Biden-Sanders “Unity Plan” and the Threat to Small Business Innovation

By at 16 July, 2020, 1:38 pm

By Karen Kerrigan-

As SBE Council has noted time and again in its research, speeches, congressional testimony, letters to Congress, blog posts, media releases and other public statements, small businesses and entrepreneurs drive innovation in America. That certainly is the case within the bio-pharmaceutical industry. Policies need to encourage investment and innovation, not squash these in their tracks. Joe Biden’s “unity platform,” which was developed with Senator Bernie Sanders (D-VT), threatens the type of positive activity America desperately needs right now and would deeply damage our leadership in the bio-pharmaceutical sector.

The platform’s recommendations propose a variety of policies that will undermine innovation and therefore the health of consumers, as well as policies that would severely hurt small bio-pharmaceutical companies and their ability to bring life-saving drugs to market. This list of bad ideas advances a government command-and-control framework, which would negatively disrupt U.S. leadership in the critical drug industry. These misguided policies include price controls, importing price controls from other nations, and weakening patents, among other heavy-handed approaches.

Protecting property rights – and in this case intellectual property (IP) – is central to innovation, entrepreneurship and economic freedom. Restricting or weakening IP rights and protections are socialist principles that put government in control of innovation. In the end, this would result in little (if any) innovative activity. Entrepreneurs need incentives – like IP protection – to produce the next wave of life-saving drugs or treatments. Protections helps entrepreneurs raise capital – and an extraordinary level is needed for drug development – to execute on all the complex steps required to bring a drug to market.  Co-sharing of IP with the federal government would dramatically reduce innovative outcomes, and bury ideas in red tape and bureaucracy.

Importing price controls from other nations has the same effect of instilling price controls domestically.  Whether our government pegs the price of U.S. drugs to those in other countries, allows for the importation of drugs, or simply sets a price by pulling a number out of the sky or by establishing a price ceiling, these policy approaches will all yield the same result: the rationing of drugs and much less innovation. The approaches will not lower the price of drugs. Again, small bio-pharmaceutical companies would be the most hurt through these intrusive government actions.

Consider the following (2017 latest data from the U.S. Census Bureau) regarding the dominant role small businesses play in the drug industry:

Size of Firms by Number of Employees

      Percent of Total Employer Firms in Pharmaceutical and Medicine Manufacturing Sector

Less than 10


Less than 20


Less than 100


Less than 500


Instead of imposing harsh restrictions on the bio-pharmaceutical industry, federal policies need to strengthen this sector and its entrepreneurs by encouraging more investment and innovation. Such policies measures include:

● allowing for permanent, full expensing for all capital investments (including non-residential structures or manufacturing facilities);

● rolling back useless and costly regulations;

● accelerating governmental approvals for manufacturing facilities;

● boosting incentives for investing in high-risk ventures like in the pharmaceuticals industry by either eliminating the capital gains tax, or by reducing the rate to 10 percent and indexing gains for inflation;

● doing more, both domestically and globally, to protect and strengthen IP;

● and, advancing trade and trade agreements, including the reduction and elimination of tariffs and quotas, and the enhancement of property rights.

Innovation and America’s small businesses in the bio-pharmaceutical industry – not to mention health care consumers – all benefit from less restrictions and more incentives to sustain and accelerate U.S. global leadership in this critical sector. Erecting new costs and barriers through price controls, price setting and weakening IP will only serve to erode U.S. competitiveness and slow the development of new and life-saving drugs that are needed now, and in the future.

Karen Kerrigan is president & CEO of the Small Business & Entrepreneurship Council


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