Lilly exec blasts IRA's 'nonsensical' distinctions as pharma readies legal attacks elsewhere

For many months, the biopharma industry has lamented price-control aspects of the Inflation Reduction Act. Now, Eli Lilly’s R&D chief is openly attacking a controversial clause in the new drug pricing law.

The government should remove a “nonsensical” distinction between small- and large-molecule drugs in the IRA, Lilly chief scientific and medical officer Daniel Skovronsky wrote in an opinion piece published in Stat.

Specifically, the IRA will enable Medicare price negotiations nine years after an initial FDA approval for small-molecule drugs, compared with 13 years for biologics.

“There is no scientific reason for this distinction, and it will have a real and detrimental impact on drug discovery and patient care,” he said.

Skovronsky joins a long list of leaders from biopharma who have criticized the IRA’s different timelines for small- and large-molecule price negotiations. Some have called the provision the “small-molecule penalty.”

Novartis CEO Vas Narasimhan, the new chair of the trade group Pharmaceutical Research and Manufacturers of America (PhRMA), recently said it’s a top priority of the industry to correct the four-year negotiation gap. Other PhRMA priorities are pharmacy benefit manager and 340B reforms, he said.

Adopting a similar argument by his peers, Skovronsky said the law will discourage investments in small molecules. Besides, “companies lose the incentive to invest in post-approval R&D,” he added, because add-on indications won’t extend eligibility for negotiations.

Pointing to the KRAS gene involved in certain cancers, Skovronsky said some drug targets can only be reached by small molecules because of their size. The FDA has approved two KRAS inhibitors from Amgen and Mirati Therapeutics, and Lilly recently published the first clinical data for its own KRAS contender, LY35357982.

Skovronsky additionally raised Lilly’s CDK4/6 inhibitor Verzenio. He suggested the company might have thought twice about its development strategy in early-stage breast cancer had the IRA come into effect five years ago. The drug won its first approval in 2017 for late-stage breast cancer and added an approval in early disease four years later.

Generics of small-molecule drugs are generally easier and less expensive to make compared with biosimilars to large molecules. By hurting development of original small-molecule medicines that can be copied, the IRA is actually missing an opportunity for greater adoption and lower costs, Skovronsky argued.

“Researchers need to follow the science to find the best medicine for patients whether it’s ‘large’ or ‘small,’” Skovronsky wrote. “Policymakers shouldn’t undermine that pursuit by creating separate systems to develop each category of medicine, especially when they discriminate against some of the best types of medicines we can make.”

Despite being vocal about its disagreements with the IRA, the biopharma industry has yet to put the fight into real actions. But that may change soon.

The U.S. government in March released a draft guidance on how it plans to implement the IRA, and drugmakers are already preparing for legal challenges, Reuters reports, citing six unnamed industry sources.

For one, the industry is considering First and Eighth Amendments challenges under the U.S. Constitution against proposed rules that forbid drugmakers from talking about the negotiations.

A separate legal venue would target the government’s definition of a single-source drug, one of the criteria used to determine whether a drug is eligible for price negotiation, the six sources told Reuters.

But these efforts would only touch on how Medicare implements the law. Challenging small molecules’ four-year disadvantage would require changing the law itself, an even taller order.