BIO’s Chief Advocacy Officer Nick Shipley joined an episode of the Vital Transformation podcast to talk about the “chilling effect” of the Inflation Reduction Act (IRA) on R&D on orphan oncology (and many other IRA-related topics)—listen up.
What we’re talking about: The IRA permits the Centers for Medicare and Medicaid Services (CMS) to negotiate the prices for certain drugs covered by Medicare, but the terms of the “negotiation” make it clear that the agency will be establishing price caps. The first 10 drugs will be named in September for price controls starting in 2026; the number of drugs will expand every year—and we’re already seeing the impact on innovation.
The impact: The IRA could prevent the development of as many as 139 therapies, says a recent Vital Transformation study, and removes incentives to develop orphan drugs for rare diseases.
“The IRA data is really bad—terrible even,”says Vital Transformation CEO Duane Schultess. “We see a dozen lost therapies a year, huge losses in R&D investment—$6 billion in Massachusetts per year—a gutting of the orphan pathway for oncology.”
“This is an ecosystem-challenging problem,” says Shipley. Although small and mid-cap companies may not be in the first round of targets, the IRA damages the innovation ecosystem, making it more difficult for them to raise capital for R&D.
“We see real tail risks for the orphan portfolio, particularly in oncology,” adds Schultess. “You are basically disincentivizing almost all orphan drug research,” echoes Shipley. “You are clearly going to have less orphan drug research.”
Listen: The podcast is available on the Vital Transformation website, or on Apple, Spotify, or Google.