Ensuring Pathways to Innovative Cures (EPIC) Act: An Amendment to the IRA to Eliminate the "Pill Penalty" Effecting the Development of New Small Molecule Drugs

 

SIMPLIFIED SUMMARY

The Inflation Reduction Act (IRA) of 2022 includes a provision with no scientific rationale or benefit to patients that gives biologic therapeutics four years longer patent life to recoup development costs and profit than small molecule drugs. This “pill-penalty” is driving pharmaceutical companies and venture capitalists to divest away from new small molecule therapeutics. Small molecules make up almost all of oral pill medications as well as comprise most treatments for brain diseases (ex: chronic pain, migraines, schizophrenia, stroke, ALS, Parkinson’s disease, Alzheimer’s disease, MS, epilepsy, and brain caners.) Small molecules are cheaper to manufacture, store, and distribute to patients than biologics making them more accessible and economically sustainable. The Ensuring Pathways to Innovative Cures (EPIC) Act was introduced by Congressman Greg Murphy, M.D. to give small molecules and biologics the same patent life to eliminate this small molecule penalty. We ask you to support the EPIC act to provide more accessible and diverse therapeutic options to patients which is aligned with the intended goal of the IRA.

 

This document details:

1)      The specifics of the IRA penalty to the development of small molecule drugs.

2)      The benefits of small molecules as compared to biologics for patients.

3)      The EPIC act’s proposal to provide patent equity to small molecule and biologic drugs.

Included are references from well-respected news sources reporting on the pharmaceutical and medical industries that are open access, as well as references from peer reviewed publications.

·       H.R.5376 - Inflation Reduction Act of 2022 and the unintended pharmaceutical industry impact

o   The Inflation Reduction Act (IRA) permits the Secretary of the Department of Health and Human Services (HHS) to negotiate drug prices directly with manufacturers for some Medicare drugs lacking generic or biosimilar options. Negotiations began in 2023, with maximum fair prices set to go into effect in 2026. (ASPE research reports, 2023: HHS.gov)

o   While the impacts of the IRA are designed to be largely positive for those on Medicare, there have been significant unintended consequences on the pharmaceutical industry, particularly in small molecule drug development because of a specific provision. (How the IRA Will Affect Drug Development. 2023: BioSpace)

·       IRA Provision with serious negative consequences: “Small-molecule or pill penalty.” 

o   The IRA assigns certain small-molecule drugs be subject to Medicare drug-pricing negotiations after 9 years, while biologics (large-molecule drugs), have 13 years on the market before price reductions. 50% of all drug revenues come in the last few years of sales after development costs are recouped. Currently, drugs get ~15 years before competitors can introduce generics. This IRA provision inhibits a small-molecule drug’s primary moneymaking years. (Pharmaceutical industry rips 'draconian' price negotiation provision. 2023: Fierce Healthcare)

o   There is no scientific or medical reason for this discrepancy, and it will have a real and harmful impact on drug discovery and patients. (Lilly exec blasts IRA's 'nonsensical' distinctions as pharma readies legal attacks elsewhere. 2023: Fierce Pharma)

o   Small-molecule drugs currently make up 90% of the drug market and these provisions by the IRA could lead to reduced investment in the development of these drugs. A disproportionate emphasis on biologics development will impact the variety of treatments available. (Impending Relief for Medicare Beneficiaries — The Inflation Reduction Act N. Engl. J. Med. 2022; 387:1437-1439.)

o   The IRA is propelling a movement to more expensive and less accessible injection drugs. It is projected “79 fewer small molecule drugs or 188 indications, and 116 million life years lost over the next 20 years.” (Policy Brief: The Potentially Larger Than Predicted Impact of the IRA on Small Molecule R&D and Patient Health. 2023: U.Chicago.edu)

 

·       Immediate consequences to the pharmaceutical industry:

o   Divestment from small-molecule drug discovery by large pharmaceutical companies and venture capitalists is already occurring. (The IRA Is Already Curtailing Small Molecule Drug Development. Here’s How to Reverse That. 2024: BioSpace)

§  Many venture capitalist investors have indicated moving away from funding small molecules for Medicare patient populations. (Measuring the damage: IRA’s impact on small molecule drug development. 2024: NPLB – No patient left behind)

§  Biologics received nearly 50% more in venture capital financing in 2023 than small molecules. Some biotech investment firms are concerned the IRA could make the “development of small-molecule drugs uninvestable” (Stakeholder Perspectives of the Inflation Reduction Act’s (2022) Impact on Prescription Drugs: A Narrative Review. Pharmacy 2023, 11, 187.)

o   Large pharmaceutical companies, most notably Pfizer, have specifically indicated their divestment away from small molecules. There has been large scale layoffs occurring at the biggest pharma companies in the US who have small molecule portfolio’s, such as Pfizer, Sanofi, Novartis, Genentech, Bayer and Bristol Meyers Squibb. In some cases, entire research sites are being closed. These layoffs and site closures have already impacted significant percentages of research and development which will limit the number of new therapeutics for patients.

 

·       There are certain specific benefits to small molecules over biologics that cannot go ignored.

o   Most drugs that act on the brain are small molecules.

§  Small molecules can more easily pass into the brain because of their size, providing treatments for mental health disorders (like schizophrenia), epilepsy, migraines, stroke, neurodegenerative diseases (like Parkinson’s disease), chronic pain, and deadly brain cancers.

