Potential unintended consequences of the Inflation Reduction Act on oncology drug development

Study reveals that the IRA's Drug Price Negotiation Program may reduce incentives for oncology drug manufacturers to pursue subsequent indications, limiting patient treatment options.

A new study published in Therapeutic Innovation & Regulatory Science explores the potential unintended impacts of the Inflation Reduction Act’s (IRA) Medicare Drug Price Negotiation Program (DPNP) on the development of subsequent indications for oncology drugs. Conducted by the National Pharmaceutical Council (NPC), the study evaluated the development timelines of cancer drugs first approved by the FDA between 2008 and 2018. The findings suggest that the IRA’s changes to pricing incentives could significantly alter the pace and nature of post-approval research, particularly in oncology, where subsequent indications often expand treatment options for patients.

The study, titled “Subsequent Indications in Oncology Drugs: Pathways, Timelines, and the Inflation Reduction Act,” provides a unique perspective by focusing on drug-level trajectories toward subsequent indications. Dr Julie A Patterson, PharmD, PhD, lead author and NPC Senior Director of Research, highlighted the focus of the research:

“We wanted to know more about drug-level details – as opposed to indication-level details – for oncology medicines as they move toward subsequent indications. In addition to supporting concerns about the impact of the IRA’s price-setting 'clock' on subsequent indications, our research found almost two-thirds of these drugs expanded treatment options for additional cancer types.”

Of the 86 oncology drugs studied, 65.1% (56 drugs) were later approved for additional indications. These indications include new cancer types, treatment lines, combinations, mutations, and stages. The study highlights that a quarter of these 56 drugs were approved for their most recent subsequent indication after the point at which they would be eligible for price setting through the DPNP. This is a crucial finding, as it indicates that many oncology drugs may face reduced incentives for further development once they enter the price-setting process.

Implications for post-approval research and development

The IRA’s DPNP introduces a timeline that begins after a drug’s initial FDA approval, affecting the incentives for manufacturers to invest in new indications. This 'price-setting clock' could lead to reduced research efforts for subsequent indications, especially for drugs with longer development timelines. The study suggests that biologic drugs, which often have faster-paced development, could be more likely to face delays in launching new indications due to the changing incentives. Small molecule drugs, which typically have more measured development timelines, may encounter disincentives when pursuing additional indications approved long after the drug’s initial approval.

Subsequent indications are vital in broadening treatment options for cancer patients. Among the 56 multi-indication drugs studied, 61% were approved for at least one new cancer type, and half were approved for earlier lines of treatment. Additionally, 41% received approval for new combinations, 32% for new mutations, and 28% for new cancer stages. These additional indications are not just extensions of existing treatments; they represent significant innovations that can address the diverse needs of cancer patients.

The diversity of development trajectories for oncology drugs further complicates the impact of the IRA. Some drugs, especially those that advance rapidly, secured approval for their first subsequent indication within 9 months of their initial approval. However, these are particularly vulnerable under the IRA’s pricing policies, as they may encounter delays in launching new indications due to pricing pressures.

In contrast, oncology drugs with slower development timelines, notably small molecule drugs, often require more than 7 years to receive approval for subsequent indications. This extended timeframe increases their risk of encountering disincentives, as their development processes may stretch beyond the point at which they become eligible for price negotiation.

The study grouped the drugs by development pace, from 'rapid' to 'measured', and found that while some achieved their first subsequent indication quickly, others took an average of 5.7 years. This disparity highlights how the IRA’s pricing policies may disproportionately impact slower-developing drugs, potentially limiting future therapeutic innovations.

“Drug development is not one size fits all, particularly in cancer, where the same drug often benefits patients who are living with different mutations or cancers,” said Dr Campbell, NPC Chief Science Officer. “This study informs important discussions about how the IRA changes incentives for oncology drugs following different development trajectories – adding to the evidence for policymakers to consider about the unintended consequences of the DPNP.”

Future considerations for oncology drug development

The study highlights the potential risks that the IRA’s DPNP could pose to innovation in oncology. While the law’s goal is to reduce drug prices, it may unintentionally slow the development of new treatment options for cancer patients by diminishing incentives for post-approval research. Given that many oncology drugs expand their therapeutic reach through subsequent indications, limiting incentives to pursue these advancements could limit future breakthroughs.

Given the complexity of oncology drug development and the unique needs of cancer patients, policymakers should carefully weigh these findings when considering the broader consequences of the IRA on life-saving cancer therapies.