Good Day BIO: EU and Japan show how drug price controls stifle biotech
August 3, 2022
With Senate Democrats scrambling to pass drug price controls before the recess, we look at the experiences of the EU and Japan with price controls and the impact on innovation. ICYMI, monkeypox cases are rising—we look at the current state and what it tells us about…
The only newsletter at the intersection of biotech, politics, and policy
August 3, 2022
With Senate Democrats scrambling to pass drug price controls before the recess, we look at the experiences of the EU and Japan with price controls and the impact on innovation. ICYMI, monkeypox cases are rising—we look at the current state and what it tells us about future preparedness. (829 words, 4 minutes, 8 seconds)
EU and Japan show how drug price controls stifle biotech
With the Senate pushing forward on drug price controls this week, we take a look at the experiences of the EU and Japan, which show how quickly price controls would stifle biotech investment, innovation, and competitiveness.
Why we’re talking about this: Senate Democrats are pushing proposed legislation that would enact price controls on as many as 100 drugs by 2031. With a few days until August recess, Sen. Majority Leader Chuck Schumer is “‘working with all the caucus’ to get buy-in from all 50 members to get the budget reconciliation bill to the floor later this week,” per The Hill.
Price controls hit startups hard: “For every 10% difference in pricing between the EU and the U.S., we see a 9% change in the number of biotech startups,” says a new report from Vital Transformation. “By 2019, EU late-stage VC (venture capital) was just 3% of U.S. late-stage VC.”
Europe lost its biotech leadership after price controls—and now, 60% of all therapies originate in the United States, according to the study (which, we should note, was funded by BIO).
Japan’s story is similar: Price controls were introduced in the 1980s-90s, and “from 1995 to 2018, Japan’s share of global value added in the pharmaceutical industry declined by 70%, from 18.5% to 5.5%,” says an in-depth analysis by ITIF.
“Japan’s experience shows a nation’s leadership in advanced-technology industries is never guaranteed or assured and should serve as warning for U.S. policymakers considering implementing drug price controls,” says the analysis.
Meanwhile, China’s gaining ground: “In 2021, Asia (primarily China) had 93 venture backed start-ups,” about the same as the United States, says Vital Transformation. Price controls mean “VC will move to markets where they obtain a reliable ROI,” hastening “transition to China for innovative biopharma.”
The San Jose Mercury News (Opinion): A cornerstone of modern medicine is on the brink of collapse “In the past 35 years, the FDA has approved just one antibacterial drug with a novel way to kill target pathogens. This slowdown in antibacterial innovation is in stark contrast to new superbugs that are increasingly resistant to today’s therapies. Absent a global effort to develop more new and novel antibiotics, antimicrobial resistance could undo much of modern medicine as we know it,” writes BIO’s Dr. Michelle McMurry-Heath.
Drug Channels (Opinion): The Shady Business of Specialty Carve-Outs “Here’s the game: A commercial plan eliminates coverage for all specialty drugs. Beneficiaries are then shunted over to a charitable foundation, because they are now disguised as uninsured—at least for specialty drugs. Naturally, the vendor skims a healthy share of the charity’s money,” writes Drug Channels Institute’s Dr. Adam J. Fein.
But: “with cases in the United States doubling every week or so, some health experts warn a shortfall of vaccine doses could threaten the nation’s ability to contain the expanding outbreak and prevent the virus from becoming permanently entrenched,” says The Washington Post.
We were warned: “The fear is there’s a very small window to interrupt transmission like this, that appears to be sustained, and I don’t see the response moving fast enough to interrupt that,” Phillip Gomez, CEO of SIGA Technologies, Inc., which makes a monkeypox antiviral, said in an interview with Bio.News.
What’s Happening on Capitol Hill: Democrats are still scrambling to bring their “Inflation Reduction Act,” which includes drug price controls, to the Senate floor this week, The Washington Post says. Last night, Sen. Thom Tillis (R-NC) introduced S.4734, the Patent Eligibility Restoration Act, which is an important first step in bringing much-needed and overdue clarity to Section 101 of the Patent Act. With Europe and China providing patents to cutting-edge science that is not eligible for protection in the U.S., this law will help the U.S. keep pace with the science and ultimately maintain its global leadership in the sciences. BIO applauds Sen. Tillis for working with diverse stakeholders to develop the legislation and begin the process—read BIO’s letter to him.
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