Assessing the implications of centralized drug price setting to investment in clinical development for HIV treatments

December 1, 2021
Charles River Associates Pill Production Line

The Build Back Better Act, which is under consideration for passage into law includes price controls in Medicare Part B and D and price caps more broadly. In this report the authors explore how the introduction of this type of a federal price setting policy in the United States would impact the size of the pharmaceutical market and investment in research and development (R&D). Although the price controls would not target medicines in specific therapy areas, the wording in the proposed legislation may mean that price controls would impact certain medicines disproportionately. Less investment in R&D would mean fewer clinical trials.

In this paper we consider the impact of such a policy on future medicines and potential cures for Human Immunodeficiency Virus and Acquired Immune Deficiency Syndrome (HIV) by developing a quantitative model. We find that there have been over 3,000 clinical trials for potential treatments for HIV since 1990 and 57 medicines for HIV have been approved by the FDA since 1987. Our model identifies HIV drugs that would be placed under price control as specified by the Build Back Better Act as:

  • Innovative HIV medicines that have a budget impact of more than $200 million
  • Small molecules and biologics for HIV that have been on the market for 9 or 12 years, respectively

Based on the Build Back Better Act, we estimate that price control for a segment of the HIV market would reduce future revenues for HIV medicines by 16.8% to 17.2% and, as a result, in 2021-2035 we project that R&D investment spending could decline by 21.6% to 22.0%. If this were the case, there would be 537 to 551 fewer HIV clinical trials relative to what would have otherwise occurred in that time period. The implications for drug development could be significant, given that currently around 610 HIV clinical trials are ongoing in the United States. While this paper considers the impact on clinical trials, this would ultimately impact the likelihood of new treatments, the prospect of a cure, the development of knowledge about treatment in specific populations, vaccine or other transformational therapy for HIV and the health of patients.

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