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Price Controls Would Stifle Biotech Innovation

Scott Gottlieb, M.D.
 

Victoria Gray of Mississippi recently became the first U.S. patient with a genetic disorder to be treated using the Crispr gene-editing technique. Doctors used a novel drug to overwrite the function of a faulty gene that gave rise to her sickle-cell disease. Advances in life science can define this century, but policy makers must resist the urge to adopt policies that impose price controls and punish drugmakers for taking risks.

The convergence of information technology and biology allows scientists to translate the human genome into digital data that can accelerate diagnoses and cures. Over the next decade, it is a near certainty that we will have gene-therapy cures for deadly inherited disorders such as muscular dystrophy. Cell-based and regenerative medicine can restore human functions lost to disease, including returning some sight to the blind. Gene editing will be used to alter DNA to erase the origins of a range of debilitating inherited disorders.

These are only some of the opportunities at hand. Yet bad policies could sap the risk-taking that brings forth the most important innovations. For instance, the Lower Drug Costs Now Act would expose the 250 costliest drugs to government price controls. The high-cost drugs lawmakers target are often the most innovative and potentially transformative new medications. This week the House will vote on the legislation, known as H.R. 3.

The price-control approach would increase uncertainty and reduce returns from biotech investment, raising the cost of capital for these invaluable endeavors. It would alter incentives and shift money from the most speculative but highest-value science, including regenerative medicine and gene editing. Money would flow instead to known disease areas and well-characterized targets, using proven approaches such as pill-form drugs.

New and high-risk drug platforms like gene therapies are often targeted first to treat rare and serious conditions; after they are proven to work safely, they will be used to treat more-common maladies, such as heart disease. This is how medicine advances. But if investors knew their returns would be capped, they would direct their investments toward safer projects with lesser payoffs. We would still get new drugs, but the treatments would be very different.

Fifteen years ago, the standard refrain from drug-industry critics was that all the big drugmakers did was develop “me too” medicines—the seventh version of a blood-pressure pill or a cholesterol-lowering statin. In response, the federal government took steps, some of which shaped Medicare Part D, to encourage investment in “specialty” drugs that were more novel.

Since then, investment capital has shifted sharply. Cancer and rare diseases receive substantially more attention and resources. The number of cell, gene and nucleotide therapies in development has more than doubled over the past three years, while total investment in cell and gene therapies eclipsed $13 billion last year.

The Food and Drug Administration approved four gene therapies in only the past three years, with 800 similar kinds of products in various stages of development. An assessment of the current pipeline and historical rates of success in clinical trials suggests that by 2025 the FDA will be approving 10 to 20 gene-therapy drugs a year. Progress is especially strong in oncology. The number of cancer drugs in development has quadrupled since 1996.

These specialty drugs often aren’t cheap. They target narrow conditions for which the cost of risk-taking and drug development is amortized over a smaller number of eligible patients. Highly novel drug platforms can also cost more initially to perfect. Based on my informal survey of companies, enrolling a single patient in a clinical trial for a gene-altering drug often costs between $500,000 and $700,000 and can reach as high as $1 million.

To support this innovation, total spending on research and development by the 15 biggest drugmakers topped $100 billion in 2018, up 32% in the past five years. A cancer cure, or a gene-therapy remedy, can sharply reduce the lifetime cost of treating a debilitating disease. It can dramatically alter the length and productivity of people’s lives. But high-cost treatments are pricing out a growing number of underinsured patients, keeping them from using medications that could alter their providence. This is unacceptable.

There are ways to make specialty drugs more affordable without eroding the incentives that drive capital into the riskiest but most promising endeavors. One is to help second-to-market drugs get through the regulatory process.

Once an effective drug is approved to treat a deadly condition, introducing a second drug to treat the same disease can be hard. It’s tough to recruit patients with a debilitating disease for a clinical trial when a proven medicine is already available. Moreover, the smaller pool of patients who will be newly diagnosed each year with the same disease isn’t always large enough to support the cost of developing a second drug, reducing competition that can lower prices.

We offer first-to-market breakthrough drugs an efficient route through FDA review. We could give second-to-market competing medicines the same regulatory benefits. Further, when the biology of a drug target is very well understood, and the basis for how it interacts with a disease firmly established, we can create a new regulatory designation to streamline development of a competing drug and shift data collection to real-world, post-approval settings.

Many drugs targeted by H.R. 3 for government price controls are examples of the innovation we should try to encourage. In fact, they are the investments that critics who griped about me-too medicines said they wanted. Now the same crowd is crafting policies that would shift investment back into the more mundane endeavors they once lamented.

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