A new study estimates that there would be more than 235 fewer FDA approvals of new medicines for patients battling cancer, neurological, and rare and infectious diseases over the next decade as well as 15,714 lost jobs for Georgia workers if proposals to expand federal government-mandated drug pricing policies are implemented. Among the proposals under consideration is allowing Medicare to set prices for specific drugs five years after FDA approval, which would lead to significant lost therapies, innovation, and jobs in the biopharma ecosystem at an even more accelerated pace. These proposals are included in the Executive Branch’s FY 2024 budget as well as the Senate’s SMART Prices Act.
Research firm Vital Transformation modeled the impacts of expanded federal government-mandated drug pricing policies at five years following FDA approval. The study analyzed the reduction of new drug approvals and loss of jobs if these policies or others similar to them were enacted into law.
“Advocates for Responsible Care (ARxC) advocates for patient access to their medications and treatments. Our 43-member coalition is very concerned that the proposed government-mandated drug policies will especially hurt chronic illness patients by impeding the development of and investment in new medicines. The New Vital Transformation and BIO separate study shows patients could lose access to at least 40% of new medicines that seriously ill patients rely on to be more productive and to extend their lives, despite their poor prognosis. It’s critical that Georgia’s Congressional delegation takes the time to fully understand the patient impact and unintended consequences of this policy,” said Dorothy Leone-Glasser of ARxC.
“At a time when the biopharmaceutical industry is just beginning to experience the negative impacts of the Inflation Reduction Act’s government-mandated drug pricing policy, any new proposal only adds fuel to the fire and reinforces a deeply misguided and flawed approach,” said Tom Kowalski, national co-chair of We Work For Health, a national organization that collaborates with biopharmaceutical research companies, vaccine manufacturers, their employees and local businesses, as well as patient advocacy organizations, to improve the health and well-being of patients. “This latest study demonstrates just how bad the damage could be should these plans be implemented.”
Key Study Highlights:
The study found that, if proposed expansions of government-mandated drug pricing policies are implemented, there are serious consequences around the development of and investment in new medicines, and significant job losses in major innovation hubs like Georgia.
- Lost Therapies: More than 80 currently available therapies of 121 identified for price setting – approximately 70% – would likely not have been developed had the pricing provisions been in place prior to their development.
- Lost Innovation: More than 235 fewer FDA approvals of new medicines or new uses over a 10-year period. Impacts of the proposed policies will be felt most heavily in many areas of unmet need, particularly in oncology, neurology, and rare and infectious diseases.
- Lost Jobs & Investment: Loss of 3,202 direct biopharmaceutical industry jobs and a total loss of 15,714 in Georgia. Loss of ecosystem investments into 50 different therapeutic indications $3.680 B in Georgia.
Specifically, We Work For Health is hopeful that Congress will preserve incentives for small molecule research. Under the IRA, biologics have a 13-year period before the government can intervene and mandate drug prices, but small molecule drugs are limited to nine years prior to negotiation. This discrepancy will lead to a reduction in investment in small molecule drugs.
It’s critical that Georgia’s Congressional delegation takes into account the existing unintended consequences of the IRA – and to ensure similar policies are not supported before the consequences of the current law can be fully understood and corrected.
Earlier this month, Vital Transformation and the Biotechnology Innovation Organization (BIO) issued a separate study showing that patients could lose access to at least 40% of new medicines that wouldn’t be developed as a result of government-mandated drug pricing policies contained in the Inflation Reduction Act. This equates to as many as 139 therapies not being developed over the next 10 years.
The new study being issued today by We Work For Health and Vital Transformation modeled the impacts on industry revenues, jobs and future research and development investments. The analysis was performed by Vital Transformation’s consulting economist Dr. Harry Bowen, research manager Dr. Daniel Gassull and CEO Duane Schulthess. For the full study, please visit Vital Transformation or We Work For Health.
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