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\u201cCMS’s proposal would encourage one thing above all else: investing less in improving existing medicines,\u201d says health expert Sally Pipes. \u201cThat’s a costly tradeoff for patients\u2014and one Medicare shouldn’t make.\u201d<\/p>\n
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The Trump administration says it wants to accelerate medical innovation. Yet one new proposal<\/a> from the Centers for Medicare and Medicaid Services could do just the opposite.<\/p>\n The agency has proposed a seemingly technical expansion of Medicare\u2019s prescription drug price control scheme, which was created by the Inflation Reduction Act<\/a> of 2022. CMS wants to treat certain newer medicines as though they were the same product as older ones when determining when they become eligible for government price controls.<\/p>\n That change would have real-world consequences. It would shorten the period companies have to recover investments in improving existing medicines. As the expected return on those investments falls, companies will have less reason to pursue them.<\/p>\n Pharmaceutical innovation rarely ends with a drug\u2019s first approval from the Food and Drug Administration<\/a>. Researchers routinely spend years finding better ways to use medicines that already work\u2014developing new formulations, improving delivery methods, and discovering new uses for existing therapies.<\/p>\n One analysis found that nearly four in ten<\/a> novel tablet and capsule medicines were later followed by at least one FDA-approved new formulation.<\/p>\n Those improvements take years of additional research, new clinical trials, another round of FDA review, and substantial financial investment.<\/p>\n Cancer care offers one of the clearest examples. Opdivo, Bristol Myers Squibb\u2019s immunotherapy for several cancers, was originally available only as an intravenous infusion<\/a>. In late 2024, the FDA approved Opdivo Qvantig<\/a>, a new formulation that combines nivolumab with hyaluronidase, allowing many patients to receive the same medicine as a three- to five-minute<\/a> injection under the skin rather than a 30-minute<\/a> IV infusion.<\/p>\n Patients spend less time in infusion chairs. And physicians and nurses can treat more people. One analysis estimated that the new formulation reduced preparation and administration time by more than 63%<\/a> and direct provider costs by 17%<\/a> per treatment episode compared with the intravenous version.<\/p>\n These gains required considerable post-approval work, including a Phase 3 trial involving 495 patients<\/a> and a separate FDA review<\/a> for the new formulation.<\/p>\n Innovations like Opdivo Qvantig are precisely what CMS is putting at risk. Under current policy<\/a>, separately approved medicines generally receive their own timeline for potential selection for Medicare\u2019s price controls. Small-molecule drugs generally cannot be selected until at least seven years<\/a> after FDA approval, while biologics cannot be selected until at least 11 years<\/a> after.<\/p>\n CMS now proposes<\/a> treating certain separately approved medicines that share an active ingredient with an older product as though they were a single \u201cqualifying single source drug,\u201d or QSSD, for purposes of Medicare\u2019s price-control program. As a result, some newer therapies could become eligible for government price controls years sooner than they otherwise would.<\/p>\n CMS defends this approach by arguing that medicines sharing an active ingredient should be treated alike. But companies don\u2019t invest in follow-on research based solely on chemistry. They invest when they expect the return will justify the cost. If Medicare shortens the period before price controls apply, that calculation changes. Projects that once made financial sense no longer will.<\/p>\n Skeptics may dismiss this concern as speculative. It isn\u2019t. Drugmakers have already begun adjusting investment decisions in response to the Inflation Reduction Act. Just months after the law passed, Eli Lilly abandoned<\/a> development of LOXO-338, an experimental treatment for certain blood cancers. A company spokesperson<\/a> explained that, \u201cin light of the Inflation Reduction Act, this program no longer met our threshold for continued investment.\u201d<\/p>\n