Biotechs Already Feeling the Effects of the Inflation Reduction Act

The drug pricing provisions of the US Inflation Reduction Act have yet to kick in but are already driving decisions in biotechs. To start, investors like Peter Kolchinsky are recommending that biotechs move to biologics instead of small molecule drugs since the waiting period prior to Medicare negotiations is longer for the former.

According to Rowan Walrath, “Compared to biologics, small molecules are typically easier to develop, and make up the bulk of new FDA approvals each year. Biologics, by contrast, are more complex and come with higher manufacturing costs. But they’ve comprised a steadily growing share of new FDA approvals and drugs currently making their way through clinical trials.”

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(Source: Boston Business Journal, March 13^th, 2023)