Kerrigan In DC Insider: A Better Way to Lower Drug Costs

By SBE Council at 26 September, 2024, 7:20 am

In a September 23 DC Journal Op-Ed, SBE Council president & CEO Karen Kerrigan addresses the Inflation Reduction Act (IRA) and its goals and outcomes in lowering drug costs. She reviews the damaging effects and predictable approach of the path taken - price controls - and the other option not taken: reforming the Pharmacy Benefits Manager (PBM) system. Kerrigan writes:

That was the road not taken. Instead, the IRA empowers Medicare officials to "negotiate" lower prices from drug makers - in reality, to impose price controls.

This path is now threatening the lifeblood of American medical innovation - our small biotech firms. Unless Congress changes priorities, we can give up hope for a new generation of breakthrough treatments in areas from cancer to Alzheimer's.

The IRA's price controls are a blunt instrument. While large corporations with diverse drug portfolios might weather this storm, small biotechs responsible for the lion's share of innovation - often staking their future on a single promising molecule - could face a catastrophic disruption to the early-stage funding on which they depend.

Indeed, a University of Chicago study predicts that the IRA will significantly reduce investment in drug research and development. This could result in dozens of potential therapies never seeing daylight.

Kerrigan reviews another option, meaningful PBM reform, and urges Congress to take action. Read the full Op-Ed here.