SBE Council Urges CMS to Withdraw IPAY 2029 Drug Price Negotiation Modification, Citing Threat to Biotech Innovation
核心洞察
The Small Business & Entrepreneurship Council (搜索) (SBE Council) formally opposed CMS's proposed IPAY 2029 modification that would change how "qualifying single source drugs" are identified under Medicare Drug Price Negotiation.
The proposal would group separately FDA-approved medicines into a single product for negotiation, shortening the window for innovators to recoup investment and discouraging follow-on innovation.
SBE Council argues the change would make biotech startups less attractive to investors, citing data that emerging biopharma companies accounted for 46% of novel U.S. drug launches from 2020 to 2024.
The Small Business & Entrepreneurship Council (搜索) (SBE Council) has formally urged the Centers for Medicare & Medicaid Services (搜索) (CMS) to withdraw a proposed modification for initial price applicability year (IPAY) 2029 that would alter how the agency identifies a "qualifying single source drug" under the Medicare Drug Price Negotiation Program established by the Inflation Reduction Act (IRA). In comments submitted on the proposed rule "Medicare Program: Medicare Drug Price Negotiation Program and Medicare Prescription Drug Benefit Program," the organization argued that the change would undermine America's biotechnology leadership by discouraging investment and follow-on innovation.
The Proposed Change and Its Implications
The modification under consideration would change how CMS identifies a "qualifying single source drug" for price negotiation. According to SBE Council, by grouping separately approved medicines into a single product for negotiation, CMS would disregard the FDA's distinct approvals and move up the negotiation clock. This would shorten the window for innovators to recoup their investment and signal to companies that improving an existing medicine is not worth the associated risk.
"If a new or improved medicine is subject to government price controls, often set below market value, on the same date as the original biologic, investors are less likely to see a return on the capital they put at risk," the SBE Council wrote in its comments. "That uncertainty could make it harder for smaller firms to attract funding, leaving promising innovations without the resources needed to reach patients."
The Role of Emerging Biopharma in U.S. Innovation
The SBE Council emphasized the outsized role that smaller and emerging companies play in the medical innovation ecosystem. From 2020 to 2024, emerging biopharma companies accounted for 46 percent of novel U.S. drug launches and 56 percent of launches through the 505(b)(2) pathway, which can be used to develop new formulations of existing medicines.
The organization also highlighted that smaller and mid-sized biopharmaceutical companies are responsible for 76% of therapies in the clinical-stage pipeline, and that small biotechnology companies originated 46% of first-in-class cancer treatments approved from 2010 to 2020 — more than three times the 14% share that solely originated at large pharmaceutical companies.
These companies, the SBE Council noted, rely heavily on venture capital and other private investment to finance years of research, clinical development, and regulatory review before a product generates revenue. Bringing a new medicine to market often requires more than a decade of research, and only about one in 10 drugs entering clinical trials ultimately receives FDA approval.
Impact on Follow-On Innovation
The SBE Council argued that the proposed modification could discourage follow-on innovations that make treatments easier to administer, more convenient, and more accessible for patients. The organization pointed to Halozyme Therapeutics as an example of the role emerging biotechnology companies can play in follow-on innovation.
Halozyme developed a drug-delivery technology that has helped transform certain medicines administered through lengthy intravenous infusions into subcutaneous injections delivered in minutes. That technology was ultimately used to develop Darzalex Faspro, a modification of an existing cancer treatment that can be administered subcutaneously in approximately 3 to 5 minutes rather than via a multi-hour infusion.
"Federal policy should encourage new firms to enter the biotechnology market and compete to develop better treatments, not create additional barriers to investment and innovation through an expanded application of Medicare price controls," the SBE Council stated.
Broader Concerns About Price Controls
The comments also referenced broader concerns about the Inflation Reduction Act's price controls. According to a tracker maintained by Incubate, a coalition for biotech venture capitalists, firms have scrapped at least 56 research programs and 26 potential medicines since the IRA became law.
The SBE Council cited additional studies showing a similar pattern. One analysis found that, in the first 29 months after the law passed, the number of new clinical trials for small-molecule drugs fell by about 25%. A different study estimated that the law led to 28 fewer industry-funded clinical trials involving already approved drugs per month.
Call for Withdrawal
In its conclusion, the SBE Council urged CMS to withdraw the proposed modification from IPAY 2029, arguing that the agency should not expand the IRA's price-control framework in ways that further discourage investment in new and improved medicines.
"America's biotechnology leadership depends on a stable and predictable ecosystem in which entrepreneurs can take risks, startups can attract capital, and investors have incentives to support promising research that fuels the next generation of medical innovation," the organization wrote.
In a separate letter to Senate Finance Committee Ranking Member Ron Wyden, the SBE Council reiterated its opposition to expanding the IRA's drug price controls, instead advocating for reforms that improve affordability through greater healthcare price transparency and market competition rather than expanded government price-setting.