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The federal government could save $25 billion in 2031 through the Inflation Control Act (IRA), which aims to reduce prescription drug spending, but estimates amount to about 1% of total expected approvals. 15 new drugs may not reach the market. The next 30 years are expected to be prolonged as a result of declining revenues in the biopharmaceutical industry.
That’s according to the Congressional Budget Office (CBO), which has the difficult task of estimating the budget and other economic impact of federal legislation on Congress. However, other estimates differ significantly from CBO’s predictions of how much fewer drugs will be developed as a result, with up to 135 fewer new drugs being developed by 2039, and that this loss of new treatments will exceed the total. It is expected to have far more negative health effects. COVID pandemic.
How did CBO analysts arrive at these numbers? Market-changing legislation is on the horizon, including President Joe Biden’s call to more than double the number of drugs subject to price negotiations. Therefore, it is necessary to consider in detail how to predict the results. Widely publicized estimates, such as those provided by CBO, give the public and policymakers a false impression of accuracy, when more weight should be given to the uncertainty in the estimates.
As economists in the biopharmaceutical industry, we appreciate that investors and biopharmaceutical companies are making clinical program investment decisions based on expectations of the price and number of people who will use a drug during its patent protection period. doing. We regularly consult with a number of biopharmaceutical companies, professional associations, and industry associations, many of whom are seeking to prevent the implementation of IRAs. Changing its expectations with a policy change as large as the IRA would impact access to poorly understood clinical trials and medicines.
We need to do a good job of examining how investors are reacting, and policymakers must recognize the uncertainty around the potential impact on drug development before expanding policy. need to do it. Billions of dollars of investment in drug development and the therapeutic and health benefits it provides are at risk.
How can we better predict policy outcomes?
CBO estimates are often developed over a short period of time and are based on published research. Building predictive models, even with peer-reviewed content, still leaves considerable room for error. Additionally, there are uncertain and variable factors that need to be considered, such as insurance coverage, disease outbreaks, and drug patent expirations.
CBO has recently, and for good reason, called for more evidence about the impact of policies such as IRAs that could change the expected market size for drug development, as it seeks to inform future projections. I’ll include it in the bill. CBO did the right thing by calling for more data and research. But in reality, more time is needed to truly see how these policies develop and how they impact clinical trials of new drugs and new indications. CBOs are typically asked to prepare estimates for Congress in a short period of time, with staff sizes remaining the same for years and normal operations continuing.
Assessing the potential impact of policies such as price negotiation in Medicare can be a multi-year endeavor for academic institutions, think tanks, and doctoral programs. The federal government should engage in the work of supporting multiple evaluations of its policies, especially before considering its expansion, making federal data more accessible and having relevant expertise on the impact of these policies. You can do so by seeking an advisor.
Medicines and vaccines save lives, alleviate human suffering, and contribute to economic productivity and America’s health security. Investments in biopharmaceutical research and development have contributed to U.S. leadership in treating and curing diseases such as HIV, cancer, hepatitis C, and COVID-19. There is too much at stake to not look for better evidence to inform future policy on biopharmaceutical regulation.
Kirsten Axelsen is a biopharmaceutical consultant, visiting scholar at the American Enterprise Institute, and policy advisor to DLA Piper and Charles River Associates. Louis Garrison is Professor Emeritus at the School of Pharmacy at the University of Washington and Senior Visiting Fellow at the Department of Health Economics in London. The companies regularly consult with numerous biopharmaceutical companies, professional associations, and industry associations. They received no financial support to prepare this opinion article. The views expressed here are their own.
