Eli Lil­ly laid blame Tues­day af­ter­noon on Pres­i­dent Joe Biden’s In­fla­tion Re­duc­tion Act as the rea­son it scrapped a $40 mil­lion can­cer drug.

As part of its third quar­ter up­date ear­li­er Tues­day morn­ing, the Big Phar­ma re­vealed it had re­moved a Phase I drug li­censed from Fo­s­un Phar­ma, a BCL2 in­hibitor that had been un­der­go­ing stud­ies for a va­ri­ety of blood can­cers. Though the rea­son­ing had been ini­tial­ly un­clear, an Eli Lil­ly spokesper­son told End­points News in an email that “in light of the In­fla­tion Re­duc­tion Act, this pro­gram no longer met our thresh­old for con­tin­ued in­vest­ment.”

Asked to ex­plain how the IRA im­pact­ed this spe­cif­ic drug, the spokesper­son high­light­ed the law’s im­pact on small mol­e­cule R&D.

“The IRA changes many dy­nam­ics for small mol­e­cules in on­col­o­gy and when we in­te­grat­ed those changes with this pro­gram and its com­pet­i­tive land­scape, the pro­gram’s fu­ture in­vest­ment no longer met our thresh­old,” the spokesper­son told End­points in a fol­low-up email.

The In­fla­tion Re­duc­tion Act, which Biden signed in­to law over the sum­mer, con­tains pro­vi­sions al­low­ing Medicare to ne­go­ti­ate prices for cer­tain high-cost drugs. Start­ing in 2026, the HHS sec­re­tary will se­lect drugs from a list of the high­est-sell­ing Medicare Part D and, lat­er on, Part B med­i­cines for which the agency will be al­lowed to set a “max­i­mum fair price.”

For small mol­e­cules, the gov­ern­ment can be­gin ne­go­ti­at­ing prices af­ter the drugs have been on the mar­ket for at least nine years. The drugs would al­so have to be among the top ther­a­pies Medicare pays for. Crit­ics of the law have said be­gin­ning ne­go­ti­a­tions at the nine-year mark will ham­per in­no­va­tion, be­cause phar­ma com­pa­nies ob­tain 13 years of mar­ket ex­clu­siv­i­ty — a thresh­old which re­mains in place with the IRA.

Lil­ly’s de­ci­sion comes a few days af­ter Al­ny­lam not­ed the IRA in a press re­lease, ty­ing it to the leg­is­la­tion to a de­ci­sion end­ing Phase III plans for vutrisir­an in the rare Star­gardt dis­ease. In this in­stance, Al­ny­lam em­pha­sized the or­phan drug ex­emp­tion for the IRA’s drug price caps, in which ther­a­pies are ex­empt from Medicare ne­go­ti­a­tions if ap­proved for on­ly one des­ig­na­tion.

Ear­li­er this year, the FDA ap­proved vutrisir­an, brand­ed as Amvut­tra, to treat hered­i­tary transthyretin-me­di­at­ed (hAT­TR) amy­loi­do­sis. Al­ny­lam lists the price at $463,500 per pa­tient per year, and the drug pulled in about $25 mil­lion in its first quar­ter on the mar­ket.

The Lil­ly drug, dubbed LOXO-338, was far from any reg­u­la­to­ry de­ci­sion. Re­searchers were test­ing it as a monother­a­py in Phase I stud­ies and it would have pro­gressed to a com­bi­na­tion co­hort had safe­ty and ef­fi­ca­cy been con­firmed, ac­cord­ing to the fed­er­al gov­ern­ment’s clin­i­cal tri­als data­base.

Lil­ly ex­pect­ed to en­roll more than 300 pa­tients, as of the tri­al’s most re­cent up­date on Oct. 12. Start­ed in Au­gust 2021, the study was sup­posed to ob­serve pa­tients’ re­sponse rates over the course of two years and re­port da­ta in 2024. But with Lil­ly drop­ping the pro­gram, it’s not clear what will hap­pen to pa­tients who have al­ready tak­en the ex­per­i­men­tal drug.

Lil­ly li­censed LOXO-338 from Fo­s­un Phar­ma in Oc­to­ber 2020, nab­bing the rights to the drug every­where but Chi­na for $40 mil­lion. On top of that, Fo­s­un had been el­i­gi­ble for up to $400 mil­lion in mile­stones and mid-to-high sin­gle-dig­it roy­al­ty pay­ments on any ap­provals.

Ad­di­tion­al­ly, Lil­ly aban­doned an­oth­er pipeline pro­gram Tues­day, a PACAP38-tar­get­ing an­ti­body known as LY3451838. Ac­cord­ing to pre­vi­ous SEC fil­ings, re­searchers had been test­ing the drug in a Phase II study for chron­ic pain since No­vem­ber 2020. But in Au­gust, Lil­ly up­dat­ed the in­di­ca­tion to mi­graines.

Per the tri­al data­base, the Phase II tri­al was com­plet­ed this past Sep­tem­ber. A press re­lease from Lil­ly Neu­ro­science said the study “did not meet pre-spec­i­fied crit­i­cal suc­cess fac­tors.”

With earn­ings sea­son in full swing, Lil­ly isn’t the on­ly Big Phar­ma com­pa­ny to cull pro­grams from its pipeline. Last month, Roche chopped a Phase II eye dis­ease can­di­date af­ter a biotech tossed a sim­i­lar drug the day be­fore, and No­var­tis in­def­i­nite­ly post­poned plans to sub­mit an FDA pitch for its PD-1 drug. GSK made a broad re­treat from NY-ESO as a can­cer tar­get when it pulled out of two cell ther­a­py 2.0 al­liances, while Ab­b­Vie dis­card­ed an au­toim­mune drug, the prod­uct of a 10-year dis­cov­ery part­ner­ship.

Lei Lei Wu con­tributed re­port­ing. 

Ed­i­tor’s note: This ar­ti­cle and head­line have been up­dat­ed to re­flect com­ments from an Eli Lil­ly spokesper­son.