Latest / Making Medicine / Listener Q&A: Drug Price Controls, EU Tariffs, and the August Recess | Making Medicine Podcast

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Listener Q&A: Drug Price Controls, EU Tariffs, and the August Recess | Making Medicine Podcast · Making Medicine

• 0:05
  Speaker 1: Hello everyone, and welcome back to the Making Medicine podcast,
• 0:09
  Speaker 1: where science, policy and innovation meet. As always, I'm your host,
• 0:13
  Speaker 1: John Stanford. Today's episode is our first Q and A
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  Speaker 1: segment where Incubate will answer questions we've received from our listeners.
• 0:21
  Speaker 1: We'll cover everything from recent headlines to the process of
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  Speaker 1: policy and more. With that, let's get into this week's episode.
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  Speaker 1: Before our first question, we do have some breaking news.
• 0:32
  Speaker 1: As many of you might have already heard, Sieber Director
• 0:35
  Speaker 1: doctor Vinnie Prisad will be leaving the FDA. We'll have
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  Speaker 1: more in a future episode about the people of the
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  Speaker 1: FDA and how personnel really can be policy. We don't
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  Speaker 1: know too much to make of this announcement, but at
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  Speaker 1: the least we can take away that it's a major
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  Speaker 1: shakeup amid an already turbulent moment for the organization. More
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  Speaker 1: to come and with that, let's jump into our first question.
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  Speaker 1: Are we moving toward more price controls on drugs? Great question,
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  Speaker 1: and a little terminology at the top, because one man's
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  Speaker 1: price control is another man's price negotiation. Our thought is
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  Speaker 1: that when it comes to the IRA price negotiations, they
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  Speaker 1: just simply aren't negotiations. The companies don't have the ability
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  Speaker 1: to walk away from the table, so the LinkedIn haters
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  Speaker 1: can complain. But these really are price controls and we
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  Speaker 1: should talk about them as such. So are we moving
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  Speaker 1: towards more of them? There's two different ways of looking
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  Speaker 1: at that question. They're the IRA price controls, which was
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  Speaker 1: a new mechanism to bring down drug prices through quote
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  Speaker 1: unquote negotiations, but really at the end of the day,
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  Speaker 1: we'll set the prices. So we'll talk about that because yes,
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  Speaker 1: more of those are coming. Then we can also think
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  Speaker 1: about this in the context of the Trump administration and
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  Speaker 1: some actions they're taking. So on the IRA drug price program,
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  Speaker 1: we are a few months away from the first price
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  Speaker 1: controls for year twenty twenty six going into place. That'll
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  Speaker 1: cover ten drugs, and there were some pretty big ones
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  Speaker 1: in that think Eloquists, Jardians, and a few others. So
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  Speaker 1: beginning in January we'll be seeing that first set of
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  Speaker 1: ten price controls. In twenty twenty seven, that list will
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  Speaker 1: grow to fifteen, and in twenty twenty eight we'll have
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  Speaker 1: another fifteen, which will be for the first time including
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  Speaker 1: Part B drugs, and then in twenty twenty nine will
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  Speaker 1: move to twenty drugs per year having price controls set.
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  Speaker 1: By twenty thirty one, one hundred of the largest drugs
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  Speaker 1: could have price controls in place. So the IRA is
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  Speaker 1: continuing exactly how its authors intended it to a growing
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  Speaker 1: list of drugs that will have price controls set on them.
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  Speaker 1: Another way to think of the price controls is what
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  Speaker 1: is the Trump administration doing outside of the IRA. And
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  Speaker 1: this is where President Trump's executive order doesn't necessarily say
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  Speaker 1: price controls, but some of those same mechanisms the government
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  Speaker 1: intervening to set what they consider the value of the
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  Speaker 1: drug is on the table, and we don't know what
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  Speaker 1: we're going to see, but we do know that this
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  Speaker 1: idea of most favor nations that you can hear about
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  Speaker 1: in an earlier episode still remains on the table, and
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  Speaker 1: the Trump administration seems actively exploring whether or not they
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  Speaker 1: could see how to put that in place in our
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  Speaker 1: country which would effectively import the price controls of another country.
