PROTECTING SMALL BUSINESS, PROMOTING ENTREPRENEURSHIP

KERRIGAN IN TOWNHALL: Small Business and Small Molecule Drugs Take a Big Hit in Investment

By at 25 January, 2024, 4:01 pm

In a January 24 Townhall Op-Ed, SBE Council president & CEO Karen Kerrigan writes that President Biden is undermining his Cancer Moonshot Initiative – announced with great fanfare recently, along with a commitment of $300 million in taxpayer dollars – through “the damage currently being inflicted on private-sector investment in pharmaceutical research as a result of the Inflation Reduction Act (IRA).” The IRA provides the federal government with price-control setting powers over some drugs it purchases for Medicare. As Kerrigan notes in the piece:

Small molecule drugs, typically pills or tablets, receive just nine years of exemption after FDA approval before price controls can kick in. Biologics – drugs typically administered by IV or injection in a clinical setting – receive four additional years. 

That discrepancy threatens to gut an entire class of new cancer medications – and the many innovative firms and small businesses at the forefront of developing them.

It cost a lot of money and patience to bring a drug to market. Less than 10% of new drugs entering clinical trials ever make it to market, and countless more candidates never even make it to trials. As Kerrigan notes:

Investors need to know that when a drug they back succeeds it will not only make a return on its own development costs, but also cover the cost of the inevitable failures.

Price controls not only hurt investment in new drugs, which ultimately harms health consumers and cancer patients, but the small innovative firms that dominate the bio-pharmaceutical sector:

Small molecule drugs represent around 90% of all drugs on the market and accounted for more than 75% of all FDA approvals between 2010 and 2020. Small and mid-size biotechs, meanwhile, are responsible for over 75% of drugs currently in development. For many smaller biotechs, research into small molecules makes up their entire portfolio…Nearly half of all oncology drugs originated in small biotechs throughout the 2010s. The 2020s should be building on that record. 

These firms count on capital and investors to bring their life-saving innovations to patients, and Congress needs to fix this by extending the price-control exemption period for small molecules to match the 13 years for biologics, Kerrigan writes, or better still, get rid of price controls altogether.

Read the Op-Ed in its entirety here.

 

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