Illustration: Natalie Peeples / Axios
The drug industry is redoubling efforts to fix the so-called pill penalty in reconciliation to get a win amid the threat of tariffs, regulatory uncertainty and cuts to federal investments in the life sciences.
Why it matters: Extending by four years the period that small molecule drugs are exempt from Medicare price negotiations is a priority for PhRMA. But that would involve amending the Inflation Reduction Act at a cost of $10 billion over a decade.
What we're hearing: Drugmakers are pushing for a legislative fix in reconciliation that would sync the length of time that small molecule drugs and biologics are exempt from negotiations.
- The vehicle would be the EPIC Act, sponsored by Rep. Greg Murphy and Sen. Thom Tillis, which would change the law to make small molecules eligible for negotiation 11 years after they're approved by FDA.
- They're currently eligible for negotiation seven years after FDA approval.
- A preliminary CBO score of the EPIC Act that we scooped last week put the cost at about $10 billion over a decade, which could complicate the reconciliation process by requiring more offsets.
- Opponents contend it also would give the pharmaceutical companies longer to keep prices of synthetic drugs higher.
What they're saying: Murphy told Axios on Tuesday that he was "absolutely" pushing for the EPIC Act to be in the budget package.
- "We're trying to thread the needle with it, trying … to get as many people as possible on it, and on the same page.… I hope it is [included]," Murphy said.
President Trump's recent executive order on drug pricing called on Congress to equalize the negotiation periods, though it didn't specify the length of time.
Between the lines: The pharmaceutical industry is facing significant headwinds, so passing the EPIC Act would be a coup.
- The Trump administration has signaled that it intends to use the drug price negotiations to lower costs but could make unspecified changes. Officials have said they want to learn from the experiences of the Biden administration in the negotiation process.
Meanwhile, manufacturers are facing the threat of industry-specific tariffs and are concerned that budget and staffing cuts at FDA are already extending the timelines for drugs' approval evaluations.
