New Research Reveals Negative Impact of IRA Expansion Proposals on U.S. Biopharma Ecosystem

Research firm Vital Transformation modeled the impacts of government mandated drug pricing schemes currently proposed as the Smart Prices Act (SPA). The SPA would impose government price setting for certain Medicare drugs at only five years after initial FDA approval.

Vital Transformation estimates that 146,000 – 223,000 direct biopharmaceutical industry jobs and a total of 773,000 – 1,100,000 U.S. jobs will be lost across the economy if the proposed expansion were to be implemented.  

The research firm also estimates that around 230 fewer FDA approvals of new medicines over a ten-year period. Concerningly, it is estimated that the impacts will be felt most acutely in areas of unmet need including rare disease, oncology, neurology, and infectious disease.

Had the drug pricing schemes been in place prior to today, estimates show that the 25 percent most-impacted firms would have suffered annual earnings losses of over 500 percent. The earnings losses, in turn, would have hindered the ability of companies to reinvest into new therapies.

Vital Transformation estimates that if the drug pricing schemes were implemented prior to the development of today’s top-selling medicines, 82 of the 121 therapies that they identified as selected for price setting likely would not have been developed.

The research clearly shows the negative impact of price controls on the biopharma industry. Price controls deter innovation and investment into new therapies and hurt doctors, patients, and the entire U.S. economy.

Read the full report here.