Patients in the U.S. will soon be left with fewer new, affordable and convenient treatments, if Congress fails to fix a harmful provision in the Inflation Reduction Act (IRA) referred to as the “pill penalty.”
The pill penalty, which allows the government to set the price of pills and other small molecule treatments years before other drugs, is already driving investors away from funding the early development of these vital medicines, according to a report by health consulting firm Vital Transformation.
The report, which was published in the Journal Therapeutic Innovation and Regulatory Science, analyzed the impact of the IRA on investment in drug development since the law’s introduction in 2021. Its findings are stark:
- R&D investments declined markedly for small molecule medicines. The study found that among smaller, early-stage biopharma companies – companies valued at less than $2 billion – small molecule R&D investments dropped by nearly 70%. These emerging companies are an important early source of new treatment advances, and these investment declines signal that over time, fewer and fewer of these medicines will be available to patients.
- The negative impacts were focused on medicines taken by seniors. R&D in disease areas most prevalent in the Medicare-aged population saw a median investment decline of 74%, with large impacts in conditions including Alzheimer’s, heart failure, and numerous types of cancer. Seniors rely on continued innovation from all kinds of medicines. This includes pills and other small molecule drugs, which are typically among the most convenient and affordable treatment options for patients, and which often target common chronic conditions including mental illness and cardiovascular disease that impact millions of Americans.
A fix is needed
When it comes to vital innovation Americans depend on, policies shouldn’t pick winners and losers.
It’s time for Congress to fix the pill penalty and protect access to some of the most important, affordable and convenient treatments in all of health care.
Learn more at PhRMA.org/pillpenalty.
Brianna Allen
Brianna is a Senior Director on PhRMA’s Public Affairs team focusing on communications strategies and activities around Medicare, Medicaid and access to medicines. Prior to joining PhRMA, she served as a strategic communications advisor at the FDA’s Center for Devices and Radiological Health and worked as a director of strategic communications on FGS Global’s health care team. She started her career in journalism and spent nearly a decade covering domestic policy issues, including federal health policy for POLITICO. She enjoys spending time outdoors exploring Northern Virginia with her husband, two toddlers and corgi puppy.
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