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  Speaker 1: So do we have more price controls coming our way? Absolutely,
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  Speaker 1: there'll be the growing list of IR eight price controls,
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  Speaker 1: and then we will see what the Trump administration does
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  Speaker 1: as it relates to importing price controls from other countries.
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  Speaker 1: Let's move to our second and very timely question. They ask,
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  Speaker 1: I saw the EU trade deal has tariffs on medicines.
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  Speaker 1: Is that true? If so, what will the impacts be? Well,
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  Speaker 1: it's a little early to tell, but our listener is right.
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  Speaker 1: Earlier this week, a trade deal was announced with the
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  Speaker 1: European Union that does include a flat fifteen percent tariff
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  Speaker 1: on a host of items, including pharmaceuticals. Check out our
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  Speaker 1: tariff episode for a deeper dive on how tariffs might
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  Speaker 1: shake up the pharmaceutical value chain. Initial analysts and news
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  Speaker 1: headlines suggested that the inclusion of pharmaceuticals could translate to
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  Speaker 1: a thirteen to nineteen billion dollar impact on the industry.
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  Speaker 1: But that's about where what we know ends. How will
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  Speaker 1: it impact individual companies and how can we quantify that?
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  Speaker 1: We just don't know. Companies are already stockpiling or already
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  Speaker 1: trying to move manufacturing domestically, so things that are already
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  Speaker 1: in the US before this goes into place won't have
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  Speaker 1: tariffs applied, and if they start manufacturing here, tariffs of
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  Speaker 1: course won't be applied either. We also know that some generics,
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  Speaker 1: but not all, will be excluded from this deal. In
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  Speaker 1: the complex value chain and the very globalized value chain
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  Speaker 1: of developing new medicines, assessing who pays and whether this
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  Speaker 1: got passed on to the consumer might be almost impossible.
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  Speaker 1: It's also important to note this is separate from the
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  Speaker 1: ongoing Section two thirty two investigation that we talked about
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  Speaker 1: in our tariffs episode. That is looking whether or not
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  Speaker 1: foreign countries manufacturing our drugs is a national security issue,
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  Speaker 1: and if it it is, will there be tariffs or
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  Speaker 1: other trade measures put in place. We don't know what
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  Speaker 1: the outcome of that is, but we do know that
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  Speaker 1: they are hurrying up to get that done, so this
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  Speaker 1: certainly isn't going to be the last time we've talked
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  Speaker 1: about tariffs. It's worth adding that historically countries don't put
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  Speaker 1: tariffs on medicines because they almost inevitably limit access to
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  Speaker 1: patients who need them. So we'll be watching to see
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  Speaker 1: how companies and countries navigate this, hopefully with patients in mind.
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  Speaker 1: Our next question asks how is the Inflation Reduction Act
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  Speaker 1: continuing to impact the investment environment. That's a great question,
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  Speaker 1: and per usual, it's a complex answer. As many of
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  Speaker 1: you heard, and Incubate celebrated the inclusion of orphan cures
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  Speaker 1: in the Congressional Reconciliation Build the One Big Beautiful Bill.
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  Speaker 1: Check out that episode if you want to dig deeper,
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  Speaker 1: we'll undoce some of the damage and we may see
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  Speaker 1: secondary indication trials resume. So let's rewind the IRA made
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  Speaker 1: it disincentivized to explore weather or not a drug worked
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  Speaker 1: in a secondary indication under an orphan designation. Congress fortunately
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  Speaker 1: saw the flaw on that and fixed it in a
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  Speaker 1: recent bill. But it's not flipping a light switch. Investors, companies, others,
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  Speaker 1: change strategies, move money. These things aren't easy to spin up,
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  Speaker 1: and so it'll take some time to see some of
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  Speaker 1: that damage be mitigated. But the pill penalty, one of
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  Speaker 1: Incubate's top priorities, remains in place. So small molecule companies
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  Speaker 1: remain at a disadvantage in their ability to garner investment
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  Speaker 1: and develop new medicines. But the IRA continues to impact
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  Speaker 1: investors and small companies in the fact that the pill
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  Speaker 1: penalty very much remains in place. So small molecule companies
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  Speaker 1: and entrepreneurs remain at a disadvantage both in developing their
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  Speaker 1: medicine and attracting investors. So until the pill penalty is removed.
