RE:RE:RE:Inflation Reduction Act (IRA) boosts biological drugs The legislation has already spurred some pharmaceutical companies to rearrange priorities and cut projects. In November 2022 Lilly cut a Fosun Pharma-partnered cancer med, citing the small molecule provisions. Astellas also teased potential future divestments that might occur due to the IRA at ASCO. Astellas' phase 3 trial of Xtandi (small molecule chemotherapy) and Leuprorelin recruited more than 1,000 patients with nonmetastatic prostate cancer, with the study finding statistically significant improvement in metastasis-free survival compared to Leuprorelin plus placebo, according to an announcement from Astellas and Pfizer. “I think in a post-IRA world, it would be very difficult to contemplate that type of study and that type of investment,” Phil Tennant, Astellas Pharma's senior vice president of U.S. oncology, told Fierce Biotech at the conference. “The risk is you lose that innovation; you lose that benefit.”
Part of the issue is that almost 60% of cancer medicines approved more than 10 years ago were primarily small molecule chemotherapy drugs that had later received label expansions as a result of post-approval clinical trials. Such product life cycle management tactics precluded innovation of new and novel cancer drugs that the IRA has now addressing by giving 13 years of FDA marketing exclusivity to biological drugs in contrast to the 9 years that small molecules would now receive. The legislation has placed a microscope on the differences between larger pharmaceutical companies and biotechs—even though the two industries are intrinsically intertwined. Mathai Mammen, M.D., Ph.D., the newly minted CEO of FogPharma and a former top R&D executive at Johnson & Johnson, described a “mindset difference." At a pharmaceutical company, R&D is focused on establishing new revenue streams to offset existing ones that will eventually be impacted by a loss of exclusivity. At a biotech, the focus is on nabbing a coveted FDA approval and making any revenue at all.
Affini-T Chief Operating Officer Kathy Yi said biotech’s focus on speed is what distinguishes it from pharma. She’s worked in executive roles at biotech companies since 2017 after three years at Novartis.
“What Big Pharma gets trapped under is life cycle management,” she said. “The public thinks that you’re just milking. You're just squeezing the lemon to the last degree instead of really, truly innovating.”
That results in a slower pace of new advances, according to Yi, with true breakthroughs coming “every 10 years instead of every few years.”
Given the key differences between the industries, the lobbying approaches for BIO and PhRMA have historically differed: The former has appealed to Democrats while the latter targeted Republicans. But with such a divided Congress, both have now narrowed in on moderate politicians on either side of the aisle.
BIO and PhRMA have also been waging a campaign against pharmacy benefit managers, middlemen that negotiate drug prices on behalf of insurance companies, Medicare plans and large companies, among others. The drug companies contend that PBMs gobble up rebates and drive up drug prices.
The reality for leaders of the biotech world is that the IRA and drug pricing reform is finally here after years of talk and little congressional action. The outcome has been to favor novel biologicals and "cutting innovations in science" over the life-cycle managment of "me-too" small molecules drugs like antibody-drug conjugates (ADCs) and other chemotherapy drug combinations.
The further action of the Federal Trade Commission (FTC) on Big Pharma mergers of like-minded small molecule companies like the US$28 Billion Amgen-Horizon deal and the proposed US$43 Billion merger of ADC company Seagen with Pfizer, should serve to stimulate mid-size "bolt-on" deals (US$10-15 Billion) for late-stage biological assets like that offered by the acquisition of ONCY.