Bloomberg recently wrote about a push by the rare disease community for changes in the Inflation Reduction Act’s drug price-setting rules. The article notes that some pharmaceutical companies have announced that they plan to stop or shift their research into rare disease or small-molecule drugs out of fear that they would not recoup their costs under the Medicare Drug Price Negotiation Program.
Under the Inflation Reduction Act, orphan drugs with a single Food and Drug Administration (FDA) approved indication to treat a rare disease are exempt from the bargaining requirements. Drugs with designations to treat more than one rare disease or condition will not qualify for the exclusion, however, and may be subject to price negotiations – even in cases where they have not been approved for any indications for an additional rare disease or condition.
The National Pharmaceutical Council conducted a study earlier this year that found that 60% of the drugs with the highest gross spending in 2020 by Medicare Part D were small-molecule drugs with subsequent indications. The study concluded that innovation for small-molecule drugs – including rare disease drugs – is at risk under the Inflation Reduction Act because it may reduce economic incentives for manufacturers to develop multiple indications for prescription drugs.
“The rare disease development pipeline and R&D progress over the last 40 years has relied on identifying new applications for approved drugs to address unmet needs for patients living with rare diseases,” said John O’Brien, president and CEO of the National Pharmaceutical Council. “It doesn’t make sense to punish a company for bringing drugs to the market to help the rare community.”
Therefore, certain members of the rare disease community are pushing for changes to be made to the Inflation Reduction Act to protect the development of rare disease and small-molecule drugs. Additionally, AstraZeneca PLC filed a lawsuit challenging the rule in court, arguing that the provisions in the Inflation Reduction Act “run headlong” into the goals of the Orphan Drug Act. Dave Fredrickson, Executive Vice President, Oncology Business Unit, AstraZeneca, said: “Rare disease and cancer patients depend upon high-risk, low-probability drug development that takes many years to develop and aims for cure. If today’s version of the law stands, patients in the United States with rare conditions, who have benefited from the Orphan Drug Act, will get delayed access to scientific breakthroughs relative to other parts of the world.”
“What used to be an effective incentive for further research into rare diseases has now effectively become a penalty, and that has a chilling effect,” said Karin Hoelzer, senior director of policy and regulatory affairs for the National Organization for Rare Disorders. “Patient groups are concerned because they’re hearing that their drug development programs may not move forward.”
A spokesperson for the Centers for Medicare and Medicaid Services (CMS) noted that the negotiation program is in line with the law and “improving the affordability of drugs in Medicare in the short run won’t hurt long-term innovation.” The spokesperson went on to say, “this is an industry that has demonstrated time and time again – they will thrive.”
This will be an interesting space to keep an eye on as the Inflation Reduction Act continues to be implemented.