Life Sciences Investment Tracker

Incubate launched the Life Sciences Investment Tracker to measure the immediate and longer-term impacts of the Inflation Reduction Act on the ecosystem. The tracker follows two key indicators built out below:

  • Public shifts in activity, specifically because of new price controls.
  • Public announcements of decreased R&D activity due to a broader investment environment.

The new law will have a particularly chilling effect on small-molecule drugs typically taken in pill form.

STAT
Money troubles and M&A: What’s on biotech insiders’ minds ahead of a not-so-celebratory JPM week

Key Dates & Information Collection Requests in CMS Medicare Drug Price Negotiation Program

The U.S. Department of Health and Human Services (HHS) announced key dates for the first year of the Medicare Drug Price Negotiation Program under the Inflation Reduction Act. Despite our efforts to educate policymakers on the negative downstream impact that Medicare negotiations will have, the Inflation Reduction Act enables Medicare to negotiate these drug prices with no established floor. This process will begin this year, and the first negotiated prices will go into effect in 2026.

The Centers for Medicare & Medicaid released a memo with more details on the implementation steps for the Medicare Drug Price Negotiation Program. Among other key components, CMS outlines key dates around the implementation timeline and three opportunities for information collection requests (ICRs) related to the Negotiation Program

CMS Resources:
CMS Press Release
Medicare Drug Price Negotiation Program Memo
Medicare Drug Price Negotiation Program Timeline

Investment Shifts Due to New Price Controls (i.e. the Inflation Reduction Act)

COMPANYSOURCEHIGHLIGHTS
AbbViePress ReleaseAndrew Baum of Citigroup asked how ABBV anticipates pricing pressure assuming CMS selects Imbruvica for the Drug Price Negotiation Program and whether they expect it before 2026 due to expected contracting on formulary placement.

Additional Reading:

AbbVie Q3 2022 Earnings Call Transcript – October 28, 2022
Acadia PharmaceuticalsPress ReleaseEVP & CFO Mark Schneyer stated that ACAD’s increased gross-to-net adjustment (18.6% from 15.2%) is primarily due to increasing 340B volumes and “…a higher gross-to-net adjustment to account for in-channel inventory rebates associated with the inflation Reduction Act (IRA).”

Additional Reading:
Acadia Pharmaceuticals Q3 2022 Earnings Call Transcript – November 2, 2022
AlkermesPress Release








10-Q
On the Alkermes (ALKS) Q3 2022 earnings call, CEO Richard Pops announced the approval by the Board of Directors to explore separating its commercial-stage neuroscience business and development-stage oncology business, partly due to the impacts of the Inflation Reduction Act (IRA).

Impact to “Varying Degrees”: “The Inflation Reduction Act includes several provisions that will impact our business to varying degrees, including those that impose new manufacturer financial liability on all drugs in Medicare Part D beginning in 2025, allow the U.S. government to negotiate prices for some drugs covered under Medicare Part B and Part D beginning in 2026, and require companies to pay rebates to Medicare for drug prices that increase faster than inflation beginning in 2023”

Additional Reading:
In spinning out cancer pipeline, Alkermes cites Inflation Reduction Act’s hypothetical incentives for biologics R&D – November 2, 2022
Alnylam
10-Q
8-K
At the beginning of ALNY’s earnings call, President Akshay Vaishnaw announced that the company will not initiate a Phase 3 study of vutrisiran this year as planned “…as we evaluate the impact of the Inflation Reduction Act on therapies being developed from orphan disease.”

General Impact: “The effect of Inflation Reduction Act of 2022 on our business and the healthcare industry in general is not yet known…The financial impact of the U.S. healthcare reform legislation over the next few years will depend on a number of factors, including, but not limited, to the policies reflected in implementing regulations and guidance, and changes in sales volumes for products affected by the new system of rebates, discounts and fees”

Additional Reading:
Pharma earnings outline drug law’s looming impact on sales, development– November 9, 2022
Amgen10-QImpact on Sales: “The IRA’s drug pricing controls and Medicare redesign is likely to have a material adverse effect on our sales (particularly for our products that are more substantially reliant on Medicare reimbursement), our business and our results of operations”• Uncertainty: “However, as the degree of impact from this legislation on our business depends on a number of implementation decisions, the extent of the IRA’s impact on our sales and, in turn, our business remains unclear”

Additional Reading:

Amgen CEO Robert Bradway warns Biden’s Inflation Reduction Act could blunt future biotech success stories – September 15, 2022

