House legislators have taken a significant step to address concerns in pharmaceutical innovation by reintroducing the Ensuring Pathways to Innovative Cures (EPIC) Act, a bipartisan initiative aimed at eliminating a controversial provision in the Inflation Reduction Act (IRA) that potentially disadvantages small molecule drug development.
Current IRA Framework Creates Development Disparity
Under the existing IRA legislation, small molecule drugs face price negotiations after just nine years on the market, while biologics receive a more favorable 13-year period before negotiations begin. This four-year gap has created what industry experts term the "pill penalty," which threatens to reshape pharmaceutical investment strategies.
Thomas Kaiser, co-founder and chief scientific officer at Avicenna Biosciences, emphasizes the significant financial implications of this disparity. "Since 50% of a drug's revenue will come from years 10–14," Kaiser notes, citing RA Capital data, the current framework could "significantly reduce revenues," leading to hesitation among venture capital firms and pharmaceutical companies to invest in small molecule development.
Industry Support and Legislative Progress
The EPIC Act has garnered substantial support from various industry stakeholders. Rep. Greg Murphy (R-NC) has worked closely with Incubate, a venture capital lobbying group, to introduce the bill. John Stanford, Incubate's executive director, confirmed in February 2024 that while multiple similar legislative pieces exist, they all fundamentally aim to address the small molecule penalty.
Impact on Medical Innovation
The legislation's supporters argue that equalizing the timeline for price negotiations is crucial for maintaining a balanced approach to drug development. Kaiser suggests that the EPIC Act could serve an educational role, helping legislators understand "the reality of medical innovation and how the IRA is mismatched" to this reality.
Implementation Challenges
Despite broad industry support, the path forward faces practical challenges. Ian Spatz, national adviser at Manatt Health, has noted that completely ending IRA drug price negotiations faces significant hurdles, particularly due to budgetary considerations. The implementation of any changes to the IRA will likely require careful navigation of both political and economic factors.
