The Inflation Reduction Act, “march-in rights” to take back patents and M&A were among the issues discussed at a Sunday panel in San Francisco ahead of Monday’s start of the J.P. Morgan conference.
Pictured: The White House/iStock, lucky-photographer
The Biden administration’s policies affecting the biopharma industry, including implementation of the Inflation Reduction Act, intellectual property challenges and mergers and acquisitions, took center stage on Sunday in San Francisco ahead of the J.P. Morgan Healthcare Conference’s official Monday kickoff.
Sunday’s event, part of JPM Week 2024, was hosted by Incubate—a lobbying group for venture capital firms in the life sciences—and law firm DLA Piper, and featured a panel discussion that included former U.S. Senator Richard Burr (R-NC).
Incubate Executive Director John Stanford said that policy is very much of interest to stakeholders attending this year’s JPM conference—a significant change from previous years. The difference in 2024, Stanford contended, is that there’s a realization that “science can now do incredible things, but policy is getting in the way.”
Stanford said that Incubate’s focus this year is on three policy areas: the implementation of the Inflation Reduction Act (IRA)’s Drug Price Negotiation Program, the Biden administration’s intention to invoke so-called “march-in rights” to take back patents of specific expensive drugs that rely on federally funded research, and the “changing dynamics” at the Federal Trade Commission (FTC) related to mergers and acquisitions.
In August 2023, the Centers for Medicare and Medicaid Services announced the first ten drugs covered under Medicare Part D that will be subject to price negotiations under the IRA. By Feb. 1, 2024, CMS will provide a maximum fair price and a justification to affected drug companies, which will have 30 days to respond to the initial offer by accepting it or providing a counteroffer.
“We expect probably 10 out of 10 [companies] to not accept that offer and then issue a counteroffer. That will play out until September when the public new price will be released,” Stanford said.
By Sept. 1, 2024, CMS will publish maximum fair prices agreed upon between the agency and participating drug companies, which will go into effect in 2026.
“These prices will be announced in September of a presidential election year. I would be hard-pressed to imagine the Biden administration announcing fairly meager cuts,” Stanford said. “I think we will see draconian cuts and I think the political pressures will drive some of that.”
Gaurav Gupta, a panelist and managing partner of J.P. Morgan Life Sciences Private Capital, said the IRA’s drug pricing provisions “don’t really derive from a rational understanding of the industry” and, in his opinion, are the most troubling policy development.
Kirsten Axelsen, a panelist and senior health advisor at DLA Piper, shared Gupta’s concerns about the IRA but said even more troubling “than any of these individual pieces of legislation or attacks is the overriding negativity towards high-priced drugs.” Axelsen maintains that the goal is to “really stick it to the drug companies and bring down the drug prices.”
Antitrust, IP Challenges
CMS isn’t the only agency making the business environment more difficult for big pharma to navigate. So is the FTC with its increased scrutiny of potential antitrust violations and the release of new merger guidelines.
However, despite what Gupta called the FTC’s “minor” recent victories, the good news overall is that 2023 “was the biggest M&A year ever in biotech,” he said, and 2023 ended with a flurry of activity.
“The imperative for M&A, which is what drives our industry forward, will override the FTC’s personnel problems that they’re having now with the poor results they’re seeing when they take cases forward in their decision-making,” Gupta added.
At the same time, he said he’s not fazed by the Biden administration’s willingness to implement march-in rights under the Bayh-Dole Act of 1980 to take back patents of specific expensive medicines that rely on federally funded research. While there is valuable intellectual property (IP) that is funded by the federal government, such as mRNA vaccines, Gupta made the case that “most of the valuable patents” and innovations are generated by biopharma companies.
While Axelsen called the Biden administration’s potential use of march-in rights a “dangerous and damaging precedent” for the country, she said it’s a policy that will most negatively affect academic institutions rather than industry.
According to Incubate, partnerships between universities and biotech companies spurred by the Bayh-Dole Act of 1980 have resulted in more than 200 lifesaving medicines coming to market.
Burr, who retired from the U.S. Senate in January 2023 and is now chair of DLA Piper’s health policy strategic consulting practice, said during Sunday’s panel that “we should really care less about whether the IP came out of NIH or an academic bench.”
Greg Slabodkin is the News Editor at BioSpace. You can reach him at greg.slabodkin@biospace.com. Follow him on LinkedIn.
