CEO: SB 17 will Harm Small and Innovative California Biopharmaceutical Companies

By Mark Holman

Sept. 5, 2017 | Holman is Chairman of Davis-based Expanesthetics, Inc.

Small and innovative biopharmaceutical companies across California are currently investing in the life-saving treatments of tomorrow, creating well-paying jobs throughout the state and spurring economic growth. But the path from investment in research to successful development of new treatments is neither easy nor guaranteed. Senate Bill 17, currently before the legislature, could make matters worse.

Early in our company’s development, I was told by a well-known Silicon Valley VC that, even if we succeeded in our endeavor to create better and more cost-effective general anesthetics, they were concerned that hospitals might not pay for them. How many beneficial and cost-saving drugs have died because investors were scared that they could not recoup their investment? The high risks of failure inherent in the drug development process – which can often take decades and is not profitable – already scares away much-needed capital investment. Such is the headwind facing companies on the cutting edge of drug discovery.

When we founded our pharmaceutical development company we had no idea the level of cynicism and undue scrutiny that was facing the very drug companies developing innovative, life-saving and disease-treating medications. Yes, there have been high-profile bad actors when it comes to drug pricing and no industry is immune from pricing their products to meet demand. But should we risk stunting development of new health care innovations by embarking on a drug price transparency experiment like SB 17 that may do nothing to impact the price that consumers actually pay for their medication? Should we, in the name of transparency, punish responsible companies in the same manner as the isolated bad actors?

As an early-stage company CEO, I’m afraid that SB 17 will increase uncertainty and stifle investment that companies like ours rely on to develop new drugs. Small California companies are driving the innovation and research that will ultimately help sick patients. The legislature should not saddle them with even lower odds of success.

I urge the legislature to oppose SB 17.

Mark Holman is the Chairman of Davis-based Expanesthetics, Inc.