Letter to Senate HELP Committee: Comments on “Reasonable Pricing” and Draft Legislation to Reauthorize PAHPA

By SBE Council at 8 July, 2023, 9:05 am

Dear Senate HELP Committee:

On behalf of the Small Business & Entrepreneurship Council (SBE Council) – an advocacy, research and research organization dedicated to protecting small businesses and promoting entrepreneurship – thank you for the opportunity to provide input on the new draft legislation to reauthorize the Pandemic and All-Hazards Preparedness Act (PAHPA).

As an organization that has worked for nearly 30 years on policies to promote strong startup activity and to ensure a healthy investment climate for startups and new market entrants  – responsible for driving the lion’s share of innovation, competition and choices in the U.S. economy – we are gravely concerned about the draft’s “reasonable pricing” language that would require companies to sell BARDA and CDC-supported products “at a reasonable price” and at the lowest price among G7 countries.

This proposal will wreak havoc on the small businesses and entrepreneurs who drive innovation in the biopharmaceutical industry, and as a result, negatively impact the economy and the health of patients.

First, by eliminating U.S. companies’ authority to set their own price on CDC and BARDA-funded products, the draft legislation would limit small firms’ returns, threatening their potential for innovation and growth, and their very existence. Over 60% of pharmaceutical companies have less than 20 employees and 80% have fewer than 100 workers.^[1] Many of these small firms will need to close shop or reduce their workforce to stay afloat should this new pricing requirement take effect.

Second, by diminishing the remaining firms’ resources for future investment and eliminating the incentive to license CDC and BARDA-funded research, the draft language will stunt the development of new, life-changing products across every economic sector. The devastating impact this would have on American consumers and patients, and U.S. leadership in drug development and innovation cannot be overstated.

SBE Council urges the Senate HELP Committee to remove the suggested “reasonable pricing” language from the PAHPA reauthorization bill. America’s entrepreneurs and innovative companies count on sound policy to develop and bring new drugs and treatments to market, and the “reasonable pricing” language threatens their work and the health of our nation.

Sincerely,

Karen Kerrigan, President & CEO

^[1] https://sbecouncil.org/2023/06/29/new-studies-the-dangerous-high-costs-of-inflation-reduction-act-price-controls/