Stakeholder Voices Grow Louder on Harmful “Small Molecule Penalty”
The month of June saw a flurry of activity by investors, manufacturers, patient advocates, and the scientific community who continue to express their concern that legislation passed by Congress last year will discourage R&D for small molecule medicines.
06.29.2023
The month of June saw a flurry of activity by investors, manufacturers, patient advocates, and the scientific community who continue to express their concern that legislation passed by Congress last year will discourage R&D for small molecule medicines – generally pills, tablets, or capsules that provide important treatment options for cancer, neurological conditions, and more.
The American Society of Clinical Oncology’s (ASCO) 2023 Annual Conference, BIO2023 Conference and the Yale Innovation Summit all provided forums for a cross-section of stakeholders to exchange new data and ideas on the troubling policy and to call on policymakers to heed their call for urgent action to enact a solution.
Known as the “small molecule penalty” (SMP), due to the disparity between how small molecule drugs and biologics are treated under the Medicare Drug Price Negotiation Program, this provision threatens to undermine future investment in this class of treatments by shortening the return horizon for investors and limiting opportunities to conduct post-approval research.
A new analysis from the Partnership for Health Analytic Research released during the ASCO Annual Conference sheds important light on how post-approval research works.
- According to the study, over 60% of cancer medications receive at least one post-approval indication while approximately 22% receive three or more.
- Further, 41% of post-approval indications in cancer drugs occurred seven or more years after a medicine’s initial FDA approval.
Taken together, these results tell us that giving investors only nine years until price controls kick in is not enough time to recoup investment, nor will it encourage investors to commit to exploring second or third indications for their therapies.
The impacts of the SMP on life sciences and patient communities were also on
the minds of attendees at the recent BIO2023 Conference and the Yale Innovation Summit. Their concerns echo what Incubate has heard over the last several months from a wide range of stakeholders who are concerned about how the SMP will impact future R&D investment.
The call for much-needed reforms that establish parity between small molecule drugs and biologic medications continues to garner support, including from a group of two dozen entrepreneurs, investors, and leaders within the Massachusetts biotech community recently sent a letter to Congress, asking lawmakers to swiftly fix this issue.
Incubate looks forward to continuing our collective efforts to convene stakeholders and educate policymakers about the SMP. To learn more about how the SMP may impact future investment in biopharmaceutical advances, check out Incubate’s latest resources.