Incubate in BioWorld on How the EPIC Act Would Restore Investment in Small Molecules
- Incubate Coalition
- Mar 12
- 2 min read
BioWorld regulatory editor Mari Serebrov recently interviewed Incubate's executive director John Stanford for her article on how the EPIC Act would restore interest in small molecule drug development.
The EPIC Act would undo a discrepancy in the Inflation Reduction Act that has shifted the investment away from small molecule therapies, despite their enormous scientific potential. In BioWorld, Stanford highlighted the types of drugs most impacted by the IRA's pill penalty:
"Meanwhile, the four-year pill penalty already has taken a toll, resulting in a 70% drop in investment in small-molecule R&D since the IRA became a possibility in 2021, the sponsors of the EPIC bill said…
Furthermore, Incubate's executive director, John Stanford, told BioWorld that about $8 billion
more than expected has shifted toward biologics and 87% of venture capitalists surveyed
expressed less interest in investing in small molecules because of the IRA's pill penalty. Stanford
added that the financial community also is taking note, with ratings groups and investment houses warning of the small-molecule penalty.
The result, in the aggregate, has been a steady move away by investors and a noted decrease in
M&A interest in big pharma toward small biotechs developing small molecules, Stanford said. But that’s not to say all small-molecule R&D is on the decline. Some areas are still attractive, he noted.
For instance, small-molecule drugs treating diseases such as cystic fibrosis that are largely outside of Medicare would not be as vulnerable to the pill penalty. Also, small-molecule drugs treating conditions such as psoriasis that impact large patient populations would have time, even with the penalty, to recoup their investment, Stanford said.
Regardless of those exceptions, if the penalty isn’t removed, a lot of innovation in the small-
molecule space will be left on the table. That could include efforts pursuing small-molecule development for indications dominated by more expensive biologics, Stanford said."