With the U.S. election in the rearview mirror, we have arrived at a defining moment for the future of medical innovation.
Decisions your administration makes during your term will either yield dividends for patients in the years to come—or will choke off some future treatments at the knees. To put it frankly, misguided policies will cost lives.
I urge you to waste no time in addressing these three policies once your term begins:
1) Incentivize the risk-takers with strong patents
It is no secret that the biopharma industry is filled with failure. Nine out of ten drug candidates that start clinical trials are destined to fail due to concerns about safety, efficacy, or both.
In this fragile ecosystem, just ten percent of investigational therapies eventually become the cures and treatments on which millions of people depend. This engine of this ecosystem is the risk-takers who invest capital into novel platforms and potential therapies, which are of course protected by patents.
But a proposed framework of the Biden administration would allow federal officials to consider drug prices when determining if they will “march in” to seize patents from a company. While proponents claim this would help lower prices, in reality it would simply chill innovation. This proposal should be revoked by your administration.
Drugs typically cost $2 billion and 14 years to develop. We believe that America’s IP system is fair: an exclusive marketing period for a drug, so that developers can recoup the steep costs of their innovation, followed by generic competition. This leads to lower-cost alternatives for patients while still incentivizing new products to be developed.
The U.S. delivers more treatment options and lower-cost alternatives than anywhere else because our system encourages public-private partnerships and risk-taking that turns ideas into medicines. As reported in STAT News by Eli Lilly’s chief scientist, “Today, 90% of all prescriptions written are for generics, which have reduced patients’ costs for specific drugs by 39% to 95%. Generic competition is the most effective tool we have to drive patient affordability.”
And for those of us on the investor side, the seizing and forfeiture of patents is a death knell. In venture capital, we are particularly accustomed to taking big risks, knowing that many of our bets will fail. But if investors believe that patents are at risk, they will flee, and entrepreneurs will be unable to raise capital to translate their science into commercial medicines.
“The mere threat of having to contend with march-in petitions would introduce a new element of uncertainty into biotech companies’ investment decisions,” wrote The Council for Affordable Health Coverage. “The framework fails to provide any specific criteria for officials to use in determining “reasonable” pricing. This ambiguity of scale and scope would further decrease investor confidence.”
Ultimately, it’s patients who will lose.
We have just been living through a “biotech winter” in terms of financing available for startups. Now, we are finally seeing signs of life again, which is good news for everyone. Do not imperil this delicate comeback by threatening our lifeblood and spooking the sector.
2) Fix the IRA “Pill Penalty”
The IRA penalizes small molecules, a mainstay of the medical arsenal. These drugs can target extracellular and intercellular components to regulate cell function and are generally cheap and easy to synthesize. Small molecule drugs make up 90 percent of all approved medicines, including aspirin, insulin, and antihistamines.
Yet the IRA now allows small molecule drugs to have their prices “negotiated” by the government, which essentially means having their price set, after only nine years on the market. Biologic drugs, on the other hand, which are drugs made from a living organism that are used to treat diseases like cancer and arthritis, are subject to price controls after 13 years.
This disparity punishes the makers of small molecule drugs and disincentivizes research into new small molecules, to the detriment of patients. One example is pain medicine. In light of the opioid crisis, it’s critical to develop alternative and effective pain relievers, which “generally must be small molecules, a key attribute that helps the therapies cross the blood-brain barrier to access the nervous system,” writes BioNews.
The IRA policies intend to try to lower drug prices for patients, but the pill penalty will result in fewer small molecule drugs. Pfizer, for example, has already indicated that they will reduce the number of small molecules in their cancer portfolio from the current 94% to 35% by 2030, because of the IRA.
The U.S. should not risk limiting future treatment options with misguided policies.
3) Pass the Pasteur Act
Antimicrobial resistance is a serious threat to humanity. The World Health Organization estimates the drug-resistant bacteria directly caused 1.27 million deaths globally in 2019 and contributed to 4.95 million deaths. The antibiotics we have in our arsenal to fight these infections become less potent over time as they gain resistance. But instead of the pharmaceutical industry working to innovate and develop new antibiotics, most large companies have abandoned this space. That’s because our policy paradigm fails to incentivize them.
Traditionally, drugs are paid by volume used, but antibiotics are a special category. We shouldn’t use more than we need, and that is typically for a short-term period of days or weeks. Thus, it’s very challenging for developers to recoup the costs of their investment into new antibiotics.
A subscription model to new antibiotics, as proposed by the Pasteur Act, would fix this broken paradigm. Contracts with the government would be “determined by evidence-based preferred drug characteristics” and range from $750 million to $3 billion. They would be “paid out over a period of up to 10 years or through the length of patent exclusivity. In return, patients covered by federal insurance programs will receive these drugs at no cost,” according to a writeup published jointly by Democrat and Republican senators. In other words, developers would be paid for their innovative new medicines, regardless of their volume used. This would bring back research and development that is sorely needed.
The Pasteur Act has bipartisan support, but it’s been stalled in Congress for several years. In that time, it’s estimated that more than 64,000 Americans have died from an infection resistant to treatment.
It’s time to pass this critical piece of legislation, as well as strengthen patent protections and fix the IRA. The right policies will give all Americans the best chance of having the right medicine when they need it most.
Thank you to Kira Peikoff for additional research on this article.