Updated: Eli Lilly blames Biden's IRA for cancer drug discontinuation as the new pharma playbook takes shape
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.