Private equity and venture capital firms, which have poured billions of dollars in biotech firms, are opposing House Speaker Nancy Pelosi’s plan to cut drug prices, saying it would stifle the small firms that are often the source of new medications.
Venture capitalists met with Pelosi’s staff, as well as House and Senate Democrats over the past month, to express concerns that financing for small biotech companies would be pinched under the bill, CNBC reported. The November gathering included Peter Kolchinsky of RA Capital Management, Johannes Fruehauf of BioInnovation Capital and Sara Nayeem of New Enterprise Associates, CNBC said.
Republicans, led by President Trump, and Democrats are seeking to cut prescription prices. The Pelosi bill would allow let Medicare negotiate costs of at least 50 high-cost prescription medications, including insulin, while others prices would be capped based on their costs in other countries.
The bill was altered slightly Tuesday in an effort to pick up backing of progressive Democrats, and may be subject to a procedural vote today before a full vote tomorrow. Democrats are expected to approve the bill, with little Republican support and a veto threat from President Trump.
Investors are joining pharmaceutical, life sciences and biotech companies in their opposition the the bill. The Biotechnology Innovation Organization, a trade organization for biotech companies and research centers, last month issued a statement, supported by pharmaceutical lobbyist PhRMA, saying the plan might mean 56 fewer new medicines over 10 years. The bill, it said, would cut by half revenues for affected companies.
“This report reaffirms just how destructive Speaker Pelosi’s extreme drug pricing plan will be for patients and their families,” BIO CEO Jim Greenwood said in the statement.
VC and PE firms pour billions of dollars every year into biotech, including $28.2 billion so far this year, according to PitchBook. More than half of that is from VC firms, which tend to fund companies earlier in their development than PE. Last year they invested $31.6 billion in private biotech firms.
RA Capital of Boston has $2.5 billion under management, and whose 158 investments include dozens of biotech and pharma firms, according to PitchBook, which noted the company has $641.7 million in “dry powder.” Bioinnovation, of Cambridge, Mass., manages $65.6 million and New Enterprise, of Chevy Chase, Maryland manages $20 billion in assets, PitchBook says.
- Pelosi and the investors have met again since the November gathering, John Stanford, executive director of venture capital advocacy group Incubate and a meeting attendee, told CNBC.
- Democrats including co-sponsors of the bill, told the VC industry people that they had provided a new perspective, said Stanford, declining to identify the lawmakers, according to CNBC.