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Pro-Patient Reforms: The Outlook for 2022 · Making Medicine

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  You're listening to Making Medicine Stories from the Early Stage Life Sciences Ecosystem, a
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  podcast that explores the people and deals that have led to the medicines, devices,
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  and technologies that keep us healthy. Let's get into the show. This
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  is Ashlyn Roberts, the coalition manager of Incubate and not your typical host of
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  the Making Medicine podcast. For this week's episode, we wanted to switch it
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  up and kind of take a step back. I'd like to introduce an interview
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  John Stanford, the normal host of an executive director of Incubate. So,
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  John person Farmas, thanks for joining today. I know you typically this is
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  your wheelhouse, but to put it lightly, the state of DC can get
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  chaotic and twenty twenty two has already been off to a busy start. Would
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  you like to give kind of a level set on everything that's happening in Washington.
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  Yeah, it's definitely much more intimidating being on this side of the chair,
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  so I'll have to remember that for all our future guests. Well,
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  thanks Ashlyn for our host in today and agree, let's this moment a level
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  set because twenty twenty two is going to be a meaningful year. One way
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  or the other for life sciences and policymakers. And so I'll jump in with
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  where we ended the year, and that was with a lot of major drug
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  pricing provisions tied up in President Biden's big Build Back Better Act. Now,
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  due to some dynamics in the Democratic Party, that bill actually stalled, but
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  that was one of the closest major reforms the US ever got to installing price
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  controls, something that Incubate. We've had a lot of speakers talk about how
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  damaging they would be. Incubate has fought tooth and nail. And while there
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  were a lot of great provisions of the Build Back Better Act, we were
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  very concerned that this bill was going to pay for some of these social provisions
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  with what accounted to a massive tax on the entire life sciences ecosystem. So,
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  if you remember, we really were looking at a few different dangerous elements
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  of the drug pricing provisions. Within Build Back Better, there was an inflation
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  cap that went back to twenty sixteen that looked to clawback money from manufacturers.
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  But we really had our eye on a new proposed exclusivity system that had a
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  lot of flaws in it. The biggest one was that it created this odd
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  dichotomy between small molecule drugs and biologic drugs and awarded exclusivity the amount of time
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  that a company has to recoup its investment, and they gave different amount of
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  times depending on those drugs. Well, as we've heard from folks like jf
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  Over at Atlas or some others that that's not really how science works. We
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  don't have folks singularly chasing a small molecule drug or a biologic But what the
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  bill would have allowed the HHS Secretary to do is to really set a price.
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  And I won't get into the depths of it. Check out our earlier
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  reports or episodes if you really want to get in the weeds of this bill,
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  but it effectively installed price controls for the first time. Now that legislation
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  stalled, but we know it's hanging out there. Democrats, many of them
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  are keen to pick up some new version of the Build Back Better Act,
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  And if they do that, the really dangerous thing for the life science ecosystem
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  is that while we're winning on the merits, we've pointed to many policymakers about
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  the flaws in this bill, we're tied up as a possible pay for we
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  could pay for all these other important things that society should consider, like the
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  child tax credit, investing in a climate change agenda. And so that's put
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  a lot of even allies to the early stage life science ecosystem in a tough
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  spot because they're half forced to pick between innovation and the life sciences or paying
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  for something else. Because that's what this bill really needed to do. It
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  needed to really break even in terms of its cost, and one of the
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  easiest things to go after seemed to be the drug industry, and that's why
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  we threw red flag after red flag, and we were pleased to see those
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  provisions stalled. But that's something we're going to be watching throughout the year.
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  And so like every year, drug pricing legislation is always potentially right around the
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  corner. I think that's a really good something that I'd like to dig into
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  a little bit deeper. I know, when we initially started Incubate over three
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  years ago, we really reformed as an education and awareness vessel, and we
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  saw we're in the midst of having both Republican and a Democrat administration. But
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  first and foremost, these drug pricing issues have not gone away, and so
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  I'd love to dig into that a little bit deeper, and I guess ask
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  you, what's your perspective on why this is an evergreen issue and why it
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  is so important to tell our audience about this. Yeah, I think it's
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  a great question. Why is it always us? Why is it always the
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  life science's ecosystem? I mean, here we are, we save society.
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  We came up with vaccines and treatments for COVID nineteen, and yet we're still
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  front and center in terms of a political target. And I think politics has
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  a role to play here. It's an easy industry to take a swing at.
