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wbjournal.com | January 8, 2024 | Worcester Business Journal 33 IRA's impact on medical innovation BY ARI FINE GLANTZ Special to WBJ T he debate over drug price negotiation policies, particularly those in the Inflation Reduction Act, has become the centerpiece of discussions about healthcare affordability, job creation, and innovation. Finding a balance between making lifesaving medications affordable while sustaining the incentives for innovation is critical. Policy must consider the entire drug supply chain and take steps to avoid unintended consequences that may stifle job growth, impede future breakthroughs, and impact treatment. At NEVCA, we aim to make New England the best place in the world to start, grow, and invest in com- panies. When it comes to the life sciences, it certainly is. However, government-mandated drug pric- ing policies included in the IRA, and efforts to expand those policies to the commercial sector, could prevent Mass. from remaining a national life science hub. e IRA's impacts on medical innovation are already being felt. e bill includes a small molecule penalty, which mandates small molecule drugs – like aspirins, and medications to treat high cholesterol and allergies – be- come eligible for government-mandated price negotia- tion nine years aer hitting the market. Meanwhile, more complex biologics become eligible for negotiation aer 13 years. is policy discourages investment in small-mole- cule medications, particularly when 50% of a drug's rev- enue is seen aer year nine. New proposals, such as the SMART Prices Act, would mandate all drugs be eligible for price negotiation aer only five years. Such a change would be devastating for biotechnology startups. According to research conducted by Vital Transforma- tion, expanding the IRA's government-mandated drug pricing policies would lead to nearly 230 fewer U.S. Food & Drug Administration approvals of new medicines or new uses over 10 years, impacts felt most heavily in oncology, neurology, and rare diseases. Another top concern about drug price negotiation pol- icies is their potential impact on jobs within these critical industries. Vital Transformation estimates the U.S. life sciences ecosystem could lose 66,800-135,900 direct jobs in the next decade. Massachusetts would take a signifi- cant hit, likely losing more than 78,000 jobs. e intent of this legislation is admirable, but Congress should assess the entire drug pipeline. For example, three of the biggest pharmacy benefit managers control rough- ly 77% of all U.S. prescription drug claims and pocketed more than $450 billion in revenue in 2020, up from $300 billion eight years ago. ere is ample opportunity to improve our drug pipe- line to ensure patients can affordably access the lifesaving medications they rely on while encouraging continued research and development of new treatments and cures. We can't sacrifice innovation by moving forward with these untested policies. Ari Fine Glantz is the executive director of the New England Venture Capital Association. New business growth remains a strength for Central Mass. Ari Fine Glantz L ast year held a lot of doom and gloom for the entrepreneurial ecosystem, particular- ly in Massachusetts. Silicon Valley Bank, which had significant business in the state, failed. e life sciences industry, once the darling of venture capitalists and economic develop- ment officials, is in the midst of a right-sizing, causing some pain. For the first three quarters of 2023, start- ups in the commonwealth raised $12.6 billion, down 26% from the same time period in 2022, according to the Boston Globe, which cited data from Pitchbook and the National Venture Capital Association. Central Massachusetts certainly hasn't been immune to these problems, particularly within the life sciences and tech industries. Yet, when looking at the much broader picture for entrepreneurs and new businesses in Worcester County and MetroWest, 2023 will turn out to be a positive year. Few small business founders will ever sit down with an angel investor or a venture capitalist. Most new business starts don't come from high-profile industries, with public offi- cials standing up to give long speeches about the jobs they are creating. Instead, these entrepreneurs are largely starting small businesses, choosing to take a risk and hang a shingle by opening cleaning compa- nies, restaurants, construction firms, transportation services, and other non-headling-grabbing sectors. Small businesses comprise the overwhelming ma- jority of the Central Massachusetts companies, and in 2023, they were started in record numbers. Coming out of the initial phase of the coronavirus pandemic in 2021, new business starts in Central Massachusetts, the state, and the nation were on a tear. at year Central Massachusetts saw a 15% rise in new incorporations while the state as a whole had a 10% increase, according to a WBJ analysis of Mas- sachusetts Secretary of the Commonwealth corporate filings data. e next year, the state took a step back, with a 3% drop in new businesses in 2022, while Cen- tral Massachusetts posted a 1.5% increase for the year. Now, the data shows for the first 11 months of 2023, Central Massachusetts is on track for 5.6% growth in new business starts for the year, again out- pacing the state, which is returning to a growth rate of 2.9% for that same period. Some of these companies undoubtedly will fail. Others may have been started by professionals who are in-between salaried jobs and looking to generate some revenue, or fulfill a lifelong dream. Others still may never grow beyond being sole proprietorships or having only a handful of employees. Yet, the cumu- lative effect of all these new business startups is an economy growing larger and more dynamic, led by a small army of entrepreneurs who are making a bet on themselves. e numbers show Central Massa- chusetts continues to expand its economic players at a more rapid rate than the rest of the state – a positive sign for the region for years to come. W W The above Editorial is the opinion of the WBJ Editorial Board. The Viewpoint column, the A Thousand Words cartoon, and the Word from the Web commentary represent the opinions of their authors and do not necessarily reflect the views of WBJ or its staff. WBJ welcomes letters to the editor and commentary submissions. Send them to bkane@wbjournal.com.