VC Daily: Venture Capitalists Push Back Against Drug-Pricing Bill

If price controls are enacted on drugs, investment will no longer flow to innovative new biotech treatments

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09.16.2021

View the article online HERE.

Good day. A bill in Congress aimed at lowering prescription-drug prices would derail biotechnology venture investment, venture capitalists said in a press conference Wednesday.

The bill, H.R. 3, would enable Medicare to negotiate with drugmakers for certain expensive and commonly used drugs, and these prices couldn’t exceed 120% of the drug’s average price in a group of international countries, The Wall Street Journal has reported. If companies refused to negotiate or didn’t agree to the price, they would be subject to an excise tax of up to 95% of that drug’s sales.

Supporters of the bill have said it is needed to curb what they see as unjustified drug price hikes.

In a news conference in Washington, organized by Incubate, a coalition of life sciences venture capitalists, venture investors said such measures amount to price controls that would cause biotech venture funding to collapse.

Speakers included Peter Kolchinsky, a managing partner of RA Capital Management, Jean-François Formela, a partner with Atlas Venture, Arjun Goyal, a managing director of Vida Ventures, and others.

In an interview, Incubate Executive Director John Stanford said biotech venture capitalists’ winning companies have to compensate for the losses they take on those that don’t pan out, and then some.

If price controls are enacted on drugs, investment will no longer flow to innovative new biotech treatments, he said.