As the year is nearing a close, lawmakers are still chipping away at spending bills and a long to-do list of health policy priorities that could come with some big changes for the biotech industry.
Endpoints News sat down with PureTech CEO and BIO board member Daphne Zohar to talk about the biggest issues facing biotech, what she urged lawmakers to prioritize during recent meetings on Capitol Hill with BIO board members, and why she thinks biotech needs to be legislated differently than pharma.
This interview has been edited substantially for length and clarity.
Lia DeGroot: You met with some lawmakers last week. I’m curious who you met with and how those conversations went. What were some of the big topics you were discussing?
Daphne Zohar: The meetings I had were mostly with Democrats. We’re really working to build relationships and bridge to the industry and explain about the industry, and also, from my perspective, explain some of the challenges.
For example, what’s been going on in general in the biotech markets and the XBI, some of that actually has been influenced by concerns about IRA, concerns about FTC. There’s issues with small companies being able to deduct R&D expenses. You do a deal with a big pharma company, and actually, if you get the upfront payment, you can’t deduct all your R&D expenses in one year, you have to amortize it over five years, so you might end up paying taxes even if you’re a loss-making biotech. Biotech companies, we’re really entrepreneurs or small business creating jobs. We’re not really big pharma.
DeGroot: What are the big policy areas around PBMs that you’d like to see Congress take some action on this year?
Zohar: One of the specific bills that’s in play is called the Lower Cost More Transparency Act, and what that bill does is it helps to rein in sort of the practices of PBMs that are more egregious. For example, requiring those PBMs to disclose drug rebates and discounts, the idea being that if you’re able to shed more light on some of these practices, you will then be able to push back on them.
DeGroot: I saw on Twitter you also mentioned that some aspects of the IRA were also some big priorities for you. Could you expand on what aspects of that you are hoping to see prioritized?
Zohar: Two specific fixes would be good. The first relates to orphan drugs. There’s this new legislation which is called the Orphan Cures Act, which would basically amend the IRA to ensure that orphan drugs that are treating one or more rare diseases are excluded from price negotiations as long as all indications are orphan. The second thing is that it clarifies that the countdown to eligibility for negotiation would only begin when an orphan drug loses its exclusion.
The other fixes that we’d like to see would be around small molecules. There’s this 13-year clock for biologics, but small molecules have a nine-year clock. The thinking is really that small molecules are extremely important in areas like cancer drug development. The other area where it’s incredibly important is in CNS drug development, where small molecules are usually the preferred approach, partly because of the ability to access the brain.
DeGroot: I’m curious if you might dive into the tone of the conversations that you had and your take on how you think legislators are approaching some of these big issues in healthcare right now.
Zohar: We were an interesting group. First of all, we were all women CEOs, and I think that the idea that we were all smaller biotech CEOs, I don’t know if that influenced the perception or the feedback we got. Because I have to say, going into this I had heard a lot about how everybody hates pharma, but there was openness. People were aware of some of the challenges of the industry.
I do think that maybe biotech companies need to have a different dialogue with lawmakers versus big pharma because there’s different needs, different challenges.
DeGroot: Why does that need to be a distinct conversation?
Zohar: What our job is, is to take innovative science, often from academia, after the NIH and the academic institution spent many years getting it to a point where you might see a potential for therapeutic, not even a therapeutic itself. Once you get into human testing, it’s really a challenging financing environment right now.
If you think of the biotech industry as sort of like scrappy entrepreneurs trying to take important science and clarify which of those scientific discoveries actually have value, that’s really hard work. We don’t, at the time that we’re doing a lot of this work, make the decisions about the drug pricing at the end of it. The last thing you want to do is stop the ability of translation to create new medicines.
It’s not like there’s good guys and bad guys. It’s just that we all have different roles in the ecosystem. If some of these new policies impact the early part of the ecosystem, then that will be the death of new medicines.
There was some concern that FTC was being heavy-handed around M&A, but the agency backed down on the Amgen-Horizon merger. People are going to be looking at Pfizer-Seagen now and seeing how the agency handles that. That was a huge headwind and that actually feels like it’s lightened up, but I don’t think the biotech industry at large sort of realizes that or is breathing a sigh of relief yet.
