On November 20, 2023, the House Budget Committee addressed a letter to the Congressional Budget Office (CBO), expressing concerns and seeking clarification regarding their analysis and model related to policies impacting new drug development in the United States. The concern stems from the CBO’s projection of the IRA’s impact on drug innovation – projecting a reduction of one drug from 2023 to 2032, approximately five in the subsequent decade, and around seven in the following decade, totaling 13 fewer drugs over the next 30 years.
However, independent assessments have suggested a notably higher figure for the potential decrease in new drugs entering the U.S. market due to the law’s enactment. Estimates range from 139 fewer drugs over the next 10 years to 135 fewer drugs over the subsequent 20 years. The Committee’s concern lies in ensuring that the CBO’s analysis of policies influencing drug development in the U.S. is founded on the most recent and accurate information. Consequently, the Committee posed the following questions to CBO:
(1) Is CBO tracking trends in investments in early-stage drug development by venture capital firms following the passage of the IRA? Are there additional updates or changes CBO is currently considering to the drug development model?
(2) Is CBO working, or willing to work, to expand the drug development model to forecast the impact of related policies on the total number of post-approval indications garnered by drugs that do come to market or the different impact on specific therapeutic areas? Does CBO intend to incorporate the impact not only to overall drug discovery, but the likelihood of firms moving away from small molecule indications, as well as the likelihood of firms moving to indications that will target a population outside of the mean Medicare age?
(3) Has CBO shifted, or considered reevaluating their assessment of the IRA’s impact as a result of actions the Centers for Medicare and Medicaid Services (CMS) has taken to implement the law since enactment? Specifically, does the selection of drugs with forthcoming biosimilar and generic competition as part of the first ten drugs in the drug price negotiation program alter CBO’s expectations regarding the reductions in budget outlays attributable to the IRA?
(4) CBO has stated that it expects that drug companies will increase launch prices in response to the inflation rebate and negotiation provisions in the IRA. Independent economists have argued that companies are already expected to be pricing at the maximum price the market can bear. How does CBO’s model assume the market will accept higher launch prices without a decrease in demand?
(5) Some analyses have noted that the IRA will have implications on the pricing of therapeutic competitors of drugs selected for Medicare “negotiation.” What, if any, assumptions did CBO make about the impact of the law on the pricing of products that are therapeutic competitors to selected drugs?
(6) Since the timeline to selection for Medicare “negotiation” starts with a medicine’s initial FDA approval or licensure, the IRA could create an incentive for innovator medicines to wait until they have developed clinical trial data for larger indications rather than move forward with indications to treat smaller populations with unmet needs for later lines of therapy, therefore delaying patient access to therapy. In its assessment of the IRA’s effects on drug innovation, to what extent did CBO assess this factor as potentially affecting the timing of medicines’ availability to American patients and subsequent impacts on patient health outcomes?
(7) CBO recently issued a blog post soliciting feedback on new research on the use of anti-obesity medications to help inform the agency’s analysis of relevant policies. Will CBO commit to issuing a similar blog post that asks for independent feedback on new research and data to help inform potential refinements and improvements to the drug development model?
Read the full letter.
Last Updated on December 20, 2023 by Aimed Alliance
