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Watching for NIH Innovation in 2017—and Drug Pricing, Trade Deals

Opinion

Xconomy San Diego — 

With the inauguration of Donald Trump as president on January 20th, the editors asked some of our Xconomists to offer their thoughts on “How could the incoming administration significantly affect your industry?”

When I worked in the Reagan Administration, the “Gipper” used to handle questions like this by saying he couldn’t respond to hypothetical questions. That being said, here’s what I’ll be keeping an eye on in Washington in 2017.

Thanks to bipartisan support, passage of the 21st Century Cures Act has put our industry in the starting gate for success as the Trump Administration takes office. Overall, the bill will make changes to our innovation ecosystem from discovery to development to delivery, with the goal of bringing new drugs and devices to patients faster.

What will this mean to our industry next year and in the future?

First, we hope to see true FDA reform, with $500 million in additional funding to the FDA over the next 10 years through the creation of an “FDA Innovation Account.” This funding includes a new review pathway for biomarkers; accelerated approval for regenerative therapeutic products; a streamlined review process for combination products; limited population pathway for antimicrobial drugs; expedited review for breakthrough devices; reauthorization of the pediatric rare disease priority review voucher program until 2020; classification of devices used with a regenerative therapeutic product as moderate risk devices; deregulation of low-risk medical software; and increased patient involvement in the drug approval process.

All of these changes and more are important to our California biopharma industry and research members.

It will be the responsibility of the new president’s appointee as Secretary of Health and Human Services, and possibly a new FDA commissioner (should President Trump make such a change) to implement this legislation. We should be able to look forward to greater investment in early stage biotech company formation. History has shown us that when the FDA creates greater certainty and expedited pathways within the regulatory process, investors become somewhat more comfortable.

The legislation provides $4.8 billion over ten years to the National Institutes of Health, including $1.455 billion for the President’s Precision Medicine Initiative, $1.511 billion for the BRAIN Initiative, $1.8 billion for the Cancer Moonshot, and $30 million for regenerative medicine.

These “NIH Innovation Projects” will be funded by annual appropriations through the creation of an “NIH Innovation Account.” These initiatives all relate directly to the fundamental research that is being conducted by our member institutes and universities in San Diego and the rest of Southern California, as well as the Bay Area. We’ll be looking to see where the Trump Administration will stand, as this will be an annual appropriation process. It must be approved each year within the federal budget and signed by the President.

As far as what might impact our industry next year in the wake of our political challenges, both candidates mentioned their concerns about the high cost of prescription drugs during their campaigns. Donald Trump has mentioned this again since winning the election. We continue to suffer the aftershocks of very negative publicity around drug price increases, and some companies handled this issue poorly when they were in the media and political spotlight. We as an industry will face a significant challenge next year in making a case for the long-term value of seemingly high-priced innovative drugs. Yet we know that case exists. We must explain the issue so that both patients and politicians can appreciate the valuable work that our industry is doing to improve health and quality of life overall. I see this as our major challenging issue next year.

Trade agreements in general, and the Trans-Pacific Partnership (TPP) in particular, have raised a mix of issues for the life science industry. President-Elect Trump has vowed to stop and even reverse current and long-standing U.S. policies and treaties in support of free trade. If the TPP continues to progress in some form, we must ensure that the current protections afforded biotech products are maintained, such as the provision within the Affordable Care Act that provides 12 years of exclusivity for the data supporting a biotech drug’s approval.

Free trade has been positive for our industry, especially in the medical device arena.

On the potentially positive side, President-Elect Trump has stated that he will work with Congress to reduce the corporate income tax rate to as low as 20 percent, which could encourage the repatriation of funds our multinational pharma companies are holding abroad. The availability of billions of dollars of new investment capital in the hands of U.S. biopharma companies could be a mixed blessing for San Diego’s life science industry.

These monies could be invested in our biotechs in ways that encourage them to enter into research and development partnerships and expand in California, contributing to job growth. On the other hand, the repatriation of overseas capital could also fuel a series of mergers and acquisitions that would hamper small life science companies from attaining maturity on their own.

It’s going to be a year in which we are largely moving into uncharted territory with the new President, his choice of cabinet secretaries, and what is sure to be a face-off between a Republican-controlled Congress and Democrats who are not going to sit by idly.

Joe Panetta heads Biocom, the Southern California association that advocates for more than 550 companies, service sector firms, universities and research institutes working in the life sciences. As president and CEO since 1999, Panetta works with a 60-member board and experienced professional staff, leading leads programs in capital formation, public policy, workforce education, and member services Follow @

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