Libertarian ideas on FDA deregulation threaten biotech; It's time for some real power to reform drug prices, reasonably
Do you sincerely want to deregulate drug development?
Silicon Valley’s Balaji Srinivasan had quite a habit of tackling the FDA on Twitter, criticizing the agency for its slow and backward ways. But all that came back to haunt him after reporters picked up on the news that he and fellow ‘seasteader’ Jim O’Neill had been in to chat with Donald Trump about top jobs at the FDA. Suddenly, that Twitter channel vanished into thin air, as we reported first. But his Tweets were saved, and live on, even as we hear that Srinivasan may not be in line for that job any more. Trump’s final pick to run the FDA will have a huge influence on how the agency plans to speed drug development. And we have a right and a need to suss things out for ourselves. So far, this episode ranks as another reason to suspect that the FDA may soon be headed for a wrong turn, especially if the new focus is on a substantial deregulation of drug development born out of a disgust for the bureaucracy.
Medicare price negotiations can benefit biopharma too.
Speaking of Trump, our new president got the chance to clarify his thinking regarding drug prices in a weekend interview with The Washington Post. As we suspected, his main weapon in the war against list prices will be Medicare negotiations — now banned by industry-friendly lawmakers. The industry desperately doesn’t want to see this, but in reality it makes for an effective way to get actual discount prices on display for all to see. The American public has a right to see what’s actually being paid for therapeutics, and this is one way to set a baseline discount price that is readily transparent. The free ride on ever-rising drug prices is over, and we all know it. The sooner this happens, the better for everyone. If a price can’t survive the light of day, it’s too high. In the meantime, the industry can move more toward a performance-based pricing method.
Mallinckrodt joins the price gouging club, and gets away with “murder.”
One of the reasons why drug prices are so controversial is that the federal government is virtually helpless when it comes to preventing a company from jacking up prices astronomically overnight. Questcor proved that more than three years ago, when it brazenly bought a rival to Acthar to prevent competition. And Mallinckrodt bought in to that rigged game by buying Questcor. This week, Mallinckrodt was cited for illegally blocking competition, but got away with only a $100 million fine. The company paid for that with the increased revenue it earned on Acthar in just 2015, as its price continued to soar. This is what Trump means when he says pharma is getting away with murder. It may take years for a rival to get approved and on the market. And Mallinckrodt is still free to jack prices. This has to end with some kind of effective legal mechanism to prevent abuses. Your next Martin Shkreli or Mallinckrodt is sitting just around the corner. And the longer we wait, the more likely it is that reform will overzealously damage the way innovation is financed in biopharma.
Our latest lists on venture cash underscore solid fundamentals for biotech. Let’s not screw it up now.
Biotech is dependent on the flow of billions of dollars in venture cash. And we love nothing quite as much as tracking where the money is coming from as well as what regions it is going to. Always enormously popular with readers, this year’s stories paint a simple tale of the dominant role played by two crucial hubs — Boston/Cambridge and the Bay Area — as well as a group of savvy investors who are instrumental in fostering and funding new innovation in drug development. That machine has been humming along nicely now for several years, pointing to the fact that the fundamentals in private biotech are strong and durable. That bodes well for the years ahead, as major reforms are being planned, which we should all appreciate. Reformers might like to keep that in mind.