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The IRA’s Ripple Effect: A Candid Conversation with John Newby
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Released: January 24, 2025

John Marshall
John Marshall, MD
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The IRA’s Ripple Effect: A Candid Conversation with John Newby

Now, I promised you an interview. And the interview today is with John Newby. Now you will see that Mr. Newby is an expert in this world of drug development and costs here for the state of Virginia and this region. And so, I think you're going to find this quite interesting. So, tune in and continue to listen to our interview.

I am honored to be joined by John Newby. He is the CEO of the Virginia Biotech Association, and he is joining us today to talk a little bit about a new challenging subject of the Inflation Reduction Act and its impact on cancer care.

So, John, thank you so much for joining us.

John Newby: Thanks, Dr. Marshall. Happy to be here.

John Marshall, MD: Tell us a little bit about your role and, and what's your crossover with all of this and how the IRA may be important to you.

John Newby: Sure. So, the Virginia Biotechnology Association is a trade group here in Virginia. Our members are life science and biotech companies of all stripes all over the Commonwealth. We have over 300 members and we've been around for 32 years now. We're headquartered out of Richmond, Virginia. We're located on the campus of VCU of the Biotech Park, Virginia Commonwealth University of the Biotech Park.

and our main goal in life is to support our startup companies, survive the gauntlet of this thing called biotechnology entrepreneurship, mainly trying to help them, with obtaining funding from investors for what they're trying to do into putting solutions in the hands of patients and also speaking on behalf of the entire industry from a government relations and policy perspective, federal government, state government to make sure we're protecting our companies anyway we can.

John Marshall, MD: Know, I want to jump right in on that. So, first, thank you for what you're doing. I was just at a meeting this past weekend where a series of biotech companies were presenting to us as colon cancer experts, their ideas. And I used to joke about, there's three guys in a garage, and who are the ones who invented whatever the drug is, or the new approach is, and that's where really innovation is.

Yes, there is some in big biopharma and the like, but a lot of it comes from individuals or small groups that get together, form a biotech company, generate their preliminary data, and that part's relatively affordable, I guess, or there's ways you can get that kind of funding. I used to think that there was just the bucket load of venture capital and others that was around that people were like, let's bet on that one or that one. But that's really been tight lately, as I understand it. And so, to get from that really good idea in this case was around colon cancer too, you know, clinic is a big investment, and that's really difficult nowadays, isn't it?

John Newby: the big investment in time and effort. the larger companies you reference nowadays, typically, like to keep an ear to the ground what's happening in basic science and then translational science and then ultimately, getting that science in the hands of hands of patients, but really on the front end, the risk really is born by the inventors, in some cases, the universities. Before the larger companies come in and acquire those companies, kind of how the ecosystem works. So, it's really on the shoulders of those great folks doing presentations to you to get out there and find the capital, you know, whether it be non-dilutive at the front end with NIH grants or other things all the way through venture capital and ultimately acquisition before a patient can get that therapy in her hands.

John Marshall, MD: And that just takes too long, right? I mean, you know, there in my world, there are people dying down there in my clinic. And how do we get this accelerated so that it's not five to 10 years, but more like one to two years to bring these therapies to market? And I, this, this model of how we found this is, you know, yes some fail, and yes, bets are lost, but it seemed to me this was a very rich pot of, of opportunity that we are unnecessarily delaying.

John Newby: Yeah, we need to do all we can to support this activity at the levels we're talking about. Too many great ideas are left on the shelf, and not funded because the investment environment is challenging always for life science and biotech. We had a good go of it for obvious reasons during the pandemic period, but it's kind of returned to the very difficult periods. But here's, here's the golden rule, good companies will always get funded. Good, good teams always get funded. Good science, mix all that together, get funded. So, we need to support that.

John Marshall, MD: I agree with that. Now, one of the main themes we've been talking about is the Inflation Reduction Act, and our audience has been hearing, you know, how did we get here and, and the current, efforts that are being made to negotiate for drug prices and this kind of stuff. And was in some meetings where those who are doing the investing in new therapies are hesitant right now because of the Inflation Reduction Act and the uncertainty that that's bringing to their bottom line, I guess.

Maybe reflect a bit on that and the impact it's having on the businesses you represent.

John Newby: Well, the bottom line is just talking generically about Any investor, you or I, even on a personal level, we don't want to put our money somewhere where our chance of, achieving our gains. Are basically eliminated. Here, you know, with artificial prices being negotiated air quotes, is, is exactly that circumstance. You have, you have a company that invests millions, if not billions of dollars more often. in their drug pipeline. And if you have a drug that is now subject to this negotiation at some point in the future, whether it be nine years for a small molecule or, at 13-year point for biologics, The government's going to put a price down and, and lock it there, irrespective of how much money it took to get there. And also more importantly, John, you know, there's irrespective of the technologies and cures and treatments that can be gained from that same drug after that 13- or 11-year point that are now no longer going to be obtained as far as a return on investment. So, this is just a, not a good idea broadly speaking, but if you're looking at investors and the incentives. You're basically cutting that incentive off at the, at the hip.

John Marshall, MD: Yeah, I do, you know, I, we've talked a little bit about. US versus ex US, because I do think a lot of drug development depends on the US investment, and the current structure of how things are going. I also have been a drug developer all my career, you know, I do know that. We don't win every one we go after, so there are many medicines that we do put significant investment in that in the end fail.

So, those are losses. So, on the one side, I was hoping that we could get more efficient, like not turn off drug development altogether, but be better at picking the winners. If you will and optimizing that. But I also thought this was an opportunity for regulators to look at, you know, this relationship of drug approvals, patent half-life, intellectual property, and all of this to think about ways of. incentivizing the investment that we are making so that if you do when you get changes in your, you know, your IP or your duration of your, your patent life or something like that. Do you think that sort of evolution could happen as a result of this?

