Addressing the Pill Penalty in the Inflation Reduction Act
TL/DR –
The Inflation Reduction Act (IRA) of 2022 is negatively impacting the production of small molecule drugs, such as mental health medications in pill form, by allowing Medicare to negotiate and set prices for these drugs nine years after FDA approval, compared to 13 years for large molecule drugs or biologics. Critics argue this is causing a so-called “pill penalty” as the shorter span does not give enough time to recover expensive research and development costs, potentially resulting in 79 fewer small molecule drugs reaching the market over the next two decades according to a study from the University of Chicago. However, the proposed bipartisan Ensuring Pathways to Innovative Cures (EPIC) Act could provide a solution by extending the same 13-year exemption for small molecule drugs currently given to biologics.
Prescription Drugs and Mental Health: The Pill Penalty under the Inflation Reduction Act
Many patients rely on prescribed medication for mental illnesses, such as depression and anxiety. These drugs, often in pill form, improve lives by lifting overwhelming feelings and facilitating better medication compliance. Most medications for mental health conditions are taken orally.
Regrettably, the Inflation Reduction Act (IRA) of 2022 has created an adverse impact on these small molecule drugs or medications in pill form. Contrarily, large molecule drugs or “biologics” like infusions or IV therapies are less harshly regulated.
Under the “pill penalty,” the IRA allows Medicare to negotiate and set prices for small molecule drugs nine years post-FDA approval, compared to 13 years for biologics. This discriminatory pricing, with no scientific basis, threatens the innovation of better treatments for mental health. Furthermore, small molecule drugs often become generics, offering patients lower-cost options, making this unequal treatment unjustifiable.
Given that nine years does not allow sufficient time to recoup the high-risk investments in small molecule R&D before Medicare price controls start, this biased system deters the development of oral medications. This could potentially leave promising drug candidates unexplored. A study estimates that the IRA’s uneven incentives will result in 79 fewer small molecule drugs in the next two decades.
However, a solution exists. Congress can pass the bipartisan Ensuring Pathways to Innovative Cures (EPIC) Act, which aims to give small molecule drugs the same 13-year exemption as biologics. This would maintain Medicare’s ability to control drug prices, but on a level field.
Through an organization like Mental Healthy F.I.T., we strive to end the stigma around mental health via creative education and impact. We aim for a brighter future in mental health, encompassing strategies from education to medication. However, the existing form of the IRA undermines these efforts by restricting research in small molecule drugs. It’s time to fix the IRA to support all aspects of mental health better.
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