Leading Venture Capital Group Concerned with Prescription Drug Deal

Investors in biotechnology and pharmaceuticals aere concerned about the potential consequences of the new drug-pricing legislation before Congress in the Build Back Better Act.

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11.04.2021

WASHINGTON (November 4, 2021) – Today, John Stanford, executive director of Incubate, a coalition of America’s early stage life sciences investors, issued the following statement on congressional Democrats’ latest drug-pricing proposal:

“As investors in biotechnology and pharmaceuticals, we’re highly concerned about the potential
consequences of the new drug-pricing legislation before Congress in the Build Back Better Act.
“The draft bill released this week would drastically reduce investment in life science research by
giving government officials the power to set drug prices.
“Venture capitalists approach investment by making bets on many different companies and
technologies, knowing that while many will fail, a few will succeed. In order for us to stay in
business, enormous but rare successes have to cover the losses. This is how we fuel important
long shots that can have an outsize impact on health and society — like new vaccines and cures.
“The proposed bill would do away with this kind of long-shot investing, by ensuring that any
new blockbuster drug would be subject to price controls after 7 years for small molecules and 9
years for biologics. Imposing price controls would cause investment in important projects to dry
up. The effect on future medical research would be dramatic.
“Finally, the benefits of this bill for patients are limited. While it caps annual out-of-pocket
spending for Part D patients at $2,000 — a long overdue reform — that improvement is far
outweighed by the price controls that will prevent the creation of lifesaving medicines.
We support efforts to lower drug costs for Americans and are pleased to see an out-of-pocket cap
of $2,000 in Medicare’s Part D benefit. That is a long overdue reform. However, abandoning the
free market for price controls will hurt incentives for the next breakthrough. We hope this bill
will be revised before going to a vote.”

About Incubate
Incubate is a 501(c)(4) organization of venture capital organizations representing the patient,
corporate, and investment communities. Our primary aim is to educate policymakers on the role
of venture in bringing promising ideas to patients in need.