New drug development in Louisiana faces policy threats

Life sciences companies are the backbone of our local economy and develop life-changing medications and therapies for patients in Louisiana and beyond. 

Unfortunately, a federal policy implemented as part of the Inflation Reduction Act (IRA) could have a disastrous impact on new medication development, harming our local innovation economy, research opportunities and patient health outcomes.

Congress passed the IRA in 2022 in an attempt to address high health care costs that burden many patients across the country, but the law contains a provision that discourages investment in a critical class of medicines known as “small molecules.” 

Small molecule drugs are extremely common. Between 2007 and 2016, 77% of Food and Drug Administration-approved new drugs were small molecule treatments, which typically come in the form of pills or tablets. 

Many Louisiana patients take small molecule medications every day, such as aspirin to treat headaches and antihistamines to combat allergic reactions, but small molecule medicines also treat more serious conditions including cancer and chronic illnesses that impact vulnerable communities such as HIV and hepatitis C. 

Conversely, larger molecule medications, or biologics, are manufactured or extracted from living organisms and are typically administered through an IV or infusion.

Under the IRA, Medicare is empowered to negotiate drug prices directly with manufacturers, but the law made different types of medications eligible for negotiations on different timelines. New small molecules become eligible for price negotiations just nine years after receiving approval from the FDA, while larger molecule medicines become eligible for negotiation 13 years after FDA approval.

 This arbitrary distinction distorts the incentive structure for investment in medication research and development. The policy does not provide enough time for small molecule drug manufacturers to recoup necessary research and development costs into such treatments. It can take an average of 10 years and billions of dollars to develop a new treatment, and only about 12% of new treatments that enter clinical trials are approved by the FDA. 

But as it currently stands, the IRA is driving investors to favor investment in biologics over small molecule treatments.

The IRA is already leading to significant negative impact on the development of new small molecule medications, with some manufacturers shuttering small molecule development initiatives in favor of biologics. One study found that the IRA could lead to nearly 80 fewer small molecule treatments over the next 20 years. 

In addition, less investment in small molecule drug development could result in fewer new generic medications coming to market – resulting in fewer medication options for patients and potentially worsening health outcomes for Louisiana patients. 

Patients rely on small molecule medications to combat symptoms, and these treatments are easily absorbed into the bloodstream, making them crucial therapeutic options for many debilitating chronic conditions.

In 2023, Louisiana’s bioscience industry employed nearly 14,000 Louisiana residents across 1,907 state business establishments. Louisiana has outpaced national bioscience growth and is among the fastest-growing states for bioscience growth and opportunity. 

Our local industry needs policies in place that would continue building our local life sciences industry and spur new research, development, and commercialization of treatments that can transform patients’ lives.

We can’t jeopardize progress made to finding new treatments and cures for patients and building up our state’s premier life sciences industry.