Legislative hurdles anticipated for biopharma in 2023

As the 118th Congress kicks into gear, biopharma industry observers speculate that 2023 may be a challenging year.

Mergers and acquisitions, down in Q4, may see regulations become more stringent this session. Similarly, probes of the FDA’s accelerated approval process could bring tighter regulations.

Here are four areas of focus, all of which BioSpace will monitor closely this year.

1. How will the IRA play out for the industry?

Despite the shift to GOP leadership in the House and the commensurate move to committee leadership posts by several industry darlings, both houses will likely still tousle with the rollout of the Inflation Reduction Act, working to mitigate its impact on biopharma.

The measure passed in 2022 along party lines, with House Democrats narrowly edging out Republicans with a tie-breaking vote by Vice President Kamala Harris. As the GOP now controls the house, including the powerful seats of committee chairmanships, expect partisan square-offs over how it’s implemented.

As the law’s first effects begin to affect patients and biopharma alike, the process under which drug prices will be negotiated is still under review.

The Centers for Medicare and Medicaid Services, responsible for implementing some provisions of the law, is widely expected to publish some details of their plan. In response, the industry will likely challenge some of these in court.

Medicare price negotiations are limited to 60 drugs through 2029, starting with 10 that will be selected for negotiation by Sept. 1st, 2023, according to the Kaiser Family Foundation.

In late 2022, major drugmakers described significant uncertainty over how the law might be implemented and how it might affect their businesses. 

Unintended consequences?

Some companies, such as AbbVie and Eli Lilly, have already warned that their drugs could be selected for negotiation. Companies have also cautioned of unintended effects from the law, including shifts in investment away from small molecule drugs and rarer cancer indications.

“The discrepancy between negotiation periods for small molecules and biologics “will have some unintended consequences…unless this is thought through carefully,” Jeremy Levin, chairman and CEO of Ovid Therapeutics, told BioSpace. Levin is also the immediate past BIO chair and current board member.

2. Mergers & Acquisitions

The Federal Trade Commission made a point in 2022 to prioritize its new oversight powers; attorneys will scrutinize acquisitions and consider how those transactions could hurt competition.

Additionally, the agency’s proposed non-compete ban poses a potentially controversial shift for biopharma, as BioSpace covered in January.

The proposed ban would affect the industry uniquely due to the “technologically advanced and secretive nature of the research and information gathered and its value to other companies, specifically those that are not the leaders in their fields of research,” Gregory Bombard, a legal expert and trial lawyer at Greenberg Traurig, told BioSpace.

Most of biopharma’s buyouts, 25 of 41 in total, were valued at less than $500 million. Three exceeded $5 billion. Two of those were companies with a single marketed product and, therefore, relatively low risk of product overlap, according to Pharmaceutical Technology.

The most significant acquisition announced in 2022, Amgen’s $28 billion takeout of Horizon Therapeutics, likely won’t trigger additional review unless the regulator wants to examine the breadth of the combined companies’ portfolio.

Nonetheless, Sen. Elizabeth Warren (D-Mass.) sent a letter to the FTC warning of anti-competitive business practices … [unfair] acquisitions would “threaten competition, reduce innovation or increase costs for American families,” she wrote.  

Still, industry advocates disagree that there’s cause for concern.

“We have been working cooperatively with the Federal Trade Commission and remain confident there are no anti-competitive aspects of this transaction,” Jessica Akopyan, head of global media relations at Amgen, told BioSpace.

The current grouping of FTC commissioners will be in place until at least May 2025, making playing a “waiting game” challenging for companies looking for deals to refill their pipelines after patents expire.

3. Accelerated Review 

Accelerated approval, a much-used FDA pathway for makers of cancer and rare disease drugs, will be tightened in coming years after Congress passed and Pres. Joe Biden signed into law a spending bill in December 2022 that could implement some noteworthy changes.

The FDA will now have more control over the program after years of controversy over withholding accelerated approvals even after trials fail.

The new law specifies that the FDA can require confirmatory trials to begin before giving an accelerated approval to expedite withdrawals of products unproven to work.

4. GOP Control of the House

Republicans, typically more aligned with biopharma’s industry priorities, now hold a slim margin in the House. Given the highly partisan nature in Washington at the moment, expect more votes to fall along party lines. For biopharma, this may be a win.

• Holding the majority gives the GOP increased power to subpoena officials and others and to set the agenda for critical committees – including those that can weigh in on biopharma regulation, drug pipelines and approvals. 
• Top COVID-19 GOP concerns include cracking down on prescription drug intermediaries, examining how pandemic relief dollars have been spent and scrutinizing vital federal agencies (including the FDA)
• Republicans plan to push for the riders they agreed to with Democrats in the summer of 2022 in the House Energy and Commerce Committee in their version of the FDA user fee package.
• Rep. Cathy McMorris Rodgers (R-Wash.), the newly minted leader of the Energy and Commerce Committee, will evaluate legislative provisions, including increasing diversity in clinical trials and overhauling the FDA’s accelerated approval pathway for new drug indications.
• Expect increased scrutiny of Biden’s COVID-19 protocols (both past and present) by the House Oversight and Reform Committee – the chamber’s primary investigative arm.

Though the market may be chilled for 2023, the heat present in the 2023 Congress will be on full blast. Biopharma, as an industry, stands to see legislative and regulatory changes that have deep potential to create more than one shake-up.

Source: BioSpace