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  Speaker 1: One of the largest impacts of the IRA, disincentivizing scientists
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  Speaker 1: from chasing what is right there in front of them,
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  Speaker 1: remains in place. Another listener asked, did the White House
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  Speaker 1: really freeze NIH funding and for how long? That's a
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  Speaker 1: great question. Just yesterday the news was out and about
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  Speaker 1: thanks to a Wall Street Journal article that the White
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  Speaker 1: House had told NIH to freeze all funding for research.
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  Speaker 1: That is true. It was included in a footnote of
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  Speaker 1: a memo that the agency interpreted as saying they no
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  Speaker 1: longer had the authority to spend that money. But only
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  Speaker 1: a few hours later they reverse course and the funds
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  Speaker 1: are flowing as they were expected to. We'll also add
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  Speaker 1: the Congressional support for the NIH and what it means
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  Speaker 1: for patients and science remains strong on both sides of
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  Speaker 1: the aisle, and even HHS officials have acknowledged publicly that
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  Speaker 1: their proposed cuts, which some viewed as pretty draconian, are
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  Speaker 1: unlikely to be reflected in the final funding levels for
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  Speaker 1: this year. So yes, our listener is right. NIH funding
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  Speaker 1: was frozen, albeit only for a few hours, and it
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  Speaker 1: seems back on track to get the dollars out the
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  Speaker 1: door to where it needs to go. The fight for
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  Speaker 1: the future of the NIH remains very much alive. Our
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  Speaker 1: last question asks what is August recess? You mentioned it
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  Speaker 1: on a previous episode. That's a little DC speak, some
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  Speaker 1: inside the beltwagh talk that we'll try to do a
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  Speaker 1: better job of explaining on every episode. August recess is
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  Speaker 1: a hallowed tradition where members of Congress recess back to
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  Speaker 1: their districts and states to check in with their constituents.
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  Speaker 1: It's also a big break for staff and others in Washington,
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  Speaker 1: where things cool down on the workfront, right as DC
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  Speaker 1: is at its swampiest, and so it's during this time
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  Speaker 1: that members of Congress can be very much approached by
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  Speaker 1: people back home and they get to hear what's on
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  Speaker 1: their mind. For Republican members, it's going to be a
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  Speaker 1: particularly interesting recess because they're going home with the hopes
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  Speaker 1: of selling the one big, beautiful bill and why they
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  Speaker 1: voted for it, while also responding to a lot of
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  Speaker 1: the activities of the very active Trump administration. Over the
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  Speaker 1: last several months, there's been a lot of concern in
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  Speaker 1: these districts about cuts to Medicaid, cuts to other government
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  Speaker 1: programs which have had Republicans somewhat reluctant to do town
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  Speaker 1: halls and engage with their members, but there'll be no
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  Speaker 1: dodging it during August, so we can certainly expect members
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  Speaker 1: to be headed back home talking about the work they've
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  Speaker 1: done and also hearing about how it is on the ground.
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  Speaker 1: August recess is a time where incubate. We'll be working
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  Speaker 1: with our network of investors and early stage biotechs to
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  Speaker 1: make sure they get in front of their members of
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  Speaker 1: Congress and share our views on policies that need to
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  Speaker 1: be addressed this fall. That's all for this episode of
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  Speaker 1: the Making Medicine Podcast. Have another question you'd like us
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  Speaker 1: this video, and as always, keep innovating.