Amgen CEO on New Products, M&A, Drug Pricing Legislation – September 14, 2022
Atea Pharmaceuticals10-QLikely Signigifant: “Most significantly, on August 16, 2022, President Biden signed the IRA into law. This statute marks the most significant action by Congress with respect to the pharmaceutical industry since adoption of the ACA in 2010… For that and other reasons, it is currently unclear how the IRA will be effectuated, and while the impact of the IRA on the pharmaceutical industry and our business cannot yet be fully determined, it is likely to be significant.”
Beigene10-QConcern on Impact to Commercial Market: “Any reduction in reimbursement from Medicare or other government programs may result in a similar reduction in payments from private payors. The implementation of cost containment measures or other healthcare reforms may prevent us from being able to generate revenue, attain profitability, or commercialize our medicines and drug candidates”
Biogen10-QIRA is Notable Example of Pricing Pressure: “Drug prices are under significant scrutiny in the markets in which our products are prescribed, for example the Inflation Reduction Act of 2022 (the IRA) has certain provisions related to drug pricing. We expect drug pricing and other health care costs to continue to be subject to intense political and societal pressures on a global basis” • Uncertainty: “The overall impact that the IRA will have on our business, results of operations and financial condition, and the impact on the pharmaceutical industry as a whole is not yet known. We will continue to assess as further information becomes available”
Bristol Myers Squibb10-QGeneral Impact: “We continue to evaluate the impact of the IRA legislation on our results of operations and it is possible that these changes may result in a material impact on our business and results of operations.”

Additional Reading:
Bristol Myers CEO Already Reassessing Portfolio In Wake Of US Pricing Law: Report – November 20, 2022
Bristol Myers Squibb warns US price reforms will dent drug development – November 20, 2022
Cereval Therapeutics10-QImpact TBD: “The effect of IRA on our business and the healthcare industry in general is not yet known. Adoption of price controls and cost-containment measures, and adoption of more restrictive policies in jurisdictions with existing controls and measures, could further limit a company’s revenue generated from the sale of any approved products. Even if we do receive a favorable coverage determination for our products by third-party payors, coverage policies and third-party payor reimbursement rates may change at any time”
Coherus BioSciences10-Q“Material Adverse Effect”: “Healthcare reform measures, including the Inflation Reduction Act of 2022 (the “IRA”), may increase the difficulty and cost for us to obtain marketing approval for and commercialize our products, affect the prices we may set, and have a material adverse effect on our business and results of operations” • Concerns on Biosimilars: “…it is currently unclear how the IRA will be effectuated, and while the impact of the IRA on our business and the pharmaceutical industry cannot yet be fully determined, it is likely to be significant. In particular, if a product becomes subject to the IRA negotiation provision and related price cap, that may significantly alter the economic rationale for developing and commercializing a biosimilar.”
Context Therapeutics10-QConcern Over Ability to Sell Product: “The passage of the Inflation Reduction Act of 2022 may negatively impact our ability to sell our product candidates, if approved, profitably”
CytomX Therapeutics10-QConcerns on Raising Investments: “In addition, we have incurred and will continue to incur additional costs associated with operating as a public company. However, financial market conditions, including the public equity markets, and government regulation, including the Inflation Reduction Act of 2022, signed into law by President Biden in August 2022, may make it difficult for biotechnology companies to raise additional funds. We cannot predict when or if market conditions will change”
Exelixis10-QGeneral Impact: “Although public rulemaking and related agency guidance for the Inflation Reduction Act has yet to be issued and it is uncertain what impact the Inflation Reduction Act will ultimately have upon our business, over time the Inflation Reduction Act could reduce the revenues we are able to collect from sales of our products and increase our government discount and rebate liabilities” • Uncertainty: “In addition, we cannot know the final form or timing of any other legislative, regulatory and/or administrative measures, and some of these pending and enacted legislative proposals or executive rulemaking, if implemented without successful legal challenges, would likely have a significant and far-reaching impact on the biopharmaceutical industry and therefore also likely have a material adverse impact on our business, financial condition and results of operations”
Gilead10-QPotential for Limiting Prices, More Rebates: “We are continuing to evaluate the impact of the Act on our business, but it is possible that the Act could have the effect of limiting the prices we can charge and increasing the rebates we must provide government programs for our products, thereby reducing our profitability and negatively impacting our financial results” • Additional Leg/Rulemaking: “We cannot be sure whether additional legislation or rulemaking related to the Act will be issued or enacted, or what impact, if any, such changes will have on the profitability of our business in the future” • Uncertainty: “These initiatives and such other legislation may cause added pricing pressures on our products, and the resulting impact on our business is uncertain”
Halozyme Therapeutics10-QPotential “Material Adverse Impact”: “In this dynamic environment, we are unable to predict which or how many federal policy, legislative or regulatory changes may ultimately be enacted. To the extent federal government initiatives decrease or modify the coverage or reimbursement available for our or our partners’ products, limit or impact our decisions regarding the pricing of biopharmaceutical products or otherwise reduce the use of our or our partners’ U.S. products, such actions could have a material adverse effect on our business and results of operations.”
Horizon Therapeutics10-QIncome Taxes: “Pending further guidance, it is possible that the IRA could increase our tax liability, which could in turn adversely impact our business and future profitability. The IRA or future changes in U.S. tax laws could have a material adverse impact on the value of our deferred tax assets and liabilities, could result in significant one-time charges, and could increase our future U.S. tax expense.”

