Eli Lilly’s CEO says Medicare price negotiations could hurt drug development

Eli Lilly CEO David Ricks said Tuesday Medicare price negotiationswhose goal is reduce costs potentially harmful for older Americans drug development.

“I’m really worried about the damage this will do to new drugs and opportunities in medicine,” Ricks said in an interview with CNBC. “Exchange.”

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Ricks meant a providing in the Biden administration’s inflation-reduction bill, which will allow the Medicare program to negotiate the prices of its most expensive prescription drugs each year.

He is the latest pharmaceutical executive to publicly blast the provision and the law in general, which is likely to cut into the company’s profits. Global drugmaker Merck last week sued The Biden administration over negotiating Medicare prices in an attempt to weaken the program.

Ricks said the “biggest problem” with the provision stems from the difference in the timeline for price negotiations for small-molecule drugs — meaning drugs made from chemicals and having a low molecular weight — compared to biologics or those derived from from living sources such as animals. or people.

Under the IRA provision, Medicare can begin negotiating prices for small-molecule drugs as early as nine years after receiving Food and Drug Administration approval, compared with 13 years for biologics.

Ricks said the distinction will “really de-invest” in small-molecule drugs, which are “one of the most effective parts of health care.”

“We will get less of them [small-molecule drugs] because investors are already telling me, ‘Why invest in more small molecules when biologics have 13 years to negotiate?'” Ricks said.

Small molecule drugs account for 90% of pharmaceutical drugs, says a study in ScienceDirect.

Novartis In February, CEO Vas Narasimhan expressed similar concerns about the different timelines, saying the industry’s top priority was to close the four-year gap between the two types of drugs, according to Fierce Pharma.

Another one providing The IRA requires drug companies to reimburse Medicare through rebates if the prices of their drugs rise faster than the rate of inflation.

According to the U.S. Department of Health and Human Services, the first set of eligible prescription drugs was subject to the Medicare inflation reduction effective April 1.