Protect Innovation

Patent-protected periods of market-based pricing are necessary to motivate investors to fund scientists to pursue new cures.

When price-controls override this period of market-based rewards (which averages 13-14 years after a drug launches), investors lose interest in funding risky projects. That’s why patent-periods of market-based pricing must be preserved.

Hundreds of thousands of scientists are funded to invent better medicines because we all pay into insurance that makes the successfully-developed medicines we all value both affordable for patients and profitable for their inventors and their investors. Our society allows these medicines to be patented at first with the expectation that they will eventually go generic and become inexpensive and save us all money.

This framework of insurance and investment enabling affordable innovation exists on a foundation of education, basic science funding, infrastructure, and the rule of law. It can be broken with the wrong policy changes or improved with the right ones.

Most drugs do go generic, which saves society considerable money and spurs innovators and investors to focus on coming up with yet more cures and treatments. But some drugs do not go generic when they should due to patent-gaming or just manufacturing or regulatory complexity. Drug manufacturers that block generic entry deny society the value that is intended from patents expiring and profit from stagnation. Congress should strengthen existing laws and create new regulations that ensure that all medicines go generic without undue delay, which means that prices may sometimes need to be lowered by regulation, but not much sooner than the patent intends.

The Inflation Reduction Act (IRA) unwisely skews R&D incentives.

The price-setting provisions of the IRA favor the discovery and development of large-molecule medicines over small-molecules.

Before the IRA, new treatments averaged 14 years on the market before facing generic competition. This was enough time for companies to generate the profits necessary to incentivize drug development. This system encouraged companies to reinvest their profits into new medicines, providing society with new, inexpensive generics in perpetuity.

Now, under the IRA, Medicare will set the prices for small molecule treatments just 9 years after FDA approval. This truncated reward period makes small molecules less favorable investments than biologics

What arbitrary and early price setting of small molecules means for society:

Small molecule biotech R&D will become uninvestable for diseases of aging.

Cancer innovation will be hit particularly hard

Higher costs for society because small molecules pills are cheaper to manufacture, administer, & copy than large molecule shots.

and much more…

Advocates, industry, and investors agree.

Patients will have less hope for new cures.

Colorectal cancer has long been considered an ‘old man’s disease,’ with an average age in the late sixties for diagnosis. But by 2030 it will be the number one cancer killer of 20-49 year olds. For those younger than 25, there’s only a 10% overall survival for all stages.
The small molecule provisions of the IRA take away the hope for an unencumbered colorectal cancer pipeline. Legislation should not force researchers to abandon potentially life saving drugs for any population.”
—Susan Wysoki, Executive Director, Paltown
Cancer innovation impacted particularly hard. More than half of cancer drug approvals are small molecules.

“As a peritoneal cancer patient, I have benefitted from treatment with older cancer drugs being studied for new purposes. As such, it pains me to have to forsake my fellow cancer fighters in the United States because of economic polices that stifle medical innovation. I worry that many treatments, such as those that have temporarily extended my own life, could also be abandoned in the United States, and may only wind up being approved in other countries outside the United States.”
—Senthil Sundaram, cancer patient and late CEO, Terns Pharmaceuticals
Drug makers will choose shots over pills.

“This was a real investment question recently during a pitch: ‘Is there any way you can change from your simple small molecule daily pill approach in these cancers to making it a more complex biologic?’ Imagine being in a board room with someone developing aspirin for the first time, and being asked to make aspirin into a needle-delivered format or delivered from an IV bag in a hospital instead of a pill? Entirely for economics! There would be no TRK drugs, no HIV small molecules, none of the recent oncology precision medicines like the previously ‘untargetable’ KRAS drugs or the EGFR Tagrisso that keep tumors at bay without the side effects of chemotherapy. The IRA is encouraging companies like mine to pivot away from small molecules that have highly predictable patent cliffs and toward biologics that do not.”
–Steve Potts, PHD, Founder, Serpass Biologics & Redrock Science

Most drugs do go generic.

For those that don’t or can’t, either due to patent-gaming or just manufacturing or regulatory complexity, Congress should strengthen existing laws and create new regulations that ensure all medicines go generic without undue delay.

Our Solution

Restore parity between large and small molecules at 13 years.

Protect small molecule innovation in cancer and other diseases of aging. Treat small and large molecules the same. Introduce price setting for both after 13 years.

Pay-for can be deeper discounts on more drugs after 13 years.

Pay for restoration of parity by forcing deeper discounts on more drugs after 13 years. Increasing the minimum discount from 35% to 42% is revenue- neutral and does not impact innovation, so long as impact of “negotiation” price sets in after 13 years.

RELATED RESOURCES

The IRA makes new small molecule biotech R&D uninvestable for diseases of aging.

By price-setting small molecule medicines after only 9 years on the market, the Inflation Reduction Act discourages early-stage funding of future cures. The law’s disparate treatment of small and large molecules will warp R&D and result in fewer new treatments for cancer and other diseases of aging.

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