US legislation to benefit small molecule drug innovation

Incentivising small molecule drug innovation

According to the Biotechnology Innovation Organization (BIO), the bipartisan Ensuring Pathways to Innovative Cures (EPIC Act) passed last week in the US, is a “critical” step for incentivising small molecule drug innovation. Representative Congressman Dr Greg Murphy, alongside Don Davis and Brett Guthrie, introduced the US legislation to fix the “pill penalty”, BIO confirmed.

Specifically, the EPIC Act is a key action towards the removal of a punitive penalty on the development of small-molecule medicines, asserted BIO President and CEO, Rachel King.

As a “vital class of treatments” for patients worldwide, King considered that the new legislation would “fix a section of the US Inflation Reduction Act (IRA) and make certain that we are not disincentivising the development of small molecule drugs that are often more accessible for patients”.

Congressman Greg Murphy highlighted that under the IRA price-fixing model, small molecule drugs are eligible for selection to the “Medicare Drug Price Negotiation” programme following seven years after US Food and Drug Administration (FDA) approval. A two-year “negotiation period” follows and a price control then comes into force at year 9.

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A “big step forward” for biotech innovation

In a similar move, legislation to restore immediate R&D expensing was passed in the US House of Representatives on 31 January 2024.

Following the vote, BIO’s Chief Advocacy Officer, Nick Shipley shared that he believed the passing of the bipartisan legislation is a “big step forward for US innovation”.

“Since 2022, American businesses have been stifled by a law that prohibited them from deducting R&D expenses in the same taxable year. Instead, these companies were forced to amortise deductions over a five-year span, creating a massive financial barrier for smaller, pre-commercial and start-up companies with significant R&D costs,” Shipley emphasised.

He added that if passed in the Senate, the bill passed by the House will benefit small biotechs. It will do so by removing existing financial barriers to life-saving and life-enhancing R&D, Shipley continued.

In conclusion, these recent legislative milestones in the US mark progress for pharmaceutical innovation, research and development, and help to widen patient access to critical and innovative medicines.