VCs On Politics: Officials Who Say They Love Innovation Are Actually Suffocating It
An idea virus swept through Washington DC and state capitals around the U.S. like a pandemic last year. Every elected official in front of a microphone suddenly wanted to spur innovation. Then they started pushing policies that will greatly undermine it.
Bob Nelsen, the managing director of Arch Venture Partners, didn’t pull any punches during a panel discussion about the state of venture investing, at the Life Science Innovation Northwest conference this morning in Seattle. Politics, he said, is becoming one of the biggest threats to life sciences innovation.
Nelsen couldn’t resist diving in after Dayton Misfeldt of Bay City Capital pointed out that his fund has been avoiding venture investments in chronic cardiovascular conditions, diabetes, and obesity because even while those are some of the biggest markets in all of pharmaceuticals, the FDA has set impossibly high safety barriers because of the pressure they feel from headline-chasing members of Congress who want to score political points by casting the FDA and Big Pharma as villains.
“The diseases that cost our country the most money, the ones he just named, are ones we aren’t investing in because of FDA actions. That’s a scary thing,” Nelsen said. “Between Alzheimer’s and diabesity [diabetes and obesity], it’s estimated to amount to 40 percent of Medicare spending in 2020, those two diseases alone. That’s a problem that needs to be addressed with incentives, instead of constantly beating us up. I’d much rather have a pill for Alzheimer’s than have somebody in chronic care for 10 years.”
Carl Weissman, the CEO of Seattle-based Accelerator and a managing director with OVP Venture Partners, didn’t disagree. (Of course, Nelsen’s firm invests in Accelerator, so it would be more surprising if they disagreed.)
“I don’t see the FDA process getting any easier, more straightforward or predictable for our companies. In an era where we are preaching cost control for healthcare, it’s counterproductive to have a process that’s more expensive and less predictable to get new healthcare treatments on the market,” Weissman said.
Nelsen was quick to add that he doesn’t consider the civil servants at FDA to be the root of the problem. He didn’t cite any examples, but type Tysabri or Avandia into Google and you’ll get an idea of the enormous pressure that’s put on the FDA when a mass-marketed drug causes problems for even a few individuals.
“It’s less of a White House driven problem than a Congressional problem,” Nelsen said. “You see Senators from both sides of the aisle that are overly concerned about safety.” By putting all the emphasis on extreme safety, this is causing investment capital and entrepreneurs to ignore the biggest health challenges of the world. Nelsen didn’t call those Senators out by name, but he let them have it anyway.
“They are not really caring at all about sick people who are dying. At some time there will be a sea change. I can see a wave of people in this country who will get fed up with it,” Nelsen said. “It’s one of the biggest risks to killing this industry—the FDA shutting us down.” He added: “People in the FDA … Next Page »