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  Unfortunately, if you do public polling, the pharmaceutical industry large has always
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  struggled to necessarily have the popularity that it probably deserves from the sense of creating
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  medicines for everyone. But I think even worse is, or even more challenging,
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  is just the complexity of our healthcare system. And it's easy to say,
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  why does this little pill costs so much? But you know what we
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  don't take the time to do. And something Incubators really tried to do is
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  say, well, let's think about why a patient has such a high cost.
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  If they do well, it has a lot to do with their insurance
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  plan and deductibles. It has a lot to do with these rising co pays
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  and coinsurance, And so I think it's a confluence of factors of its good
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  politics, but also it can hide these sort of bad ideas, can hide
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  behind the complexity of the healthcare payment system, which we would be the first
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  to say is broken. And that's why Incubate has champion bringing down out of
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  pocket costs. We've championed things like smoothing for patients. You know, we're
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  really committed to insurance being insurance. If you get sick and your doctor prescribes
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  you a medicine, your insurance should cover that cost full stop. I think
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  that that is really helpful. Thank you for that, John. So,
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  I know that you gave a little bit more of a background of how we
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  were leading into the year and whether or not the prospective of build back that
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  better will be likely. But looking ahead at this year, what else do
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  you thinks on the table? Yeah, I want to talk about sort of
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  three things and then maybe close with some reflections on how we can do better
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  for patients in twenty twenty two. You know, three areas intellectual property and
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  the American system of patents is front and center, mergers and acquisitions as part
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  of a broader m and a sort of question mark from a policy standpoint.
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  And then finally, you know, we need a good legislation to come in
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  the form of what those of us in Washington say PADUFA. But really what
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  that is is it's the FDA's reauthorization and that's up this year. So I'll
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  jump in with intellectual property, something so fundamental to a life science investor because
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  most of the time that's the only asset you can get. IP is front
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  and center. You know, during the vaccine development and distribution phase in response
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  of COVID nineteen, we talked a lot about this trips waiver and that IP
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  around the globe was under assault because a lot of folks were saying, IP
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  is this barrier to access and bait. Along with many others, raised our
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  hand and said, that's really not true, and we've been really borne out
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  by the facts to be correct. Here we see these vaccine stockpiles around the
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  world. The tragedy is it is not a IP barrier. They're just a
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  host of barriers in the developing world of getting medicine to people and we've got
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  to be focusing on tackling that. But domestically, that anti IP focus is
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  unfortunately manifesting in some other ways. We're in the midst of a conversation about
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  marching rights, and there's a really twist. You can twist an old law
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  and say that the government has this right to march in and take a product
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  if it deems its cost too high, and that's really not I encourage you
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  to check out the Bidole coalition that incubates a part of that gets really in
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  the weeds on why that's not what this law says. But we are seeing
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  efforts to use marching rights to go after a drug for cost, and that's
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  really concerning the idea. I mean, it's akin to a price control,
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  but maybe even more challenging to the fundamentals of investing that just because the government
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  doesn't like the price of something, they could go in and take the i
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  P and that's really counter to some of the many fundamentals of the American economy.
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  So we're watching really closely these proposed marchins and I want to stress to
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  everyone how wild this would be if it moved forward. And I hope the
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  NIH makes the right decision to not move forward here. Under the last several
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  administrations, Republican and Democrat alike, everyone has disagreed with this marchin interpretation.
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  We hope that holds. In fact, under the last administration, the Department
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  of Commerce tried to codify some regulations that established the correct definitions of when marchin
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  is applicable and really is in a factor there. So we'll see whether or
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  not marching it'll be something that we're talking about throughout the year, for sure.
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  The other one that has swept up I think the country over the last
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  couple of years, really focused around the tech community, has been a concept
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  of mergers and acquisitions. And you know m and A you know, as
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  part of the American corporate entity, has been around for a long time.
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  It's how small business becomes big business. But in the US and in our
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  biopharmac system, m and A actually plays an even more critical role because when
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  we think about what life sciences produces, it produces something we've taken to our
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  bodies that's a lot different than you know, my phone or my headphones or
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  another product. You know, it's something where safety and efficacy or paramount.
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  That's why we have a Food and Drug Administration. We have about at any
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  given time fifteen hundred to two thousand biotechs in this country doing incredible work,
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  and they are great at translating discovery into drug development, but they'd be the
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  first to tell you that they are not great at the manufacturing processes, the
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  regulatory processes, and clinical trials. So we see it, says Johannes Fru
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  Health has said, it's a relay race and it gets handed off one after
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  the other. So something we're a little concerned about is in this anti MNA
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  rhetoric, do people misunderstand just how critical that relay race is for life sciences.
