A legislative proposal, if passed into law, could cost the United States up to 1.2 million jobs and lead to more than 130 fewer FDA approvals over a 10-year period, according to a new report.
Pictured: Pills and capsules on dollar bills/iStock, Julia_Sudnitskaya
The proposed expansion to the Inflation Reduction Act would substantially harm U.S. biopharma, triggering hundreds of thousands of job cuts across the industry and leading to fewer innovative treatments in critical therapeutic areas, according to a new report released Thursday by healthcare consultancy Vital Transformation.
The 34-page report makes the case that the proposed Inflation Reduction Act (IRA) expansion would eliminate around 136,000 to 216,000 jobs in the biopharma industry and lead to an additional 678,000 to 1,076,000 indirect layoffs across the U.S. economy.
The expansion would also result in around 134 fewer FDA approvals over a 10-year period, which would most heavily affect “many areas of unmet need,” such as oncology, neurology, rare diseases and infectious diseases in the elderly population, the report contends.
Vital Transformation expects that these consequences would ripple throughout the entire commercial market but warns that the effects would most strongly impact the industry’s hubs of scientific innovation in California, Massachusetts and New York.
Besides its effects on jobs and innovation, the proposed IRA expansion would also severely cut funding for biopharma, triggering a 70% drop in venture capital as well as a 50% decrease in initial public offerings (IPOs) across the industry, according to the report. The sector is going through a winter in IPO offerings, which have dropped dramatically since a 2021 peak.
“The study projects another $55 billion in lost partnership investments for the most impacted firms on top of the current drops in investments since the introduction of the IRA,” according to the press release.
Thursday’s report is in response to a proposal by Democratic lawmakers in the House of Representatives to expand the IRA by vastly extending the contentious Medicare Drug Price Negotiation Program to cover all people with private insurance. Overall, this would encompass more than 164 million workers and their families with health coverage through their employment, as well as over 16 million people with Marketplace coverage.
The proposed legislative bill—the Lowering Drug Costs for American Families Act (H.R. 4895)—also seeks to block pharmaceutical companies from hiking drug prices faster than the rate of inflation. It would also bump the yearly number of prescription drugs that would be subjected to price negotiations to 50, up from 20.
Dan Leonard, executive director for industry group We Work For Health, in a statement said the proposed expansion to the IRA would effectively double down on a “bad idea” whose effects and unintended consequences are only beginning to be realized.
“While the stated goal of reducing costs for patients is one we can all agree on, this research demonstrates that policies like these will only hurt the very people—seniors—they are purportedly trying to help,” Leonard said, adding that such price-setting efforts by the government are “harrowing” for patients and workers who rely on the biopharma industry for treatments and jobs.
We Work For Health collaborated with Vital Transformation on the report.
However, House Democrats argue that H.R. 4895 will stop drug companies from raising prices faster than inflation by ensuring that the rebates enacted under the IRA also apply to individuals covered by private health plans.
“Extending the inflation rebates to privately-covered American workers can save as much as $40 billion over the next decade alone,” while strengthening the Drug Price Negotiation Program “to deliver more savings,” according to a fact sheet on the proposed legislation.
Tristan Manalac is an independent science writer based in Metro Manila, Philippines. He can be reached at tristan@tristanmanalac.com or tristan.manalac@biospace.com.
