Investors warn Pelosi’s drug price bill could dry up funding for small biotech companies
Private equity firms are balking at Speaker Nancy Pelosi’s (Calif.) drug bill, which could be voted on in the House as early as next week.
Back in October, several venture capitalists met with Pelosi’s staff and a group of moderate House and Senate Democrats to voice their concerns, CNBC reports. The day after their meeting, the group of investors published a letter in which they argued that Pelosi’s bill would “lead to an immediate decrease in capital available for early-stage life science companies.”
According to BIO, the biotech industry’s main trade group, 7 out of 10 clinical trials for new medications are conducted by small biotech start-ups. To do these trials, the start-ups often rely on funding from private investors.
Pelosi’s bill would allow for the government to arbitrate lower prices on the costliest drugs each year, which many fear will push investors away.
The Congressional Budget Office (CBO), which operates as a nonpartisan referee of sorts, said the plan would lead to a reduction of eight to 15 new drugs coming to the market from 2020-2029. Currently, about 30 new drugs are annually approved by the Food & Drug Administration.
Industry trade group PhRMA says that Pelosi’s plan would result in 56 fewer medications, with the White House claiming it would produce 100 fewer medications, CNBC reports.
However, the CBO has also estimated that Pelosi’s bill would save the government $456 billion over the next decade and would reduce the deficit by $5 billion.
Senate Majority Leader Mitch McConnell (Ky.) has vowed to hold the bill up if it reaches the Senate.
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