Narasimhan: Inflation Reduction Act forcing pharmas to rethink pipelines

CEO Vas Narasimhan: IRA has distorted U.S. drug market

The Inflation Reduction Act has created “distortions” in the economics of drug development that will make it more difficult to develop small molecules for conditions affecting Medicare populations and present challenges to developing new indications for small molecule and biologic therapies, Novartis CEO Vas Narasimhan told The BioCentury Show.

“Over the next decades we will see significantly fewer medicines in some of the most important diseases for the elderly being developed by our industry as a consequence of this policy,” Narasimhan said.

He said Novartis AG (SIX:NOVN; NYSE:NVS) is evaluating its pipeline in the wake of the law. “We haven’t completely cracked all of the ways we need to rethink our pipeline, but the work is ongoing.”

Provisions in the law regulating the prices Medicare pays for some medicines will create “a loss of exclusivity event for the portion of your sales that are happening in the Medicare population.” The law may lead to differential pricing for public and private payers, he added.

Narasimhan noted that some new modalities that the nine-year threshold for Medicare price regulation applies to all products regulated under NDAs, including new modalities such as siRNA and radioligands. 

Discussing recent shakeups at Novartis — plans to cut up to 8,000 jobs, reorganizing its business units and replacing the leadership of the Novartis Institutes for BioMedical Research (NIBR) — Narasimhan acknowledged that the company has struggled in the U.S. market. “We’re not even in the top 10 in the U.S.,” he said. “We’ve got to shift that position, so we’ve made the organizational changes to put us in a position to do that.” 

Novartis is looking at a combination of  “incremental” deals and investment in its internal pipeline to realize its goal of reaching a top five position for U.S. pharmaceuticals sales, Narasimhan said.