Good Day BIO: Inflation Reduction Act and ag biotech

We’ve talked a lot about how the Inflation Reduction Act will harm drug R&D—and that’s still true—but today, we look at the good news for ag biotech and climate solutions. Plus, a recent HHS investigation looks at how private Medicare insurers and middlemen steer patients away from cheaper generics. (798 words, 3 minutes, 59 seconds)

Inflation Reduction Act has good news for ag biotech – and the planet

The Inflation Reduction Act (IRA) is expected to kill drug innovation and hamper development of new treatments, but the legislation signed into law on Aug. 16 nonetheless contains good news for biotech companies working on climate solutions. 

Historic investment: The law’s investment of $369 billion for energy and climate change is “the single largest infusion of federal cash aimed at tackling the climate threat in U.S. history,” says Erick Lutt, BIO Senior Director of Federal Government Relations.

Close to Paris: Independent review finds the law could reduce U.S. emissions approximately 40% below 2005 levels by 2030, close to the 50% reduction pledged in the Paris Climate Accords.

SAF tax credit: The law includes a tax credit in 2023-2024 for sellers of sustainable aviation fuels (SAFs), “a significant political victory” for BIO, one of the first proponents of such a credit, Lutt says. Blenders who sell SAFs get $1.25 per gallon, plus additional credits based on the lifecycle emissions reduction of the biofuel.

Additional support for biofuels: The law grants $500 million for blender pumps and other biofuel infrastructure, $244.5 million to support production, transport, blending, or storage of SAFs, and $46.5 million for developing low-emission aviation technologies.

Biotech in agriculture: The IRA’s largest agriculture expenditure—$20 billion for conservation programs targeted to private landowners—can encourage use of biotechnology. The $8.45 billion for climate spending through the EQIP program can include innovations like methane-reducing cattle feed, and biotech-based measures for soil conservation and carbon sequestration, Lutt says.

The next steps: Further legislation, executive actions, and regulatory improvements are needed, says Lutt. Still: “The investments that are in there are great, not just for helping incentivize our technologies but they’re great for the planet, too,” he tells us.

Read more in Bio.News.

More Agriculture and Environment News: 

Science: Deadly bird flu may be in North America to stay
“H5N1 infections in both wild bird species and poultry have continued in parts of the United States and Canada over the summer, dashing hopes that warmer temperatures would halt the spread.” 

USDA: USDA begins accepting applications for $100 million in biofuel infrastructure grants
“USDA is making the funding available through the Higher Blends Infrastructure Incentive Program (HBIIP). This program seeks to market higher blends of ethanol and biodiesel by sharing the costs to build and retrofit biofuel-related infrastructure such as pumps, dispensers and storage tanks.”

Insurers gain from PBM rebates while patients and taxpayers lose, finds HHS investigation

Medicare Part D insurers who demand rebates from drug makers steer patients away from cheaper generics—meaning patients and taxpayers lose while insurer pharmacy benefit managers (PBMs) gain, finds an investigation by the Office of the Inspector General (OIG) of Health and Human Services.

The context: PBMs, many of which are owned by insurers, demand rebates from drug manufacturers in exchange for including their products in the formulary of covered drugs. But new drug pricing legislation ignores PBMs, the real driver of high drug costs.

What OIG found: After PBMs take their rebates, Epclusa, a brand-name hepatitis C drug with a $65,000 per-patient price tag, costs private Medicaid Part D insurers about $30,000 per patient, according to the OIG investigation.

But: Patients are charged based on the full price of $65,000—meaning they exceed their annual drug copay and receive “catastrophic coverage” from Medicare (and ultimately taxpayers), which picks up 80% of the cost.

So, because patients are charged the full price and Medicare covers much of the cost, private insurers are incentivized to forgo cheaper generics. In this case, the generic hepatitis C drug costs only $21,000 after rebates. This happened in 70% of cases for this drug, per OIG.

Insurers’ gain is beneficiaries’ loss: “The large rebates offered by manufacturers for higher-cost hepatitis C drugs benefit plan sponsors but provide little relief to beneficiaries who received the drugs or the Medicare program,” the report finds.

Dan’s Deep Dive: “Three insurance company PBMs control 80% of patients’ medicines and use their market power to get tens of billions of dollars in discounts on medicine, but don’t share the savings with the patients,” says Dan Durham, BIO Senior Health Policy Advisor.

Read the full story at Bio.News.

More Health Care News:

Moderna: Moderna completes FDA application for EUA of Omicron-targeting COVID-19 booster
“The application is for a 50 µg booster dose for adults 18 years of age and older, and is based on preclinical data as well as clinical trial data available for the company's BA.1 Omicron-targeting bivalent booster candidate, mRNA-1273.214.” 

Pfizer: Pfizer and BioNTech announce updated COVID-19 vaccine data supporting efficacy in children 6 months through 4 years of age
“The vaccine efficacy remained consistently above 70% in both the 6 through 23 months and the 2 through 4 years age groups.”

President Biden’s Wednesday: Returning from Rehoboth Beach, Delaware, where his vacation allowed time for White House renovations.

What’s Happening on Capitol Hill: Recess.