National Pharmaceutical Council study reveals post-approval oncology trials fall after Inflation Reduction Act, with disproportionate effect on small molecules

New research from the National Pharmaceutical Council (NPC) published in Health Affairs Scholar reports that the Inflation Reduction Act (IRA) was associated with a significant decline in industry-funded post-approval oncology trials, with the effect most pronounced for small molecule drugs. The findings highlight concerns that government price regulation could have long-term consequences for cancer research and innovation. 

The study, Early Impact of the Inflation Reduction Act on Small Molecule vs Biologic Post-Approval Oncology Trials, was authored by Hanke Zheng, Julie A. Patterson and Jon D Campbell of the NPC. Using Citeline’s Trialtrove database, the researchers examined industry-funded Phase 1–3 oncology trials initiated between July 2014 and August 2024, focusing on activity after US FDA approval. 

The analysis found that monthly post-approval oncology trials dropped by 40.0% after the IRA passed. Small molecule drugs experienced a sharper reduction (45.3%) compared with biologics (32.5%). 

This disparity translated into an additional decrease of more than four small molecule trials per month relative to biologics. The disproportionate decline was consistent even when the analysis was restricted to the post-COVID-19 era, reinforcing the robustness of the findings. 

Underlying the decline is the IRA’s Medicare Drug Price Negotiation Program (DPNP), which sets different eligibility timelines for government price negotiations: 7 years for small molecule drugs, and 11 years for biologics. The shorter timeframe for small molecules, commonly referred to as the “pill penalty,” is seen as a disincentive for companies to invest in further research once a drug has reached the market. 

The authors used a difference-in-difference analysis to separate the impact of this policy from other influences, such as the pandemic. As Dr Patterson, Senior Director of Research at the NPC, explained: 

"We used the trend of biologics as the control to estimate the impact of the shorter DPNP eligibility timeline on initiation of post-approval clinical trials among oncology small molecules. The significant additional decline of nearly five fewer small molecule trials a month suggests that we're already observing the impact of the pill penalty in small molecule cancer research." 

Dr Zheng, lead author and NPC Research Manager, noted the importance of small molecule drugs for patients: 

“In addition to the therapeutic benefits, small molecule drugs often provide greater flexibility and convenience for patients, making cancer treatments possible through a pill taken at home. We sought to quantify the impact of their shorter ‘clock’ to government price regulation on post-approval clinical trials for oncology.” 

The study adds to earlier NPC research showing a link between the IRA’s passage and reduced industry investment in post-approval trials, with small molecules disproportionately affected. Dr Campbell, NPC Chief Science Officer, emphasized the broader policy implications: 

"This study quantifies just one of the IRA’s effects, spotlighting how government price-setting disincentivizes industry-funded post-approval oncology trials — with disproportionate impacts to trials investigating small molecule drugs. Policymakers should consider how the discrepancies towards DPNP eligibility are obstructing innovation for new oncology medicines.” 

By quantifying these early effects, the study provides further evidence that the IRA may already be shaping investment decisions in cancer research. The authors suggest that policymakers should carefully weigh the potential consequences of price-setting frameworks on the pace of innovation and the availability of new oncology treatments.