Thread by @PeterKolchinsky

It would seem that the final healthcare deal has been baked & it would seem that it’s going have some absurd unintended consequences. Get ready for seniors getting more injections. Here’s why…

https://twitter.com/senatorsinema/status/1455606373480341512

The compromise on price controls is that they will only be imposed after a period of market exclusivity. How long is that period? Forget patents. Small molecule drugs will be price controlled after 9y on market & biologics after 12y, (for Medicare only).

That means that given a choice between funding development of a biologic or small molecule drug, it’s going to be more attractive to fund the biologic. But biologics are typically injected/infused, therefore cost more to administer, have lower adherence than small molecule pill.

Biologics cost more to make so their long term costs are going to be higher than small molecule generics. Congress is skewing R&D in the wrong direction.

If anything, rewards for developing small molecule drugs should be higher, not lower, than biologics, precisely b/c small molecules give us inexpensive, typically oral generics down the road. If nothing else, keep incentive the same so no skewing.

The trouble with how Congress has been negotiating this deal is that it seems that they failed to appreciate the unintended consequences of what may have seemed like minor points to them. Hopefully now that we see the latest creation, Congress will remain open to feedback.

This latest deal can’t possibly be what Congress wants. Dear leaders, please accept input from those on the inside of the ecosystem you’re about to distort to society’s detriment. @ScottPetersSD, thank you for trying. @SenSchumer, we need better.

Oh, and they did away with the incentive for companies to run trials to study how to use medicines in kids, the 6 month pediatric exclusivity extension. That incentive was designed to fix a market failure, the fact that kids need many kinds of adult medicines too rarely.

The FDA wants to know whether and how to dose kids, because it’s often in different ways than adults. So the 6 more months of exclusivity was meant to offer companies an incentive to run trials that otherwise offer no financial return. That’s now gone. We’ll miss it.

Are we going to have through a decade or two of not getting important data on how to treat kids w/ adult drugs just to repeat the whole advocacy process that led to creation of pediatric trial incentives in first place? Why not keep what works?

Also, although today companies have an incentive to look for new uses for their existing drugs even 5-10 years after they have launched b/c they have time to generate a return from successes, Congress is pretty much wiping those out, esp for small molecules.

With only 9 years of exclusivity before Medicare slashes a drug down to being barely profitable, there won’t be much time to run studies in new indications. Consider that SGLT2s were approved in diabetes but also turned out to work in heart failure and renal disease. No more.

We simply won’t glean as much value from small molecule drugs anymore. Or else company would have to invent different molecule just to get 9y of exclusivity to profit from showing it works in a new disease that an existing drug could have been proven to treat. Inefficient.

And since Medicare encourages cheap compounded Avastin to treat forms of eye disease (wet AMD) instead of expensive Lucentis, a similar drug design for the eye, investors will assume that old cheap small molecule will be used in new disease once new drug proves a class works.

So investors likely won’t fund development of a related drug in a class for the new disease b/c they will know payers will use that knowledge to encourage old drug to be used off-label instead.

Proper studies of certain hypotheses will go unfunded, just as pediatric studies will no longer be run. Hopefully Congress gives NIH a ton more money to run all those trials no one else will run (but have you seen how slowly those trials run? It’s not an NIH strength).

A better solution: since drugs have gone generic after 13.5 years on average & investors have remained motivated to fund R&D of new drugs, mandate price reductions after 13 years for all drugs but preserve extensions for meaningful upgrades like pediatric and new uses.

As for affordability, the compromise sets what’s still a high $2000 OOP cap on drugs (compared to $1200 in Peters’ bill). It does nothing to cap rising OOP costs of commercial plans. So could have helped patients a lot more. Congress, please stay open to revisions.

Another thing… @POTUS Biden champions cancer moonshot. But many cancer targets are intracellular & require small molecule drugs. So this disincentive to develop small molecule drugs is like saying you want to go to the moon but discourage use of rockets. Let’s think it through.