Leonard: Protect American patients by eliminating the pill penalty

Life-science researchers are thrilled about the advances made with “small-molecule” medicines.

The once humble and ordinary pill has become a delivery vehicle for molecules that can penetrate cell walls to target cancers. Tablets break through the blood-brain barrier and kill malevolent proteins with unmatched precision. Meanwhile, artificial intelligence is scouring the history of potential chemical treatments in search of overlooked or underappreciated possibilities.

That’s why it’s tragic that when Congress passed the Inflation Reduction Act (IRA) in 2022, our legislators included a provision that unknowingly sounded a death knell for small-molecule advances.

The good news is that bipartisan, corrective legislation is now on the table — the Ensuring Pathways for Innovative Cures (EPIC) Act would address this issue and level the pharmaceutical playing field.

To reduce drug costs, the IRA empowers government officials to cap the prices for prescription drugs covered by Medicare. The program starts with 10 drugs in 2026 and grows each year after.

The law also established an exemption period for drugs after they receive FDA approval, allowing drugmakers to recoup their investment costs and earn a return before the price caps take effect: nine years for small-molecule pills and 13 years for more complex “biologics,” which are typically injected or infused.

This four-year discrepancy all but guarantees that investment in small-molecule drugs will diminish. About half of a drug company’s overall sales of a new medicine accrues in years 10 through 13, when generic medications typically enter the market.

With a more limited time to recoup research dollars, early stage investors will start directing a disproportionate share of their investments away from small molecules.

This is already happening. As of last June, biologic development had attracted 48 percent more venture financing than small-molecule development since the start of the year, according to an analysis from GlobalData.

Drugmakers are quickly — and painfully — adjusting to this new investment landscape. A recent survey of two dozen highly innovative pharmaceutical firms found that 63 percent plan to shift R&D resources away from small-molecule medications.

If the trend continues, the aptly named “pill penalty” will devastate small-molecule research — for no good scientific or medical reason, only one created by shortsighted policy.

Small-molecule medicines provide huge quality-of-life improvements for many patients due to their ease of delivery at home versus having to be administered in a care setting. They are practical, accessible, affordable and lend themselves well to producing cheaper generic alternatives when these medications go off-patent. Small-molecule compounds comprise 90 percent of global prescriptions and represent two-thirds of novel drug approvals yearly.

The list of small-molecule drugs includes everyday medicines such as aspirin and antihistamines, and treatments for cancer, high cholesterol, mental illnesses, and other ailments. To use most of these products, patients simply pick up pills at the pharmacy, take them home and swallow them — easy.

Biologics are trickier. Though these treatments are no less valuable clinically, they do have the disadvantage of being less accessible. For many of these treatments, patients typically have to take time off from work, get to a clinic or infusion center, and wait while the treatment takes place under medical supervision.

Penalizing small-molecule therapies won’t just make treatment less convenient in the long term, it will also cost lives. The pill penalty will contribute to as many as 116 million life-years lost, according to a study from the University of Chicago.

The EPIC Act provides a clear solution to the IRA’s distortion in incentives. It would equalize the exemption period for small-molecule drugs and biologics at 13 years, eliminating the IRA’s pill penalty and not allowing misguided policy to ultimately pick winners and losers in innovation.

Dan Leonard is the executive director of We Work for Health.