Novartis warns the U.S. that a plan to reduce drug prices may have negative consequences for key research

By Ludwig Burger

FRANKFURT, (Reuters) – The U.S. government’s plans to lower drug prices could lead to a decrease in research in some of Novartis’s most promising areas, warned the Swiss drugmaker on Friday. Washington should reconsider the “unintended consequences” of its new rules.

In August, President Joe Biden signed the Inflation Reduction Act into law. This allows federal Medicare to negotiate prices for some of its most expensive drugs.

The legislation states that small-molecule drugs and biologic drugs made from living cells will not be subject to negotiated prices for nine years after approval. However, they will be subject to them until 13 years later.

According to some executives, biologics are being prioritized by pharmaceutical companies over small-molecule drugs that are mostly pills. Novartis stated that this would be particularly detrimental to its areas of innovation strength.

While it may seem that lawmakers want to favor sophisticated biologics over more conventional drugs, many of the most promising treatments are in the latter group, Victor Bulto from Novartis’s President for Innovative Medicines on the U.S. Market, said that while the intention of lawmakers is to favor these advanced biologics, there are some very promising options.

Bulto said that the price setting for small molecules after nine years and biologics after 13 years is the most troubling part of that legislation.

He said that new modalities like radioligand therapies or RNA technologies are actually – according to this legislation – considered small chemicals and that therefore that piece of legislation we think needs to change to benefit innovation and patients down to the road.”

The United States pays the largest amount for its drugs globally. An independent group that is used by the U.S. Congress for cost estimates has predicted that the IRA’s drug price provisions will decrease the federal deficit to $237 billion in the next ten-year.

Novartis’ RNA Drive, which is one of the three technologies that the company wants to concentrate on, has seen Novartis pioneer RNA interference technology (or RNAi), where disease-causing genes can be silenced or rendered ineffective. In late 2021, Novartis approved Leqvio, a drug that lowers cholesterol.

Another focus area is radioligands like Pluvicto for prostate cancer. It works by combining cells-killing radioactive particle with molecules that attach to tumors.

Bulto stated that there was still hope for U.S. legislators to reconsider the “unintended” effect of discouraging small-molecule drug development relative to biologic proteins drugs.

“My hope is in your efforts. To raise awareness about the effects on patients and the industry, he said, “So we will do everything within our power.”

Novartis declared last September that it would make growth within the United States its top geographical priority. This is to better take advantage of opportunities in America’s largest pharmaceutical market.

Its goal is to be a top-five American player by 2027, an increase from the 10th in 2021.

Bulto stated that the United States would not be pushed to the detriment of its leadership position in Europe, and that it can raise additional resources through a more targeted approach in the pursuit of drug technologies and disease areas.

(Reporting by Ludwig Burger, Editing by Mark Potter