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Designing Oncology Clinical Development Programs in the Era of the IRA
Jul 01, 2025
Designing Oncology Clinical Development Programs in the Era of the IRA
The Inflation Reduction Act (IRA), signed into law in 2022, incorporates a Medicare Drug Price Negotiation Program (DPNP) under which selected high-gross-spend drugs are subject to government pricing negotiations seven or eleven years after FDA approval for small molecules and biologics, respectively, with corresponding prices becoming effective at nine and thirteen years.
It has been argued that this will disincentivize and have a cooling effect on drug R&D, especially in the case of small molecules – as these become eligible for negotiations four years sooner than biologics.
This potential unintended consequence of IRA may not be limited to post-approval R&D; earlier-stage work could also be impacted as return-on-investment calculations incrementally drive R&D portfolio shifts over time. The consequences of this may be particularly acute in those areas where downstream expansion into additional indications and new lines of therapy has been commonplace – such as in oncology.
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