Research published by Zheng et al in Health Affairs Scholar found that the passage of the government price-setting provisions of the Inflation Reduction Act (IRA) was associated with a broad decline in industry-funded oncology trials after first U.S. Food and Drug Administration approval, with disproportionally greater reductions for small-molecule drugs.
The IRA established the Medicare Drug Price Negotiation Program (DPNP), which allows small-molecule drugs to be selected after 7 years and biologics after 11 years. This shorter “clock” for small-molecule drugs is often called the “pill penalty.”
The report sheds light on the influence of the IRA on industry-sponsored, postapproval clinical trials for oncology drugs—drugs that often have multiple indications that expand treatment options for patients with cancer.
Using Citeline’s Trialtrove database, the study authors analyzed the overall number of postapproval, industry-funded phase I–III trials that were initiated for approved oncology drugs between July 2014 and August 2024 (excluding vaccine-related trials). The authors reported the following results after the IRA’s passage:
- Overall, monthly postapproval oncology trials fell by 40.0%, with sharper declines for small-molecule drugs (45.3%) than for biologics (32.5%).
- The disproportionate decline for small-molecule drugs translated into an additional reduction of 4.5 trials per month when compared with biologics.
- The disproportionate decline for small-molecule drugs was robust to a sensitivity analysis that limited the pre-IRA period to the post–COVID-19 era.
This evidence builds on previous National Pharmaceutical Council (NPC) research identifying a strong correlation between the passage of the IRA and reduced industry investment in postapproval clinical trials, with a larger impact on small-molecule drugs.
“In addition to the therapeutic benefits, small-molecule drugs often provide greater flexibility and convenience for patients, making cancer treatments possible through a pill taken at home,” said Hanke Zheng, MS, PhD, lead author of the current report and NPC Research Manager. “We sought to quantify the impact of their shorter ‘clock’ to government price regulation on postapproval clinical trials for oncology.”
Study authors used a difference-in-difference analysis to control for other factors, such as the COVID-19 pandemic, which could have impacted postapproval oncology clinical trials and isolated the true impact of the IRA’s differential DPNP eligibility timeline for small molecules.
“We used the trend of biologics as the control to estimate the impact of the shorter DPNP eligibility timeline on initiation of postapproval clinical trials among oncology small molecules,” said study author Julie Patterson, PharmD, PhD, NPC Senior Director of Research. “The significant additional decline of nearly five fewer small-molecule trials a month suggests that we’re already observing the impact of the pill penalty in small-molecule cancer research.”
“This study quantifies just one of the IRA’s effects, spotlighting how government price-setting disincentivizes industry-funded post-approval oncology trials—with disproportionate impacts to trials investigating small-molecule drugs,” said senior study author Jon Campbell, PhD, NPC Chief Science Officer. “Policymakers should consider how the discrepancies towards DPNP eligibility are obstructing innovation for new oncology medicines.”
Disclosure: For full disclosures of the study authors, visit academic.oup.com.
