Implications of the Biden IRA on the value proposition of new drugs

An Expert View from Chris Blanchette, Novo Nordisk (NOV: N), Kathy Lang, PRECISIONheor, Ross Maclean, Precision Value & Health.

The Inflation Reduction Act (IRA), requiring rebates by pharma manufacturers to the federal government if Medicare payment rates outpace the rate of inflation, is now a hot topic in pharmaceutical circles, amplified by comments from President Joe Biden in his State of the Union address earlier this year. However, the focus seems to be on negotiations for current “high-cost” brands based on calendar year sales in 2022. Little attention is being focused on an equally important element of the IRA: the impact the act may have on pharmaceutical R&D pipeline assets currently in Phase II or early Phase III of development.

In this article, we outline challenges with assessing the true value of innovations that will have implications for IRA assessments, and we propose suggestions around the importance of early planning to mitigate several elements of risk that manufacturers will face.