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Nancy Pelosi's drug pricing bill threatens small biotech companies

Speaker of the House Nancy Pelosi
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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