A Look at the Effects of the Inflation Reduction Act
Study explores how the Inflation Reduction Act’s Drug Price Negotiation Program and its maximum fair prices impact incentives for investments in post-approval activity.
One of the main purposes of the Inflation Reduction Act (IRA)—which passed in August 2022—is to lower prescription drug prices for Medicare enrollees and taxpayers. However, manufacturers are also incentivized to invest in post-approval activities for both oncology and cardiovascular drugs.
In fact, the Medicare Drug Pricing Negotiation Program (DPNP) features a set maximum fair price (MFP) guidelines for certain drugs that beneficiaries can use. Three of those 10 initial drugs—whose prices will be announced by Sept. 1, 2024, to go into effect by Jan. 1, 2026—were either initially for an antithrombotic or cardiovascular (CV) indication—such as apixaban, rivaroxaban, and sacubitril/valsartan—while some others have actually received CV indications following approval.
A study published in the Journal of Medical Economics sought to explore various implications of the IRA, including the timing and number of post-approval clinical trials and approved indications for CV meds, especially given the fact that limited attention has been provided to the effect these drugs can have, according to the study authors.
The investigators created a dataset derived from two measures: industry-sponsored, post-approval clinical trials—along with label changes that were FDA-approved for new indications—for the 65 drugs (consisting of 60 small molecules and five biologics) that were approved by the agency, from 1995 all the way through the end of 2021.
This features a dive into the magnitude and timing of any post-approval activity for drugs that the FDA approved through biologic license applications or as new molecular entities. It excludes medications that will not be a part of the DPNP, radiodiagnostic agents, or those used to enhance diagnostic imaging, plasma-derived products, and those indicated only as parts of interventional procedures.
For each of the 65 drugs, the original approval date was tallied, along with whether the drug is considered a biologic or small molecule. Such a designation would clarify what specific year the MFPs would take effect.
Results indicated that 49% of indications were awarded, while 76% of industry-funded clinical trials were completed following approval; in the 1995-1999 cohort, 98% of trials for drugs were reached. For the 60 small molecules, 76% of post-approval trials ended five years or more following original drug approval, and 65% ended seven or more years following the original drug approval. Nine or more years after the original drug approval, 53% ended.
As a result, the investigators concluded that “Post-approval indications and industry-funded clinical trials represent a substantial share of all indications and industry-funded trials for cardiovascular drugs, and a substantial share of these indications occur years after initial approval. The timing of additional post-approval clinical trial starts, primary completions and indication approvals often occurs after or near IRA DPNP drug selection and implementation dates, suggesting that the new DPNP economic incentives may have an impact on decisions about future cardiovascular drug post-approval investment. As most approved cardiovascular drugs are small molecules that will face earlier potential DPNP selection and MFP implementation dates, these effects could be heightened relative to sectors with a greater share of biologics.
…While many uncertainties remain, including what actual MFPs will be announced and implemented, and how extensive and rapid the spillover effect will be from government purchases to prices in the commercial market, the level and timing of post-approval indication and clinical trial activity for cardiovascular drugs suggests there could be adverse effects on manufacturer post-approval investment behavior as a result of the DPNP’s changes to the economic incentives for post-approval investment. This is an important issue for policymakers and researchers to monitor going forward.”
Reference
Grabowski, H., & Long, G. (2024). Post-approval indications and clinical trials for cardiovascular drugs: some implications of the US Inflation Reduction Act. Journal of Medical Economics, 27(1), 463–472. https://doi.org/10.1080/13696998.2024.2323903
