In 2022, the Inflation Reduction Act, or the IRA, was enacted, which, among other provisions, included several measures intended to lower the cost of prescription drugs and related healthcare reforms. Specifically, the IRA authorizes and directs the U.S. Department of Health and Human Services or the DHHS to set drug price caps for certain high-cost Medicare qualified drugs and the first year of maximum price applicability to begin in 2026. The IRA further authorizes the DHHS to penalize pharmaceutical manufacturers that increase the price of certain Medicare drugs faster than the rate of inflation. Finally, the IRA creates significant changes to certain Medicare benefits by capping certain beneficiaries’ annual out-of-pocket spending at $2,000 beginning in 2025.
All entries for: Biologic
Larimar Therapeutics
Neutral Outlook
Bala Cynwyd, PA
51-200 employees
Since that time, there have been multiple healthcare reform measures, including the Inflation Reduction Act of 2022 (“IRA”) which, among other things, allows HHS to directly negotiate the selling price of a statutorily specified number of drugs and biologics each year that CMS reimburses under Medicare Part B and Part D. The negotiated price may not exceed a statutory ceiling price. Only high-expenditure single-source biologics that have been approved for at least 11 years (7 years for small molecule drugs) can be selected by CMS for negotiation, with the negotiated price taking effect two years after the selection year.
ARGENX SE
Neutral Outlook
Amsterdam, Netherlands
501-1,000 employees
Beginning in 2025, the IRA eliminates the coverage gap phase and associated manufacturer discounts under Medicare Part D, significantly lowers the enrollee maximum out-of-pocket cost and establishes a new manufacturer discount program, which requires 10% discounts in the initial phase, and 20% discounts in the catastrophic phase. Although these discounts represent a lower percentage of enrollees’ costs than coverage gap discounts, the new manufacturer contribution during the catastrophic phase could be considerable for certain high-cost drugs and the total contributions by manufacturers to a Part D enrollee’s drug expenses may exceed those currently provided. The IRA also requires manufacturers to provide annual Medicare Part D rebates for single-source drugs and biological products with prices that increase faster than the rate of inflation.
Acrivon Therapeutics
Negative Outlook
Watertown, MA
51-200 employees
The imposition of a “maximum fair price” under the IRA could limit the amounts that federal and state governments will pay for our products and prevent us from being able to generate revenue sufficient to cover our costs or attain profitability.
ProKidney Corp.
Neutral Outlook
Winston-Salem, NC
51-200 employees
However, the IRA’s impact on the pharmaceutical industry in the United States remains uncertain, in part because multiple large pharmaceutical companies and other stakeholders (e.g., the U.S. Chamber of Commerce) have initiated federal lawsuits against CMS arguing the program is unconstitutional for a variety of reasons, among other complaints. Those lawsuits are currently ongoing.
Estrella Immunopharma
Neutral Outlook
Emeryville, CA
1-50 employees
Since its enactment, there have been judicial, congressional and executive branch challenges and amendments to certain aspects of the ACA. For example, on August 16, 2022, the Inflation Reduction Act of 2022 (“IRA”) was signed into law, which among other things, extends enhanced subsidies for individuals purchasing health insurance coverage in ACA marketplaces through plan year 2025. The IRA also eliminates the “donut hole” under the Medicare Part D program beginning in 2025 by significantly lowering the beneficiary maximum out-of pocket cost and through a newly established manufacturer discount program.
4D Molecular Therapeutics
Neutral Outlook
Emeryville, CA
201-500 employees
While the impact of the IRA on the pharmaceutical industry cannot yet be fully determined, it is likely to be significant.