Nov 13, 2019

Nancy Pelosi's drug pricing bill threatens small biotech companies

Photo: Saul Loeb/AFP/Getty Images

Small biotechs are worried that House Speaker Nancy Pelosi's drug pricing bill would dry up the venture capital funding that they need to survive, STAT reports.

Why it matters: These companies turn basic research into new drugs, and conduct 70% of clinical trials, according to data from BIO.

Between the lines: Small biotechs often don't even have drugs on the market — they're still experimenting to find new treatments and cures, dependent on venture capital to fund their endeavors.

  • If investors no longer have the promise of high profit margins, they may abandon the biotech industry, venture capitalists told STAT.
  • "We could end up shooting ourselves in the foot," Andrew Lo, an economist at the Massachusetts Institute of Technology, told STAT. "These efforts, while they stem from very reasonable and laudable motivations, they will have an unintended consequence of creating a chill on funding."

The other side: While progressive experts admit that the bill would reduce biotech investment, they disagree on the extent and whether the changes would be all negative.

What we're watching: It's looking increasingly unlikely that Pelosi's bill will become law before the 2020 election, but most of the leading Democratic presidential candidates are running on similar ideas.

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Eleven biopharmaceutical companies have filed for bankruptcy so far in 2019, the most in a single year within the past decade, according to a new series from BioPharma Dive.

Why it matters: It’s rare for biotechs to go under because they have so much access to extra funding. But more firms have hit dead ends.

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What lower prices would mean for drug companies

Illustration: Eniola Odetunde/Axios

Drug pricing regulations would not decimate the pharmaceutical industry, according to an analysis from health policy researchers at West Health and Johns Hopkins.

Why it matters: This throws some cold water on Big Pharma's claims that new drug research and investments would evaporate if the federal government limits what they can charge for medications — the proposal du jour in Congress and the White House.

Go deeperArrowNov 15, 2019

2020 Democrats' new drug pricing bill

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Sens. Cory Booker, Bernie Sanders and Kamala Harris — who are all running for president in 2020 — are announcing legislation Friday that would create an independent agency to determine list prices of prescription drugs.

Why it matters: This is further mainstreaming of Democrats' leftward shift on drug prices.

Go deeperArrowNov 15, 2019