As the Senate continues to talk about drug pricing let's think about biotechs, too

As the Senate continues to talk about drug pricing let's think about biotechs, too
© Getty Images

The U.S. Senate Committee on Health, Education, Labor, and Pensions (HELP), led by Chairman Lamar AlexanderAndrew (Lamar) Lamar AlexanderOvernight Health Care: What to expect in omnibus | HIV expert to head CDC | Sessions issues memo on death penalty for drug cases HIV expert named CDC director GOP lawmakers blast Dems for opposing ObamaCare fix MORE (R-Tenn.) and Ranking Democrat Patty MurrayPatricia (Patty) Lynn MurraySpending bill would double child care funding for low-income families Funding bill gives billion boost for NIH medical research Spending bill prevents employers from pocketing tips under tip-pooling rule MORE (D-Wash.) recently held a hearing on Capitol Hill on the enormously important issue of drug pricing.

It was the second in a series of Senate hearings expected on the topic. What stood out to me was the seriousness of the hearing; the substantive dialogue and thought-provoking debate.

In this heated political atmosphere, I say hats off to the members of the Senate HELP committee. Over the past few years, the topic of drug pricing has become a mouthwatering partisan and political topic and, as such, those of us leading small biotech companies watch politicians making recommendations, on policies that will influence the development of new treatments and potential cures for deadly diseases, in a solely political campaign context.


As co-founder of a development-stage biotech company, it’s unnerving.

And so, it was a breath of fresh air this week to see the topic being debated in a more serious fashion, in a formal Senate hearing setting, with our elected officials debating the finer points of drug pricing.

As the Senate continues to walk down this drug pricing avenue, I’d ask senators to specifically keep the small biotechs in mind as the companies who are leading the way in developing innovative life-enhancing and life-saving drugs, therapies, and treatments.

Off the record, Big Pharma will tell you that the cure for most of the major diseases, including cancer, is likely to come from the ranks of the small biotechs.

Thanks to biotech scientists, investors, and business leaders, there are now hundreds of life sciences health care products and vaccines available to patients; many for previously untreatable diseases.

Because of a mix of government policies and economic market factors, many of these drugs do end up being expensive — and world-changing drugs coming out in the next five to ten years will also be expensive.

This is not a question of greed.

Development stage drug companies do not have a capital generating product or make an annual profit.

It comes down to two factors; length of the regulatory approval process from formula to market, which is estimated to be around ten years, and basic economics, and the risk capital from investors willing to stick with the development of a particular drug for ten years against the backdrop of a constantly changing scientific and competitive landscape.

In a polarized political era, it is easy to point to the few companies whose leaders have made some very unfortunate decisions in the pricing a drug, and who have received an enormous amount of negative PR, and say ‘ah-ha’! But those are the exceptions and not the rule; and having an expensive drug should not automatically throw a company into that particular light.

Small biotechs, which survive on risk capital, are in a unique category. There is a fine balance that small biotechs must follow precisely to manage the maze of regulatory hurdles and secure the necessary investor funding to keep the company — and potential treatment — afloat to finally get a drug from research to market.

The government can assist biotech innovators in three ways; working to streamline the FDA approval process, proposing tax and spending policies which encourage investment in medical technology, and making sure that patents stay iron-clad so that investors know that their investments are protected.

The firm I co-founded is a quintessential small biotech company that would be positively affected by efforts by the FDA to streamline the approval process. Since many companies like ours depend on investors to provide the millions of dollars that keep us moving forward, when we get our first drug approved, we will not be able to sell the treatment for less than what the market and business variables determine. As such, reducing the cost of said approval process would likely reduce the overall treatment cost to the patient.

At an early stage, many companies don’t know what a drug would cost an individual, but it could be expensive. And so, what is more important — that life saving drugs be invented to cure patients, but be expensive due to the government and economic process, or that the remedy never be invented at all?

If that sounds like a no-win situation, that’s because it is.

As is the case with most products, competition and public opinion will eventually influence drug prices.

Many of us stand ready to be a positive practical resource to Congress, the National Institutes of Health, and the FDA as they consider a quicker approval process, without sacrificing safety, to bring needed life-saving drugs to patients world-wide.

Drug pricing is a very important issue to debate in a sincere and considered context; and so, we ask our elected leaders to always remember innovative small biotechs when debating these critical public policy issues of the day.

Jeffrey Bacha is president and chief operating officer of DelMar Pharmaceuticals, a company focused on fighting cancers like GBM, ovarian and other solid tumors. Bacha serves on the National Brain Tumor Society (NBTS) Research Roundtable, and will be presenting during a meeting next week on Improving Early Phase Clinical Trials to Accelerate Brain Tumor Drug Development. 

The views expressed by contributors are their own and not the views of The Hill