Vital Transformation (VT) modeled and estimated the impacts of the Inflation Reduction Act’s (IRA) pricing provisions for a cohort of the top 200 Part B and D drugs by CMS spend, resulting in 92 drugs impacted by IRA in the next 10 years, which are produced, collectively, by 41 biopharmaceutical companies.

Had the IRA been in place beginning in 2014, we estimate the reductions in revenue on the impacted drugs to be up to 40%.  Because of this, between 24 and 49 therapies currently available today would most likely not have come to market and therefore not available for patients and their providers.

Looking forward, we estimate that because of the IRA pricing provisions, the substantial reduction in revenue will significantly narrow investment opportunities. Conservatively, as many as 139 drugs over the next 10 years are at risk of not being developed at all. Both biologics and small molecule drugs are impacted, with an average reduction in revenue per therapy of $4.9 billion and $4 billion respectively.

IRA provides a negotiation exemption for orphan drugs that treat only one rare disease. This disincentivizes investments in orphan drugs and areas of high unmet patient need as the broader indications will provide a superior return on investment, as much as $500 million over three years.

Based on two impact scenarios, we estimate a loss of between 66,800 - 135,900 direct and 342,000 - 676,000 indirect jobs in the U.S. biopharma ecosystem.

The dominance of American biopharma in global innovation has increased since Kneller’s publication in 2010; the USA is responsible for 95% of the increase of 111 total FDA approvals since 2010.

The diversified external R&D ecosystem, emerged since 2008, has led to an increase of more than 160% in the value of external R&D partnership in Europe and the US.

The value of Europe’s partnership deals has have remained stable since 2011, whereas the median value of partnership agreements in the US has trebled.

120 of 363 total FDA approvals between 2011 and 2020 were developed by US based small companies with less than $500 mil in revenue.

The NIH’s CRADA and Intermural grants were directly responsible for the creation of 4 of the 363 new drugs in our cohort; US academic institutions created 10% of all indigenously originated IP.

While most drugs are created by small biotech companies in the cohort, large companies step in after FDA approval with development, marketing, and scale; this appears to increase the efficiency of the Biotechnology ecosystem.

The majority of biologics undergo priority review and target orphan indications at the time of FDA approval between 2011-2020.

The NIH’s role in drug discovery, while vital, is not directly responsible for the development of new therapies.