While many industry players and observers have high hopes for the EPIC Act, some say budgetary headwinds could make it difficult for the current administration to make meaningful repeals or amendments to the IRA.
House legislators have reintroduced a key piece of legislation that, if passed, could remove one of the more controversial provisions of the Inflation Reduction Act for the pharma industry.
The bipartisan bill, called the Ensuring Pathways to Innovative Cures (EPIC) Act, seeks to “equalize” the time before small molecule drugs and biologic therapies would qualify for drug price negotiations under the Inflation Reduction Act (IRA). Currently, the IRA gives small molecule drugs nine years before they can be put up for negotiations, whereas biologics get 13 years of exclusion.
If passed, the EPIC Act would remove the so-called “pill penalty,” which poses a strong disincentive against developing small-molecule drugs, Thomas Kaiser, co-founder and chief scientific officer at Avicenna Biosciences, argued in opinion piece for BioSpace on Tuesday.
“Since 50% of a drug’s revenue will come from years 10–14,” Kaiser continued, citing data from RA Capital, the pill penalty could “significantly reduce revenues,” in turn “making venture capital firms and pharma understandably nervous about placing bets on small molecules.”
Several industry players and observers have long been pushing for the EPIC Act. In February 2024, John Stanford, executive director of venture capital lobbying group Incubate, told BioSpace that there are other pieces of legislation similar to the EPIC Act, “but it all amounts to fixing the small molecule penalty.”
Incubate worked closely with Rep. Greg Murphy (R-NC) to introduce the bill.
Kaiser is also hopeful about the EPIC Act, which he said could help educate legislators “on the reality of medical innovation and how the IRA is mismatched” to this reality. “Removing the pill penalty will ensure that patients do not lose access to future, potentially life-saving, medicines,” he said.
Still, practical roadblocks could get in the way of the EPIC Act and other legislative initiatives like it. In a November 2024 analysis, Ian Spatz, national adviser at Manatt Health, said it was “unrealistic” to expect the Trump administration to end the IRA drug price negotiations—especially given budgetary concerns.
Attempts to repeal or even amend the IRA, including eliminating the pill penalty, “will increase government spending,” Spatz argued, which Congress will need to offset through other savings methods. The reintroduced EPIC Act comes as the second cycle of drug price negotiations under the IRA are underway. Last month, the Centers for Medicare and Medicaid Services named 15 drugs that would undergo the price setting program—a list that unsurprisingly includes Novo Nordisk’s obesity and diabetes treatment Ozempic. Companies have until the end of February to confirm their participation, while the CMS will have until June 1 to file its initial pricing proposal.
