This is an excerpt from a story published in the Boston Business Journal on March 13, 2023:
The Inflation Reduction Act (IRA) was signed into law in August. Despite the name, it was less about curbing soaring inflation than it was about codifying several Democrat-led policies designed to expand access to health care and rein in climate change.
It includes some major drug-pricing provisions. While these measures are meant to curb costs for patients, biopharma executives and investors say they’re having unintended consequences for their businesses.
That means that biotech companies are already juggling trade-offs within their businesses, sometimes at the urging of investors like Kolchinsky, who manages the Boston-based RA Capital Management. And they’re not always happy about it.
“The CEO said, ‘I don’t want to make a biologic. A biologic would be more expensive to produce, so we would really rather proceed with the small molecule we’re working on,'” Kolchinsky said. “But we can’t justify funding the small-molecule version.”
Kendalle Burlin O’Connell, CEO of the trade group MassBio, which represents more than 1,600 member companies, said the new law “is probably the most major area of concern for our industry.” Meanwhile, President Joe Biden has already floated expanding on the new law via his recent proposed budget, both by increasing the number of drugs eligible for Medicare negotiation and by allowing the agency to negotiate sooner.
“When we think of the innovative work that’s happening here in Massachusetts, the IRA is truly putting that work in jeopardy,” Burlin O’Connell said.