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Pill penalty in IRA raises concerns e. (Photo: Shutterstock)

OPINION: The Inflation Reduction Act Hinders Medical Innovation and Patient Access

The Inflation Reduction Act creates a ‘pill penalty’ that disincentivizes investment in the development of small-molecule medications

By Heather Allen, July 1, 2024 10:54 am

During my forty plus years of practicing medicine, I have seen a lot of changes and many improvements, but one of the latest changes baffles me. The Inflation Reduction Act’s (IRA) provisions regarding price controls on certain advanced medicines for Medicare patients, particularly the discrepancy in exemption periods between small-molecule drugs and biologics, have raised significant concerns about their impact on innovation and patient access. The IRA’s focus on cost containment measures may inadvertently hinder the development of new therapies, especially those in pill form, which are often more accessible and convenient for patients, particularly those from marginalized communities. 

The longer exemption period for biologics compared to small-molecule drugs creates a “pill penalty” that disincentivizes investment in the development of small-molecule medications. This penalty could lead to a decline in research and development spending, resulting in fewer new medicines being brought to market, as evidenced by Eli Lilly’s decision to halt efforts on a small-molecule blood cancer drug due to financial feasibility concerns. This has drastic effects on the field of oncology. 

Furthermore, limiting the patent life of small-molecule drugs may discourage ongoing research to discover new indications for existing medicines, thereby limiting treatment options for various conditions. The potential shift in R&D focus away from small-molecule medicines, as indicated by research conducted by Vital Transformation, underscores the broader implications of the pill penalty on future medical innovations. 

The negative repercussions of the pill penalty extend beyond pharmaceutical innovation to impact patient health, particularly for those who face barriers to receiving intravenous infusions outside their homes. Marginalized patients, including Black and Hispanic Americans disproportionately affected by certain diseases, rely on easy-to-take pills for effective treatment. For instance, the development of single-tablet regimens has been crucial in managing conditions like HIV/AIDS, highlighting the importance of small-molecule drugs in improving health outcomes. 

Addressing the pill penalty requires policy intervention to equalize the exemption periods for small-molecule drugs and biologics. The proposed EPIC Act aims to achieve this goal by eliminating the disparity in exemption periods, thereby incentivizing investment in small- molecule therapies and promoting medical innovation.

Ultimately, ending the pill penalty is essential not only for ensuring equitable access to innovative treatments but also for safeguarding public health, particularly in the face of emerging health challenges such as antimicrobial resistance and infectious diseases like COVID-19. By rectifying the unintended consequences of the Inflation Reduction Act, policymakers can support a more conducive environment for pharmaceutical innovation and improve health outcomes for all Americans. 


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Heather Allen
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