Eli Lilly CEO says Medicare price negotiations could harm drug development

Eli Lilly CEO David Ricks connected Tuesday said Medicare terms negotiations, which purpose to cut costs for older Americans, could perchance harm drug development. 

"I'm truly disquieted astir the harm this volition bash to caller cures and possibilities successful medicine," Ricks said successful an interrogation connected CNBC's "The Exchange." 

Ricks was referring to a provision in the Biden administration's Inflation Reduction Act that volition let the Medicare programme to negociate prices connected the costliest medicine drugs each year.

He's the latest pharmaceutical enforcement to publically blast the proviso and instrumentality astatine large, which volition apt trim institution profits. Global drugmaker Merck past week sued the Biden medication implicit Medicare terms negotiations successful a bid to weaken the program.

Ricks said the "biggest problem" with the proviso stems from a quality successful timeline for negotiating prices connected small-molecule drugs — meaning those drugs made retired of chemicals and person debased molecular value — versus biologic medicines, oregon those derived from surviving sources similar animals oregon humans.

Under the IRA provision, Medicare tin commencement negotiating prices connected small-molecule drugs arsenic aboriginal arsenic 9 years aft they person Food and Drug Administration approval, compared with 13 years for biologics.

Ricks said that favoritism is "going to truly truncate investment" successful small-molecule drugs, which are "one of the astir businesslike parts of wellness care." 

"We'll get less of [small-molecule drugs] due to the fact that investors are already saying to me, 'Why would you put successful much tiny molecules erstwhile biologics get 13 years earlier negotiations?'" Ricks said. 

Small-molecule drugs marque up 90% of pharmaceutical drugs, according to a study successful ScienceDirect. 

Novartis CEO Vas Narasimhan successful February expressed akin concerns astir the varying timeline, saying it's a apical precedence of the manufacture to close the four-year spread betwixt the 2 types of drugs, according to Fierce Pharma.

Another provision of the IRA requires pharmaceutical companies to refund Medicare done rebates if the prices of their drugs emergence faster than the complaint of inflation. 

The archetypal acceptable of eligible medicine drugs was taxable to Medicare ostentation rebates starting April 1, according to the U.S. Department of Health and Human Services.