Small-Molecule Drugs Offer Comparable Health Benefits To Biologics At Lower Costs.

The Inflation Reduction Act of 2022 requires that Medicare negotiate a Maximum Fair Price for selected small-molecule drugs nine years after their Food and Drug Administration (FDA) approval and thirteen years postapproval for selected biologics. The discrepancy between these time frames raises questions about the relative value of small-molecule drugs versus biologics. We compared the incremental quality-adjusted life-year (QALY) gains, incremental costs, and incremental cost-effectiveness ratios (ICERs) of small-molecule drugs and biologics approved by the FDA during the period 1999-2018. We used the Mann-Whitney U test (to compare medians) and Kolmogorov-Smirnov test (to compare the distributions). We found that small-molecule drugs and biologics offer similar magnitudes of incremental QALY gains (0.08 versus 0.10). Small-molecule drugs tend to be associated with lower additional costs ($4,738 versus $16,020) and more favorable cost-effectiveness ($108,314 per QALY versus $228,286 per QALY). Creating parity regarding time to Medicare price negotiation may be appropriate.