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The New England Journal of MedicineWill Medicare Price Negotiation Delay Cancer-Drug Launches?

Unraveling the Complexities of Drug Launch Delays and Medicare Price Negotiation

The Inflation Reduction Act (IRA) of 2022 has stirred a significant debate in the pharmaceutical industry. This article explores the potential consequences of the IRA on drug pricing, innovation, and launch strategies, providing a comprehensive analysis of the financial, ethical, and reputational implications.

HCN Medical Memo
As healthcare professionals, it’s crucial to understand the potential impact of policies like the IRA on patient access to new treatments. Although the IRA aims to reduce costs for patients and taxpayers, it may also influence pharmaceutical companies’ strategies in ways that could delay access to innovative treatments. Staying informed about these issues can help us advocate for our patients and navigate these complex dynamics in our practice.

Key Points

  • The IRA aims to lower Medicare costs by negotiating prices for high-cost prescription drugs.
  • Critics argue that reduced revenues from Medicare could distort innovation and lead to delayed launches of new medications.
  • Delaying drug launches could have significant financial downsides, including forgoing revenues from all public and private US payers.
  • Delayed launches may also squander valuable patent protection time.
  • The time value of money exerts a powerful influence on financial forecasts driving decision making.
  • The potential revenue loss from delaying a drug launch often outweighs the financial benefits.

Only 15% of all drugs in phase 2 studies are ultimately approved by the FDA.

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