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December 17, 2019 Bioscience Notebook

NH bioscience startups wary of drug-pricing bill

PHOTO | File image ReNetX Bio CEO Erika Smith
By Natalie Missakian

A prescription drug bill that cleared the U.S. House last week seeks to curb skyrocketing drug prices charged by large pharmaceutical firms. But the price controls could work against Connecticut’s push to grow its bioscience sector by driving investors away from the small startups that comprise much of the industry here, local biotech leaders say. 

The House approved the bill in a 230-192 vote along party lines Friday, although it is not expected to pass the Republican-controlled Senate, which has introduced its own drug-pricing legislation.

ReNetX Bio CEO Erika Smith, whose New Haven-based startup is working on a breakthrough treatment for spinal-cord injuries, was among more than 100 CEOs from small biotech startups around the country who signed a letter to House leadership earlier this month in opposition to the bill.

“We are at an incredible inflection point in science and technology that is bringing forth transformative treatments and even cures for cancer, infectious diseases and a myriad of other serious and rare diseases,” the Dec. 5 letter said. “Our continued success depends on maintaining an environment that supports investment in tomorrow’s discoveries.” 

The most contentious aspect of the bill is a provision that would allow Medicare to negotiate prices with drugmakers based on the cost of drugs paid by patients in other countries. Companies that do not negotiate would face steep fines under the plan. 

All Connecticut House members voted in favor of the measure, with some testifying about constituents who were rationing their medicines or being forced to choose between filling their prescriptions and buying food. 

BioCT, an advocacy and support organization for Connecticut’s bioscience sector, joined life science associations in 42 states that signed a letter to congressional leaders last fall voicing concerns about the so-called reference pricing and foreign price controls. 

BioCT CEO Dawn Hocevar said in an interview Monday “there’s no panic” among her organization’s members about the bill’s passage in the House last week, but she has heard concerns from venture capitalists who typically invest in Connecticut’s life-sciences sector.

Unlike large pharmaceutical companies with revenue-producing drugs on the market, young biotechnology firms such as ReNetX rely mostly on private investment to keep the lights on and fund their research and development, industry leaders say. 

Opponents of the bill say those fledgling companies would be hit hard if investors decided to divert their money into other industries they view as more profitable. 

“The ventures want to know that there’s going to be a profit down the road [in return for their investments] and this type of bill could curtail that,” Hocevar said. “We are a capitalistic society and that’s just the nature of the beast.” 

Paul Pescatello, executive director of the Connecticut Bioscience Growth Council, warned in an op-ed article published by Hearst Connecticut Media earlier this month that the bill would impact Connecticut’s economy and the 2,500 companies and nearly 40,000 workers that comprise the state’s bioscience sector. 

“Connecticut is a major player in bioscience. We rank second in the nation in academic R&D investments and fourth in venture capital investments in the field,” he wrote. “Policies like those put forth [in the bill] will dissuade investments that are crucial to sustaining the bioscience industry.” 

Hocevar agrees that something needs to be done about the soaring costs, but said the House bill unfairly singles out her industry. 

She said while the bill in its current form “will never become law,” its passing underscores the need for all stakeholders who play a role in rising costs — including drug companies, insurers, pharmacy-benefit managers, hospitals and others — to sit down with legislators to work out a compromise.

“To completely point the finger at pharmaceutical companies is not correct,” she said. But the industry “needs to step up and recognize their role in this and help come up with a solution proactively to address the drug pricing.”

“Otherwise there’s going to be a vacuum and legislators are going to fill that vacuum with a bill,” she said. 

Contact Natalie Missakian at news@newhavenbiz.com

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