§  Of note, many diseases of the brain still have high unmet medical need and no useful treatment options. Small molecule therapies have the potential to address diseases multiple sclerosis (MS), like Lou Gehrig's disease (aka ALS), Huntington's disease, muscular dystrophy, Alzheimer’s disease, and dementia.

§  Negative impact: Moving away from small molecules means a lower likelihood of breakthrough therapies for debilitating and deadly diseases of the brain. (Transforming Drug Development for Neurological Disorders: Proceedings from a Multidisease Area Workshop. Neurotherapeutics (2023) 20:1682–1691.)

o   Most oral (pill) medications are small molecules.

§  Oral pill medications allow patients, especially the extremely sick, elderly, and disabled, to take their medications from the comfort of home by mouth either daily or as needed without traveling to see a medical professional.

§  Negative impact: Moving away from small molecules creates additional access hurdles and costs for patients accessing and taking their medicines.

o   Small molecules are usually in solid forms and are therefore more stable and have longer shelf lives.

§  Longer shelf-life medications can be bought in larger quantities by patients and pharmacies, stored at room temperature, and shipped in the mail without specialized refrigeration. (Biologics vs. small molecules: Drug costs and patient access. Medicine in Drug Discovery, 2021, 9, 100075.)

§  Negative impact: moving away from small molecules means more costs associated with transportation, storage, and distribution of drugs to patients.

o   Small molecules are easier and cheaper to manufacturer than biologics

§  Small molecule drugs are more easily synthesized, purified, characterized, and scaled up to large qualities necessary for sale and distribution worldwide which contributes to their lower cost. (Biologics vs. small molecules: Drug costs and patient access. Medicine in Drug Discovery, 2021, 9, 100075.)

§  Negative impact: moving away from small molecules means higher cost drugs for patients that could offset the cost saving measures of the IRA.

 

·       Downsides of biologic drugs for patients:

o   Almost all biologics are currently administered by injections.

§  Intravenous (IV) injections require trained healthcare professional administration usually in a health care setting like doctor’s office or hospital. Intramuscular and subcutaneous (fatty layer under skin) injections can sometimes be done at home (like for insulin), but many require administration by a medical professional like vaccines do.

§  At home injections require specialized and expensive auto-injection devices that often cost more than the drug itself such as contributing to the prohibitive cost of EpiPens. (Global Autoinjector Devices Market $10.5 Billion by 2031. 2023: iHealthcareAnalyst, Inc.)

§  Negative impact: Not everyone is capable of self-injecting drugs at home which increases the serious risks of inadequate administration and improper dosages.

o   Most biologics, like vaccines, require specialized formulations and storage.

§  Biologics have shorter shelf lives and often need to be kept refrigerated with specific temperature requirements such as avoiding the drug from spending any time below 0°C or >30 minutes <2°C or > 8°C. “Data from 276 injectors and nearly 2.5 million temperature assessments showed that only 1-in-8 (11.6%) were stored within the recommended temperature range” which may affect drug effectiveness in patients. (The majority of patients do not store their biologic disease-modifying antirheumatic drugs within the recommended temperature range. Rheumatology (Oxford) 2016, 55(4), 704-9.)

§  Negative impact: Patients, pharmacies, nursing homes, hospitals and other healthcare facilities will require additional refrigerated storage and transport costs that will be passed down to patients or risk the dosage of ineffective medications. An additional burden is placed on the unhoused, underhoused and transient population who may not have refrigerated storage options for their medicines at all.

o   Patients still do not prefer long-acting injections over daily pills.

§  Polling patients on long term regular HIV medications shows a split or preference for daily oral medications over injectables even when they are long acting (some lasting for months) indicating patient preferences for new therapeutics as oral drugs which are still mostly small molecules. (Preference for daily oral pills over long-acting antiretroviral therapy options among people with HIV. AIDS. 2023 Aug 1; 37(10): 1545–1553.)

§  Negative impact: Patients may choose to not seek therapeutic treatments for their diseases or depend on inferior options due the desire to avoid needle injections.

 

·       H.R.4925 - EPIC Act: Ensuring Pathways to Innovative Cures (EPIC) Act

o   Introduced by Congressman Greg Murphy, M.D. (Murphy Introduces Legislation to Eliminate IRA "Pill Penalty" and Support Small Molecule Drug Innovation. 2024, Press Release: house.gov)

o   A Bill: To amend title XI of the Social Security Act to equalize the negotiation period between small-molecule and biologic candidates under the Drug Price Negotiation Program.

§  SECTION 1. EQUALIZING THE NEGOTIATION PERIOD BETWEEN SMALL-MOLECULE AND BIOLOGIC CANDIDATES UNDER THE DRUG PRICE NEGOTIATION PROGRAM.

o   The bill is cosponsored by representatives Don Davis (D-N.C.) and Brett Guthrie (R-Ky.). “The aim of this act is simple: equalize the negotiating period between biologics and small molecules under the IRA’s Drug Price Negotiation Program and ensure continued R&D investments in small molecule drugs.” (Stakeholders Hope Bill Will Create IRA Drug Negotiation Parity Between Biologics and Small Molecules. 2024: BioSpace)

o   We ask you to support the EPIC act to remove the unscientific distinction between small- and large-molecule drugs in the IRA. The goal is to have parity between the ability for companies to develop and profit from small molecule and biologic drugs equally.