WASHINGTON (January 17) -- Today, the Centers for Medicare & Medicaid Services announced the second round of Medicare Part D drugs selected for government price controls under the Inflation Reduction Act. The new prices take effect in 2027.
Incubate's executive director, John Stanford, issued the following statement in response:
"Today's announcement is a sobering reminder that Washington's bureaucracy will inevitably devalue the next generation of life-changing medicines. Even worse, hundreds of possible cures will never see the light of day because price-control economics are causing companies to shelve them.
"The Inflation Reduction Act has already created a structural distortion in the early-stage life sciences investment ecosystem. All of the 15 drugs named by CMS today are small molecules. Under the IRA, new small molecule treatments are arbitrarily subject to price controls four years earlier than biologics. This disparity is discouraging investments in small molecules, which are affordable, convenient, and effective treatment options for patients living with cancer, neurological disorders, and many other conditions. According to Incubate's recent survey of life sciences investors, 87% of respondents say the IRA is negatively impacting their decisions to invest in small molecules. We fear today’s announcement, which included drugs that have only been on the market for just seven years, will further chill investment into the industry.
"Price controls on a growing list of drugs covered by Medicare also lead to fewer treatment options for seniors, particularly for conditions such as Alzheimer's disease and cancer. Since the passage of the IRA in 2022, at least 40 research programs have been shuttered by life sciences companies. At least 22 drugs have been discontinued -- including treatments for cancer, psychiatric disorders, hepatitis B, and more.
"Venture capital, which is critical for financing the development of new treatments, is beginning to weigh policy as a factor in dealmaking as a result of the IRA. Our investor sentiment survey found that more than 75% of respondents believe the IRA will reduce investments in startups. Half of respondents are less interested in financing oncology and rare disease therapies due to the IRA.
"Incubate will continue to champion reforms -- like the bipartisan EPIC Act -- that would put small molecules and biologics on the same timeline for price controls at 13 years. Life sciences investment decisions should be guided by the latest science, not arbitrary policy distinctions.
"It's crucial for policymakers to understand how government price-setting is already impacting patient access and life-saving medical innovation. As CMS moves forward with implementation of the IRA, Incubate remains committed to advocating for a policy environment that promotes investment in novel drug development."
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About Incubate
Incubate is a 501(c)(4) organization of venture capital firms representing the patient, corporate, and investment communities. Our primary aim is to educate policymakers on the role of venture capital in bringing promising treatments to patients in need.
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