The Inflation Reduction Act’s Medicare Drug Price Negotiation Program represents a paradigm shift in drug pricing policy in the U.S. For drugs selected for maximum fair price (MFP) setting, the window for achieving returns is likely to condense as the MFP setting comes into effect at 9 years post-initial FDA approval for small molecules and 13 years for biologics. This changing dynamic suggests that clinical development post-initial approval may be adversely impacted. Understanding the historical trends in this development is crucial for assessing the potential effects of this policy on innovation and implications for stakeholders.
This report analyzes all novel active substances (NASs) approved between 2000 and 2023 to understand how the innovation of drugs evolves after the initial FDA approvals. To assess this proliferation of innovation, the report highlights the total share of drugs that have more than one FDA approval and the types of approvals received by such drugs. These types of approvals are classified across various categories such as new indication, different line of therapy, new patient population, NAS combination drug, NAS with prior-NAS combination, combination regimen, and new formulation. It also examines the time points and target indications across therapeutic areas of these approvals.
Exhibit 1: NASs by number of post-initial approved expansions and indications
Exhibit 4: Expansions of NAS post-initial approval by time since first approval
Exhibits 5: Biologics and small molecules by type expansions over time
Exhibit 6: Percentage of expansions with FDA designations!