General Impact: “The IRA permits HHS to implement many of these provisions through guidance, as opposed to regulation, for the initial years. It is currently unclear how the IRA will be effectuated but it is likely to have a significant negative impact on the pharmaceutical industry”
IDEAYA Biosciences10-QConcerns on Profitability & Revenue: “The implementation of cost containment measures, including the prescription drug provisions under the IRA, as well as other healthcare reforms may prevent us from being able to generate revenue, attain profitability, or commercialize our product candidates if approved. Complying with any new legislation and regulatory changes could be time-intensive and expensive, resulting in a material adverse effect on our business.”
IGM Biosciences10-QPotential “Material Adverse Effect”: “The implementation of cost containment measures, including the prescription drug provisions under the Inflation Reduction Act, as well as other healthcare reforms may prevent us from being able to generate revenue, attain profitability, or commercialize our product candidates if approved. Complying with any new legislation and regulatory changes could be time-intensive and expensive, resulting in a material adverse effect on our business”
Merck10-QIRA & 9-Month Period in 2022: “…the Company’s sales performance in the first nine months of 2022 was negatively affected by other cost-reduction measures taken by governments and other third parties to lower health care costs. In the U.S., Congress recently passed the Inflation Reduction Act, which makes significant changes to how drugs are covered and paid for under the Medicare” • General Impact: “The Company anticipates all of these actions and additional actions in the future will negatively affect sales and profits”

Additional Reading:
IRA impact: AstraZeneca and Merck CEOs warn of oncology drug development shifts – November 11, 2022
Mirum Pharmaceuticals10-QLikely to Have “Significant Impact”: “These provisions will take effect progressively starting in 2023, although they may be subject to legal challenges. It is currently unclear how the IRA will be effectuated but is likely to have a significant impact on the pharmaceutical industry” Impact to Livmarli: “Any reduction in reimbursement from Medicare or other government programs may result in a similar reduction in payments from third-party payors. The implementation of cost containment measures or other healthcare reforms may prevent us from being able to generate revenue, attain profitability or commercialize Livmarli and our other product candidates, if approved.”
Pardes Biosciences10-QConcerns on Revenue Generation: “The implementation of cost containment measures or other healthcare reforms may prevent us from being able to generate revenue, attain profitability, or commercialize our products. Such reforms could have an adverse effect on anticipated revenue from product candidates that we may successfully develop and for which we may obtain regulatory approval and may affect our overall financial condition and ability to develop product candidates”
Protagonist Therapeutics10-QPaused Trials of rusfertide: “In keeping with our organizational prioritization of rusfertide in PV, plans to initiate trials of rusfertide in additional disease indications have been paused. This decision was influenced in part by the recent enactment of the Inflation Reduction Act in the United States and includes previously planned trials of rusfertide in the subset of hereditary hemochromatosis patients with chronic arthropathy”
Recursion Pharmaceuticals10-Q“Adverse Effects”: “…the recently enacted federal Inflation Reduction Act (IRA) contains provisions that could have an adverse effect on our ability to generate revenue, attain profitability, or commercialize our product candidates if approved, as the statute includes provisions intended to reduce the cost of prescription drugs under Medicare. In addition to the direct impact of the IRA on federal drug reimbursement, the statute may also lead to similar reductions in payments from private payers. The continuing efforts of the government, insurance companies, managed care organizations and other payors of healthcare services to contain or reduce costs of healthcare and/or impose price controls may have adverse effects.”
Regeneron10-QPotential for REGN Drugs Being Selected: “Notably, the U.S. Congress recently passed the Inflation Reduction Act (the “IRA”), which includes measures allowing the government to negotiate prices of certain prescription drugs under Medicare (including those covered under Medicare Part B, such as EYLEA and, potentially in the future, aflibercept 8 mg)” • Uncertainty: “While enacted into law, it is unclear how the provisions of the IRA will be implemented and the extent to which the policy changes will ultimately impact reimbursement levels of our marketed products covered under Medicare Part B (such as EYLEA) or our product candidates that may in the future be covered under Medicare Part B (such as aflibercept 8 mg)” • Potential for “Material Adverse Impact”: “A reduction in the availability or extent of reimbursement from U.S. government programs (including as a result of the legislation, proposals, initiatives, and developments described above) could have a material adverse effect on the sales of EYLEA or our other marketed products. Economic pressure on state budgets may also have a similar impact”
Revance Therapeutics10-QImpact to DAXXIFY: “ It is currently unclear how the IRA will be implemented but is likely to have a significant impact on the pharmaceutical industry… Any new regulations or revisions or reinterpretations of existing regulations may impose additional costs or lengthen review times of, or affect the price that we may charge for, DAXXIFY™, or any future product candidates including an onabotulinumtoxinA biosimilar”
Sage Therapeutics10-QConcerns on Impact to Commercial Market & Development Decisions: “These risks as to pricing may further heighten the risk that we would not be able to achieve the expected return on our drug products or full value of our patents protecting our products if the pricing of any of our products are the subject of Medicare price negotiations. As a result, these risks may also impact the development decisions we make with respect to our products.”
SanofiPress ReleaseSA CO Paul Hudson stated that the IRA “…will likely create significant uncertainties across our industry,” highlighting investments into future R&D.

