Private equity investors are lobbying against Nancy Pelosi's sweeping drug pricing bill, telling her legislative aides in a series of private meetings in recent weeks that the plan would dry up financing for small biotech companies.
A group of venture capitalists, including Peter Kolchinsky of RA Capital Management, Johannes Fruehauf of BioInnovation Capital and Sara Nayeem of New Enterprise Associates, met with Pelosi's staff as well as moderate House and Senate Democrats on Oct. 29 to discuss their concerns. The investors have had follow-up meetings since, according to John Stanford, executive director of venture capital advocacy group Incubate and attended the meetings.
Small biotech start-ups lead 7 in 10 clinical trials, according to BIO, the industry's main trade group. The firms, which work to create new, innovative drugs to treat a range of illnesses, often rely on funding from private investors.
Passage of Pelosi's drug plan, which is scheduled for a vote on the House floor as early as Wednesday, could spur investors to take their money elsewhere, the venture capitalists warned lawmakers. The legislation would allow the U.S. government to negotiate lower prices on the costliest drugs each year.
Some Democrats, including co-sponsors of Pelosi's bill, told the venture capitalists they brought a critical new perspective in the drug pricing debate, Stanford said. He declined to identify any of the lawmakers in the meetings.
A day after the Oct. 29 meeting, the venture capitalists published a letter, as first reported by STAT News, urging Congress to rethink Pelosi's proposal, saying it would "lead to an immediate decrease in capital available for early-stage life science companies."
A spokesman for Pelosi didn't immediately return calls for comment, but he previously said the bill would provide "real negotiations that require HHS to reward genuine innovation, while protecting American patients from price gouging."
The potential impact on smaller biotech companies adds a new layer to the drug pricing debate ahead of a highly anticipated House vote on Pelosi's bill later this week. Talk around Pelosi's drug pricing plan, which is expected to pass the Democratic-controlled House, has mainly focused on large pharmaceutical companies, some of which are better able to weather sweeping policy proposals.
High prescription drug costs have become a rare bipartisan issue, drawing support from Democrats in Congress and the Trump administration. Health-care remains a top issue for voters ahead of the 2020 presidential election. Congress and the Trump administration are trying to pass legislation before the end of the year that would bring more transparency to health-care costs and, ultimately, lower costs for consumers.
Pelosi and fellow House Democratic leaders have been working for months on a plan to reduce U.S. drug prices. Lawmakers made few changes to Pelosi's bill when it was passed through three committees — Ways and Means, Education and Labor and the Energy and Commerce committees — along partisan lines in October.
Drugmakers, Congress and the White House agree that Pelosi's bill would reduce the number of new drugs coming to the U.S. market. But each group's estimates vary.
Republicans, who oppose Pelosi's bill, have been quick to cite a report from the nonpartisan Congressional Budget Office that said the plan would lead to a reduction of eight to 15 new drugs coming to the market over 10 years. Industry trade group PhRMA, short for the Pharmaceutical Research and Manufacturers of America, said it would result in at least 56 fewer medicines. The White House claims as many as 100.
However, the preliminary analysis from CBO also showed Pelosi's plan would save Medicare $345 billion over the decade.
In the Senate, lawmakers are working on their own drug pricing bill, seen as a more "moderate" alternative to Pelosi's.
Senate Finance Committee Chairman Chuck Grassley, R-Iowa, and ranking Democrat Ron Wyden, of Oregon, unveiled last week a revamped version of their bipartisan drug price bill that is backed by President Donald Trump. It would make changes to Medicare by adding an out-of-pocket maximum for beneficiaries and capping drug price increases at the rate of inflation, among other measures.
Health industry analysts and policy experts say the Senate bill has a higher chance of becoming law than Pelosi's bill, which Senate Majority Leader Mitch McConnell has vowed not to take action on.