John Newby: I think the way you describe what will be a commonsense way forward is exactly why it's not going to be done anytime soon. You can't reduce all that you said to a bumper sticker. You can't reduce all that you have just said to, we're going to cut drug prices.

John Marshall, MD: Right.

John Newby: So that's the problem. That's really an issue here. it is a very complicated system that the U.S. has to get drugs into the hands of patients, but it's the best in the world. And I think the world recognizes that. And indeed, the world benefits from what we do here in the U.S. Yes, I do think that all those things that you just mentioned should be done eventually to look at things holistically and get to a better place. but that's not really how it's being approached from a political, political will, if you will. So, we have to deal with each attempt from policy makers to help and try to ameliorate the hurt that they're actually doing in this new system.

John Marshall, MD: But, you know, the other side is, as an oncologist particularly, I do a lot of trial-and-error medicine, right? We try a drug or try a therapy, see if it works. It's not inexpensive. It has side effects. You know, I need to be more efficient too. And I think about the payer side of this. Right. So, there's the private payers and then there's the federal payers that are actually funding health care. That money's coming out of yours and my, you know, our pockets, whether whoever we work for our health insurance or taxes. And. That's to a side of this that I've always struggled with the inefficiency of what we do on the other side. So, and again, this is some sort of idealistic world. I've just painted. Of that there would be more recognition of the inefficiency on this side improved development on the other side to a place where we're actually, you know, spending less money for better outcomes.

John Newby: That's the desire. Let me, let me, also throw something else in there. Not only is it the fact, and you know, firsthand this john, that it takes a lot of money and effort to develop drugs. The chances of success are lower than low in many cases. add on to that the threat of the reduced investment in this space, which is what the IRA potentially could do. So, there was a recent survey that was conducted by PhRMA, by the large Pharmaceutical Research Manufacturers Association that we're all familiar with. 78 percent of the companies that they surveyed said they expect to cancel early-stage pipeline projects that no longer makes sense given the short timelines that are being established in the IRA for setting prices for small molecules, large molecules.

So not only at the outset, is it already hard enough to get a drug. successfully through the pipeline. Now I have now I have companies saying, okay, now we're going to take away project money to begin with, because it just doesn't make financial sense, given these artificial deadlines and price, restrictions are going to be put on the drugs.

So, we're getting it from all ends, both from the scientific end, which is already difficult enough. Now the funding ends and we need to change that funding piece and deal with the uncertainties of the science because it is science. but let's not hurt ourselves with cutting ourselves off from the funders with, with such a regime that we're talking about.

John Marshall, MD: And I think it is important for our audience. I know they know this, but you know, cancer, we've sliced and diced it into subgroups that molecular profiling makes smaller and smaller markets for drugs when we get them there. And so, when we talk about trimming the sales, in terms of reinvestment and development, those small markets are the ones that are going to be lost just at a time when in fact, we understand better how to treat the different subgroups. So, I'm anxious about that along with you. Let me ask you one, one last question.

So, what's going to happen next year?

John Newby: If I knew that I, I wouldn't be talking to you right now. we don't know. But you know, I wanted to make one more point, particularly when it comes to this audience and oncology experts and the IRA. So, the IRA does something else as well when it comes to orphan drugs. Most, many orphan drugs are obviously small molecule, targeting cancer, rare diseases, you know, those, those diseases affecting 200,000 or, or, or less, Americans. Currently it really, the IRA does, really hurts incentives for orphan drugs that are primarily for cancer. It only exempts from these price setting, this price setting regime, those orphan drugs that only treat one disease condition. Now that should absolutely make everyone's head spin in this community, right? Because we all know many orphan drugs that are approved in year seven, ultimately go on to be approved for 3, 4, 5, 6 more indications in seven years, eight years, 10 years in the out years. Currently the IRA cuts off that possibility because it says only orphan drugs that are indicated for one disease can be accepted from the price setting regime. Virginia bio and many other organizations, big bio pharma are advocating to change that provision. pretty soon. but that's just yet another example specifically how this impacts this community here, given the orphan drugs are really those small molecules that are at issue in your community.

So, we all need to kind of come together and encourage our policymakers to look at big picture. This is an education process. It's like anything else in our space. Many of the folks on Capitol Hill don't have direct experience in what you do every day. So, it takes time for education, and we have gotten on Capitol Hill and my counterparts across the states and our national organizations have. But it's a process. Who knows what this new administration is going to do? And how, how well they're going to receive, our positions based in science and fact. But all we can do is continue and with your support, get the word out and, and, and encourage our policymakers to do the right thing.

John Marshall, MD: God, let's leave it right there. I think that's a, we, it's a charge and a call to action for us all in the year ahead. This is John Newby. He's the CEO of the Virginia Biotech Association, who's taken some time this morning to share his thoughts on the IRA.

John, thank you so much for joining us.

John Newby: Thank you for having me.

John Marshall, MD: I promised you that a good interview. That was a great interview. We appreciate all of the insights he brings forward as we look forward to the year ahead and all of our both scientific but also financial challenges that we have ahead of us in health care. Nowhere is that brighter shining is the issue more critical than around cancer care, where our therapies are getting more and more effective, but they are also going up and up in cost, and we're going to have to figure out how we're going to manage those two opposing factors for more people to get access to these lifesaving therapies, new innovations, new cures for patients with cancer out there. Join me next time for oncology unscripted, where we'll continue to dissect the world of oncology and healthcare in general. And what you're going to see will surprise you join us

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This transcript has been edited for clarity.