Models attempting to quantify the relationship between drug development and financial return are missing a key element: the effect on post-approval research

Changes in biopharmaceutical policy, specifically the Inflation Reduction Act (IRA), introduced administrative drug price setting in the U.S., prompting questions about the impact on drug development of this and future policies under consideration. Existing models used to inform policymakers, such as those from the Congressional Budget Office (CBO), attempted to quantify the relationship between investment and financial return but overlooked the effect on post-approval research. This research, essential for expanding drug indications and demonstrating efficacy in new populations, is often pursued years after initial approval, at the time when IRA price controls take effect. As a result, the expected financial return from secondary indications is diminished, potentially discouraging investment in post-market studies. This commentary emphasizes the importance of models that incorporate the impact of policy on both new and post-approval drug development. Without such analysis, policymakers risk underestimating the broader consequences. Given the significant role post-approval research plays in improving health outcomes, particularly for chronic disease, its exclusion from policy impact models is a notable gap. We urge the research community to generate evidence that informs more comprehensive modeling, ensuring that future policy decisions support investment in the entire lifecycle of drug development.