The Sacramento Bee: Drug Price Bill Is Bad For Business, Patients

By William J. Newell
Special to The Sacramento Bee | Link:
Sept. 5, 2017

California is rightfully known as the birthplace of the biopharmaceutical revolution. Our state continues to be the leading home of innovative companies that are pioneering the new field of precision medicine to develop medications and doses tailored to individual patient’s genes.

As a longtime entrepreneur in this sector, I am concerned that Senate Bill 17 will harm our ability to afford the costly and time-consuming process of bringing these therapies to market.

I share the concerns about the cost of health care, so it’s not surprising that the Legislature is looking for ways to reduce costs. However, this bill would require companies such as ours to publicly report sensitive information on the cost of drug development that will do nothing to reduce costs or help sick patients. Instead, it will undermine innovation.

William J. Newell

The risks we take when we invest tens of millions of dollars are based on the expectation that our investors will ultimately be rewarded. We must generate enough cash from our FDA-approved therapies to finance all our research and development, including those investments that didn’t result in a successful product. SB 17 will only add more risk to our business model and remove incentives that make it attractive to invest in our companies.

California is home to over 3,000 life sciences companies with nearly 300,000 employees – the largest concentration in the world. Legislation that forces us to share corporate information with our competitors is harmful to small companies like ours.

SB 17 also includes a mandate for bioscience companies to provide advanced notice of even modest price increases. These 60-day warnings will give wholesalers, hospitals, pharmacies, large provider networks and buying groups ample time to purchase extra products before the increase takes effect. With thousands of purchasers, even minor upticks in quantities ordered are extremely difficult for biopharmaceutical firms to manage since these complex medications take time to manufacture. This could well lead to temporary shortages.

The California biopharmaceutical industry is a vibrant, interconnected system that includes emerging, small and large biopharmaceutical companies, as well as academic institutions and investors. If any one of these components are threatened, our industry will suffer.

This industry welcomes an honest dialogue about the cost of our total health care system – one that includes all the players that are needed to help improve it, including payers, regulators, legislators, health care professionals, employers and patient advocacy groups. Our shared goal should be to design an economically sustainable system that ensures patient access and promotes innovation.

Californians have legitimate concerns about access to affordable drugs, but SB 17 does not address them. It is a bad deal for business and does nothing to benefit patients.

William J. Newell, CEO of Sutro Biopharma, Inc. in South San Francisco, is vice chairman of the California Life Sciences Association. He can be contacted at [email protected].

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