The drug pricing under Pelosi’s plan would drive investors away from the small biotech companies.

With all the drama around Pelosi’s proposed drug pricing plan focused on the large pharma companies, nobody thought of the small guy.

In fact, small biotechs are responsible for 7 out of 10 clinical trials, as per data from Biotechnology Innovation Organization (BIO), a biotech trade association.

Pelosi’s drug pricing plan: death knell for the small biotech startup

According to a preliminary analysis by the Congressional Budget Office (CBO), Pelosi’s pricing plan would save Medicare $345 billion over the decade.

Though beneficial for the federal budget and consumers, Pelosi’s plan would kill the small biotech companies. That’s because unremunerative prices would make it difficult for them to raise financing from private equity investors.

Funding would, therefore, dry up resulting in a chokehold on R&D and innovation.

A dearth of new drugs

Due to the funding crunch, the development of new drugs would slow down. Drugmakers, Congress, and the White House are unanimous. Pelosi’s plan would curtail the number of new drugs launching on the US market.

According to the CBO, there would be a reduction of eight to 15 new drugs over the decade. Industry trade group Pharmaceutical Research and Manufacturers of America estimates it would result in at least 56 fewer medicines. Meanwhile, the White House puts the figure at 100 drugs.

PE players lobby Pelosi

On October 29, a group of PE capitalists met with Pelosi’s staff as well as moderate House and Senate Democrats to air their worries.

Meanwhile, Pelosi’s plan is due to be voted on in the House by Wednesday. Given the general and bipartisan concerns regarding high prescription drug costs, the pharma industry may only come worse off on this political agenda.

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