'We're going to miss the next Keytruda': Lilly, Merck, Gilead and PhRMA CEOs talk IRA consequences

Almost 10 years ago, Merck ushered superstar cancer drug Keytruda across the FDA finish line for the first time, starting down a path that would ultimately yield dozens of additional approvals over the years.

It was a “once-in-a-lifetime, lighting-in-a-bottle” discovery that wouldn’t be possible in the same way under the Inflation Reduction Act (IRA), Merck CEO Robert Davis warned at a Pharmaceutical Research and Manufacturers of America (PhRMA) panel Friday on the sidelines of this year’s annual American Society of Clinical Oncology (ASCO) conference.

While Davis said the drug is unique and is “not a repeatable model,” Eli Lilly’s CEO David Ricks argued that lighting could still strike twice—if it weren’t for the IRA.

Specifically, Ricks referred to the IRA’s nine-year restriction on market exclusivity before government price-setting for small-molecule drugs as “terminating ideas before they have time to even grow roots.”

“I think that we’re going to miss the next Keytruda. And that’s why we’re raising the points that we are,” Ricks stressed.

In the nearly two years since the bill was passed, many drugmakers and groups have unsuccessfully tried to shut down the IRA's negotiations with lawsuits questioning the constitutionality of the law.

Now, as the Centers for Medicare & Medicaid Services and companies are busy negotiating prices, the industry's mission is to “relentlessly educate” policymakers on the “more negative implications” of the legislative decisions, PhRMA’s chief Steven Ubl said at Friday's panel.

On the education vein, Davis cited a “fundamental misunderstanding” many lawmakers have of the pharmaceutical ecosystem.

“We need a fair value for the risk we take,” he said. “And that is not understood.”

For example, Merck has spent $46 billion so far on Keytruda development, with an additional $20 billion expected by 2030, according to Davis. The ability to fund such research comes from sales, Ricks explained.

Sales peak when a product has market exclusivity and therefore isn’t threatened by generic competition. The period of market exclusivity is a “societal bargaining” that allows drugmakers to recoup their investments, Ubl said.

The “kind of data that changes medical textbooks” requires an ecosystem that allows innovation to thrive over longer periods of time, Gilead CEO Daniel O’Day said.

Still, O'Day acknowledged that “steps have to be taken to make medicines more affordable” for patients.

Drug pricing has long been a point of contention even outside of the IRA. Earlier this year, Davis was questioned in a Senate committee hearing about high U.S. drug prices for nearly three hours alongside Bristol Myers Squibb’s and Johnson & Johnson’s CEOs, where he was slammed for Keytruda's $191,000 U.S. list price.