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  And so this will be something whether it's in Congress, at the FTC,
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  or with the administration, INCUBAT will be making its position abundantly clear.
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  The merger and acquisistant cycle in the life sciences community is fundamental because of our
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  regulatory environment and because of how important it is the companies that manufacture drugs have
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  the right experience. It's the natural end to the life cycle, and from
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  the investor standpoint, those acquisitions bring capital back to us that can then be
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  redeployed, and it's a very virtuous cycle. But I think it's getting a
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  bad rap this year, and it has last year as well, and so
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  we'll be working to counter that narrative. The final one is, as I
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  mentioned, the reauthorization of the FDA a process called PADUFA, and that happens
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  fairly regularly, and we want to see it happen this year. I think
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  this year it's going to have a little extra spotlight because of the accelerated approval
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  process we've talked about earlier this year, and Incubate's been engaged on a troubling
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  decision by CMS as it relates to Alzheimer coverage, and I encourage you to
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  look at incubates resources there, but I won't spend too long on it here.
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  The accelerated approval process at the FDA is going to be probably a part
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  of this conversation, and I think this reauthorization, we hope it goes smoothly
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  because it's really needed that it do so. And PADUFA has been one of
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  the policy making successes in recent years, but it's going to come with some
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  more scrutiny because of that NCD conversation around Alzheimer's thank you for walking us through
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  that. I think that was very helpful in kind of bucketing out all of
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  these issue areas that really do need attention and will be a center point for
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  conversation this year. I will say to your reference of the relay race,
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  I remember when we went on Capitol Hill and met with quite a few number
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  of offices that that notion of the importance of M and A and handing off
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  that innovative discovery to take it through towards commercialization really was incredibly helpful in a
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  perspective that they hadn't heard yet. And so I will echo your sentiments on
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  that front, and I know that you Another issue that we're talking about is
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  some pro patient reforms looking into ahead of this year. Is there anything that
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  you'd like to highlight on that front. Yeah. I'll close by saying this
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  is where we have to be spending our time, and there's been a lot
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  of talk about what we can do to benefit patients, but a lot of
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  times when you examine these policies, they do just the opposite. In an
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  upcoming podcast, and I know we're going to have Kirsten on talking about some
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  of the sort of unintended consequences that are harming patients in some of these proposals.
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  And that's why we've got to have a really honest and transparent dialogue in
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  Washington and around the country because state capitals are important too about what's really going
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  to benefit a patient, and from the life science investor perspective, with meant
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  so many of our members and scientists focused on really hitting home runs, really
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  pursuing breakthrough cures and treatments. It's we've got to make sure that patients can
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  access that. When patients can't access breakthroughs and cures, that is just a
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  huge challenge to the whole logic of the work that we do. But I
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  think we have an ability in with a sort of an obligation to pull forward
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  what are the real pro patient reforms? So what are we going to be
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  talking about. We're really going to be talking about out of pocket costs and
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  the need to lower or even eliminate those so that when your doctor prescribes a
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  medicine, you can go get it. I think we need to talk about
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  also some flaws in our system. If you have a chronic condition and you
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  know that you're going to have a medicine cost, there's something called patient smoothing
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  that's missing. You hit these huge bills in January and February to hit your
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  deductible and then your medicine begins to get covered. Well, that doesn't really
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  make a lot of sense. Why are we saddling the average American with these
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  huge expenses at the beginning of their insurance here? And so that's the kind
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  of common sense reform that makes a ton of sense sitting around a kitchen table,
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  but hasn't broken through in Washington. And so we're going to be lifting
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  up ideas like that, and we've got to make sure with these new therapies,
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  things that are offering unimaginable cures. You know, we're stuck in a
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  payer system. It's from the era of HMOs and sort of an ancient philosophy
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  around insurance. But that's not going to match a cure that pays dividends over
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  fifty or sixty years. And so we've got to have real conversations around that.
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  So we really hope Washington will shift the narrative, and we really hope
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  the President in the State of the Union kicks that off with some rhetoric and
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  dialogue that shows we all need to come together for an honest conversation that will
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  really benefit patients. Thank you John for that great point on the state of
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  the Union, and we look forward to that coming out and hopefully changing this
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  narrative as well. And I also look forward to having these conversations more frequently
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  just in between our episodes where we're also highlighting additional guests. So with that,
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  thank you for joining me today and thanks to our audience for listening and
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  sharing feedback. Of course, there's more incubated at www dot Incubation Coalition dot
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  org. Keep innovating everyone you've been listening to making Medicine. To ensure that
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