Additional Reading:

Sanofi, Alnylam Q3 Reports Hint at Early Pipeline Impacts from IRA – October 31, 2022
Xilio Therapeutics10-QNote: Xilio described the IRA in a risk section entitled “Current and future legislative efforts may limit the prices for our products, if and when they are licensed for marketing, and that could materially impact our ability to generate revenues”
Zymeworks10-QConcerns over Revenue Generation: “The implementation of cost containment measures, including the prescription drug provisions under the Inflation Reduction Act, as well as other healthcare reforms may prevent us from being able to generate revenue, attain profitability, or commercialize our product candidates if approved”

Other Reports of Decreased R&D Activity

COMPANYSOURCEHIGHLIGHTS
ViatrisDEF 14ANo specific IRA mention, but company states: “…uncertainties regarding future demand, pricing and reimbursement for the Company’s products” is a risk
Xenon Pharmaceuticals10-Q“Significant Implications”: “In August 2022, Congress passed the Inflation Reduction Act of 2022, which includes prescription drug provisions that have significant implications for the pharmaceutical industry and Medicare beneficiaries… The impact of these regulations and any future healthcare measures and agency rules implemented by the Biden administration on us and the pharmaceutical industry as a whole is currently unknown”

The Conversation

Jan. 20th-Novartis warns U.S. plan to curb drug prices could hit key research

While small molecule chemical drugs will be subject to negotiated drug prices nine years after regulatory approval, biologic drugs made from living cells would not be affected until after 13 years, according to the legislation. As a result, some pharmaceutical executives say they are now prioritizing biologics, generally injections or infusions, over “small-molecule” drugs, which are mainly pills. But Novartis said that would hit its areas of innovative strength particularly hard.

Jan. 17th- JPM23: Novartis takes sweeping approach to ‘US-first’ mindset, exec says

On that front, Bulto said the newly passed Inflation Reduction Act is already affecting Novartis’ R&D decision-making because the company’s projections around net value for drug candidates is changing.

Jan. 17th – WTAS: Inflation Reduction Act already impacting R&D decisions

Whether you are looking at estimates of how many fewer medicines or indications will be developed, or noting shifts away from areas of unmet patient need because the law is signaling those innovations are not valued, the IRA’s price setting provisions are a loss for patients everywhere.

Jan. 12th- Pharma Companies Say New Drug Price Law Leaves Them in Limbo

Drugmakers say a new US law aimed at cutting prices on top-selling medicines after they’ve been on the market for several years has them stuck in limbo. 

Jan. 12th- Drug companies favor biotech meds over pills, citing new U.S. law

“The difference between a nine- and 13-year product line is about 50 or 60% of the value,” Eli Lilly Chief Executive Officer Dave Ricks said in an interview. “In 10 years, we’ll have far fewer small molecules being developed than we do today.”

Jan. 12th- JPM23 week: Storm prep top of mind for biopharma CEOs

Finding alternate paths to growth, despite market turbulence, has been a major talking point for biopharma CEOs during the conference.

Jan. 11- Biden administration will select first 10 drugs for Medicare price negotiations by September
  • The Health and Human Services Department will select 10 Medicare Part D drugs this year for price negotiations with manufacturers.
  • The federal government for the first time has the power to negotiate Medicare drug prices due to the Inflation Reduction Act.
  • The actual negotiations begin in 2024 and the prices will go into effect in 2025.
Jan. 7th- VC investing may have fallen by a third in 2022

Based on data collected through Dec. 12, venture capital investing in US companies in 2022 was on track to drop a third compared with the prior year, according to PitchBook. Some startups are relying on the money they have already raised to delay the need for further fundraising, and others have turned to so-called insider rounds to maintain their valuations.

Jan. 3rd- As Predicted, Patients Are Paying the Price for the Inflation Reduction Act’s Drug Reform

It has been about four months since President Biden signed the Inflation Reduction Act (IRA) and, already, the law’s drug-pricing rules have dealt a major blow to medical innovation — one larger than its proponents acknowledged and the Congressional Budget Office forecast.