Trends in industry-sponsored clinical trial activity since passage of the Inflation Reduction Act

By shortening the time after U.S. drug approval when substantial revenue reductions typically occur, the Inflation Reduction Act's (IRA) Drug Price Negotiation Program (DPNP) alters investment incentives. Particular concerns include disincentives for post-approval clinical testing of new indications (begun after U.S. drug approval), and investment in small molecules relative to biologics. Post-approval development faces shortened times to earn returns; small molecule drugs are eligible to be selected for the DPNP four years earlier than biologics. The purpose of this study is to investigate these potential disincentives by quantifying trends in clinical trial starts, before and after IRA passage, for biologics and small molecules, further segmenting trials into those begun prior to U.S. drug approval and those begun later, seeking additional indications (pre-approval and post-approval trials, respectively).

Combining data from Citeline Trialtrove and Pharmaprojects databases, a linear regression model estimated separately for trials beginning pre- and post-U.S. drug approval yielded best-fit estimates of trends and percentage changes in average monthly Phase I-III industry-sponsored interventional clinical trial starts for the periods before (January 2010-July 2022) and after (August 2022-December 2024) passage of the IRA, in biologic and small molecule drugs.

During the first twenty-nine months after IRA passage, the estimated number of small molecule drug clinical trials started monthly dropped by 25.2% (95% CI: -39.0% to -7.1%) and 29.5% (95% CI: -42.4% to -13.2%) for pre-approval trials for new drugs and post-approval trials, respectively. In comparison, for biologics, the model estimates non-significant decreases for pre-approval trials (-2.1%, 95% CI: -9.4% to +5.8%) and post-approval trials (-13.0%, 95% CI: -30.0% to +6.4%).

While descriptive, this study offers early evidence of reductions in industry-sponsored new small molecule pre-approval and post-approval drug trials after IRA passage. These trends should be monitored as responses work their way through drug pipeline investment decisions.