactics that will help:
- Bring human impact to center stage. Compelling testimonials are a best practice in complex policy communications – both discussing the need for new drugs and how breakthroughs that treat the worst diseases might not have existed under the IRA nine-year rule.
- Emphasize transparency. Dramatic policy changes demand detail to shed light on all sides. Critics note that the IRA price-negotiation process lacks clarity about determining maximum fair prices for selected drugs. Just as stakeholders urge transparency for drug company business practices, the industry must demand the same from policymakers.
- What about allies? Drug pricing is a multifaceted debate, meaning non-drug company interests might align with the industry on relevant aspects, including broader points on innovation, technology, and regulation.
- Offer solutions. Don’t just criticize – instead, communicate about ways to harmonize IRA intent with U.S. competitiveness and long-term patient benefits. e.g., establishing a national drug pricing review board to suggest drug prices based on clinical benefits.
Bottom-Line: The Industry Must Engage in Evidence-Based Debate
Drug pricing myths abound, and the industry and companies must politely but firmly face this head-on with empathetic spokespeople – healthcare is a field fraught with misinformation, and a strategically sound approach is required. Those favoring revising the IRA timeliness must communicate strategically to avoid opponents setting impossible expectations for drug makers.
We’d welcome further discussion: