Sanofi, Alnylam Q3 Reports Hint at Early Pipeline Impacts from IRA

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The implications of the Inflation Reduction Act of 2022 (IRA), which is aimed at lowering the price of prescription drugs, are already reverberating across biopharma pipelines as companies hint at – or explicitly state – their impacts.

The IRA, which Pres. Biden signed into law in August, initially focuses on negotiating the prices for Medicare Part D’s 10 most-prescribed medicines and takes effect in 2026.

Prior to the bill’s passage, Merck CEO Robert Davis said the legislation on pricing would be “highly chilling on future innovation." The Biotechnology Innovation Organization (BIO) claimed the impact on drug manufacturers' revenue would make investment in R&D and innovation less attractive.

The most immediate impacts of the IRA are expected to apply to currently marketed drugs covered by Medicare. The Secretary of Health and Human Services (HHS) will have the power to negotiate the prices for 10 drugs by 2026; this will increase to 20 in 2029.

As companies reevaluate their pipelines accordingly, the Congressional Budget Office estimated the new regulation will lead to a 1% decline in newly approved drugs over the next decade.

However, this may "significantly underestimate" the impact as the CBO study only looks at newly approved drugs and does not account for reduced investment in life cycle management, according to Pharmaceutical Research and Manufacturers of America (PhRMA).  

In Alnylam’s Q3 report Thursday, the company announced it would not initiate a Phase III trial for vutrisiran in Stargardt disease. Christine Lindenboom, SVP of investor relations and corporate communications at Alnylam, told BioSpace the company’s decision is related to the drug's Orphan Drug designation status.

Negotiation exemptions exist for drugs that have indications associated with only one Orphan Drug designation. Alnylam’s vutrisiran has Orphan designation in ATTR amyloidosis. If the Stargardt program were to move forward, it could ultimately negate the current exemption.  

Companies may be incentivized to prioritize multiple assets with few targeted indications rather than “pipeline-in-a-product” development programs, since “multi-indication blockbusters are likely to face increased pricing scrutiny,” according to global strategy consultancy L.E.K.

This increased scrutiny would be expected to apply to Sanofi's pipeline cornerstone Dupixent. However, the company does foresee the impact from Medicare pricing negotiation taking effect prior to 2031, CEO Paul Hudson said during an investor call Friday. 

Hudson was quick to reassure investors that the company is “well positioned in the short term to navigate the core elements related to” the IRA. He attributed this to the “industry-leading responsible pricing policy” Sanofi has followed for several years.

He added that Sanofi’s growth drivers are generally newer medicines and vaccines.  

Hudson spoke to the potential impacts on the pharmaceutical industry in a broader sense.

“We believe that the implementation of these policies will likely create significant uncertainties across our industry with regards to sustainable investment in science and innovation and artificially influence future R&D decisions,” he told investors Friday.

Hudson went on to say that inflation penalties would “present a significant challenge to an industry dependent on a constant cycle of investments into innovation and expectations from others in the supply chain for additional rebates and fees.”

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