Unintended Consequences of the Inflation Reduction Act: Clinical Development Toward Subsequent Indications

The Inflation Reduction Act’s (IRA) Medicare Drug Price Negotiation Program (DPNP) may lead to fewer subsequent indications and delay launches for small molecule drugs, according to new research from NPC published in the American Journal of Managed Care.


Julie Patterson, PharmD, PhD; James Motyka, PharmD; and John Michael O’Brien, PharmD, MPH


The American Journal of Managed Care


This study describes clinical development for subsequent indications for high-spend Medicare Part D small molecule drugs.

  • Thirty of the 50 drugs with highest gross Medicare Part D spending in 2020 were multiindication small molecule drugs.
  • Subsequent indications based on preapproval clinical trials were often launched within 2 years of initial approval, whereas those based on postapproval research generally were not approved until more than 7 years post approval.
  • These findings, FDA approval time lines, and Medicare’s proposed implementation of the Drug Price Negotiation Program suggest that the Inflation Reduction Act of 2022 will likely affect time to first launch, postapproval research toward additional indications, and ultimately patient access.


To describe the clinical development landscape for high-spend Medicare Part D small molecule drugs and illustrate the potential impact of the Inflation Reduction Act of 2022 (IRA) on research and development investments toward subsequent indications.


Descriptive analysis of research and development time lines of small molecule drugs in the top 50 of 2020 Medicare Part D spending using publicly available dates when pivotal clinical trials were first posted to ClinicalTrials.gov and FDA approval dates for initial and subsequent indications.


We summarize the drugs, indications, and time lines using descriptive statistics.


Thirty of the 50 drugs with highest gross spending by Medicare Part D in 2020 were small molecule drugs with subsequent indications. Subsequent indications based on preapproval research (n = 34) were often approved within 2 years of initial approval (n = 15) and, on average, 2.9 years after a drug’s first approval. Additional indications based on postapproval clinical trials or real-world evidence (n = 42) received FDA approval, on average, 7.5 years after a drug was first approved, with the majority (55.8%) receiving FDA approval more than 7 years after the initial approval.


Our analysis of clinical development for new indications reveals aspects of innovation in small molecule drugs that are at risk under the IRA. Specifically, the time lines described in this research demonstrate how the IRA may reduce economic incentives to develop multiple indications, including single-indication launches and investments in postapproval research for additional indications.

Unintended Consequences of the IRA

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The study is available in AJMC

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