The Dawn of a New Era: Inflation Reduction Act Puts New Pressures on Drug Launches

Cameron Izadi
Senior Vice President
Fingerpaint Market Access

We have entered a new reality in healthcare.

The recent announcement of the first 10 drugs subject to Medicare negotiations under the Inflation Reduction Act (IRA) is an act of commitment by the current administration in its pursuit of drug reform—even in the face of litigation. In light of these changes and their implications, pharmaceutical manufacturers will need to rethink their launch strategies to ensure they are well positioned for the future.

While the IRA was passed in the spirit of creating a sustainable healthcare system by reducing the burden of drug cost on patients and the government, we cannot overlook the profound consequences it will have on the development and commercialization of new therapies. The provisions allowing Medicare to negotiate drug prices after just 7 years for self-administered drugs and after 11 years for physician-administered drugs will undoubtedly expose new challenges for pharmaceutical companies faced with delivering a return on investment while maintaining patient-centricity.

This disruptive force of the IRA will directly affect new product launches. Compressed life-cycle timelines and profit margins in this new environment will only increase pressure to accelerate commercial outcomes. Simply put: To deliver on corporate expectations, manufacturers will need to drive faster uptake at launch.

That’s why now, more than ever, organizations should take critical steps toward rethinking their marketing strategies, particularly for new product launches.

Step 1: Accept the new reality and evaluate exposure

• Recognize that most successful products with sizable Medicare populations will likely face Medicare negotiations during their life cycle
• Acknowledge that indirect pricing pressure from a negotiated competitor may have a greater impact than being directly negotiated
• Account for the statutory cost-sharing and potential formulary risk resulting from Part D benefit redesign
• Anticipate the impact of negotiations with CMS and Part D plan sponsors to spill into commercial markets

Step 2: Embed cross-functional integration early into long-term strategic planning

• Prioritize purposeful integration across marketing, market access, medical, and agency partners to ensure organizational alignment
• Form the cross-functional team early in the clinical development phases of the drug, strengthen integration during launch readiness, and maintain it throughout the life cycle of the drug
• Plan for market disruptions caused by the direct and indirect impacts of the IRA over the product’s forecast horizon

Step 3: Redefine flawless execution

• Develop a clear, evidence-based value proposition that also addresses the needs of the largest and newest customer, the Department of Health and Human Services
• Invest in market conditioning early to establish the unmet need as the foundation for product launch
• Enable nimbleness for cross-functional teams to adapt efficiently to unexpected market disruptions
• Establish shared goals across commercial teams anchored on annual net sales and other pertinent performance metrics
• Focus resources, strategy, and promotional execution on activities that maximize rapid uptake, and be thoughtful about innovation and experimentation

While the new healthcare reality will differ for every product, companies that instill an appreciation for the IRA into the fabric of launch planning will be better prepared to navigate the uncharted waters ahead.

Cameron Izadi can be reached at cizadi@fingerpaintaccess.com.