Good Day BIO: Price controls will harm the economy – here's why
August 2, 2022
Drug price controls would not only kill future cures—but would also harm the economy, several new studies say. Plus, the pandemic might have curbed greenhouse gas emissions (for a time), but it led to a resurgence of the plastic problem. Enter biotech, which is…
The only newsletter at the intersection of biotech, politics, and policy
August 2, 2022
Drug price controls would not only kill future cures—but would also harm the economy, several new studies say. Plus, the pandemic might have curbed greenhouse gas emissions (for a time), but it led to a resurgence of the plastic problem. Enter biotech, which is developing sustainable alternatives to single-use plastic. (753 words, 3 minutes, 45 seconds)
Cure-killing Senate drug plan would also harm economy
Along with killing new cures, the Senate’s plan for drug price controls will take a bite out of America’s thriving bioeconomy, recent reports show.
Why we’re talking about it: Proposed legislation, eyed for a Senate vote this week, would enact price controls on drugs for which Medicare spends the most each year. The bill would regulate 20 drugs annually by 2029, and 45% of the drugs covered under Medicare Part B and D are likely to be included in the 100 drugs regulated between 2026-2031, an Avalere analysis says.
This would harm the economy—eliminating 592,290 jobs (with an economic impact of $168 billion) by 2031 and reducing drug manufacturer revenue by at least $455 billion by 2032, finds a Vital Transformation analysis published last week (and funded by BIO).
In California alone, we’d lose 111,415 jobs supported by biopharma, with the state economy shrinking $33 billion by 2031, says the study.
Why? Drug makers’ revenues will drop by a projected $450 billion in 2026-2032 under the plan, according to an Avalere analysis. This proposal will affect “pricing and contracting strategies, competitive market dynamics, and patient access,” another Avalere analysis says.
And lost revenue = lost drugs,as we’ve noted. Of 110 drugs approved in 2012-2021, only six would have made it to market under the Senate plan, as only drugs with 50% probability of market entry would be developed, finds Vital Transformation.
And the industry might leave: “The Biopharma sector will likely be forced to seek out marketing opportunities and developments in China, where VC is currently investing heavily in biopharma startups,” says Vital Transformation.
COVID curbed plastic progress – but biotech battles back
While the pandemic reduced human activity and emissions for a period of time, it also reversed an environmentally friendly trend of cutting plastic consumption, says a book published last week. Enter bioplastics.
But then: COVID-19 encouraged the use of items like N95 masks, take-out containers, and single-use bags, with plastic promoted as hygienic.
It’s tough to kick the plastic habit,says Mah: “People are locked into supply chains and infrastructures, unable to simply opt out of plastic consumption,” and plastics are essential to everything from sustainable transportation to medical equipment.
Enter biotech—which is providing sustainable alternatives to traditional plastic made from fossil fuels.
A few examples:
Bio-BDO is a green alternative to butanediol (BDO), which is traditionally produced with fossil fuels and used in the production of plastics, fibers, and solvents.
Bio-HMDA, made from sustainable feedstocks by BIO member Geno (formerly Genomatica), can replace fossil-fuel-based HMDA to make nylon, coatings, and adhesives.
Virent makes“drop-in” plastics that are biodegradable or compostable out of recycled carbon or crop waste.
Food packing is being made from wheat straw and mango peels.
LanzaTech is capturing carbon from industrial emissions and fermenting it into a sustainable raw material that lululemon is using to make athletic wear.
“There are no easy solutions to such a complex problem,” writes Mah. “However, we can stop the plastics crisis from spiraling even further out of control.”
Biotech is already helping.
More Agriculture and Environment News:
The New York Times: The future of food “‘[P]recision fermentation’ is helping food scientists grow ingredients found in animal products without the need for a traditional farm. Instead, the scientists isolate the specific ingredients, then multiply their cells in brewery-style tanks. The result? Animal-free eggs, milk and meat that are biologically similar to animal products.”
BIO Beltway Report
President Biden’s Tuesday: Virtually attending the signing of Michigan Gov. Gretchen Whitmer’s Executive Directive to implement the CHIPS and Science Act of 2022. Whitmer is looking to use the act to attract industry, Bloomberg says. Meanwhile, the White House has named Robert J. Fenton Jr., a regional administrator for the Federal Emergency Management Agency (FEMA), as the monkeypox response coordinator, reports The Washington Post.
What’s Happening on Capitol Hill: Senate Majority Leader Chuck Schumer (D-NY) is seeking a vote this week on the climate and tax legislation that includes the proposed drug price controls. Senate Democrats are “awaiting a ruling” from the parliamentarian on whether they can pass the bill with a simple majority, per Reuters.
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