SAN DIEGO — Test tubes and beakers don’t care what laws politicians pass, but biotech execs sure do.
The life sciences have always been shaped by policy. Biotech companies from San Diego to San Francisco to Boston look to local, state and federal lawmakers to ensure that they have space to expand and funding to buoy their research.
It’s why Biocom, a California life science trade group based in San Diego, keeps an office in Washington D.C. — and why the organization held a forum last week with San Diego’s mayoral candidates.
With an election looming, many long-running issues for the biotech community have taken on fresh urgency. Here are a few topics that have fueled recent debates, from drug pricing to the merits of funding stem cell research.
On Sept. 13, President Trump issued an executive order designed to ensure that Medicare pay no more for prescription drugs than other developed countries, where prices are usually lower than in the U.S.
“It is unacceptable that Americans pay more for the exact same drugs, often made in the exact same places,” read the order.
The president had threatened to sign an executive order calling for this policy, known as international reference pricing, earlier in the summer but held off initially.
It didn’t take long for Biocom to respond to the announcement.
“On behalf of California’s life sciences community, we are deeply disappointed in the executive order issued by the Trump Administration,” said the organization in a prepared statement. “California, which is one of the world’s leaders in biomedical innovation, would be among the first to suffer.”
The issue has not been a partisan one lately. In December of 2019, the Democratic-led House of Representatives passed a bill that called for reference pricing, though the legislation languished in the Senate.
Taking aim at big pharma unites Democrats and Republicans, and with good reason. In a public opinion poll of 25 industries, Americans ranked the pharmaceutical industry dead last — right behind the federal government.
Most of San Diego’s biotechs are too small and early-stage to have drugs on the market. But reference pricing could discourage some of the investors who bankroll biotech’s boom, according to Jimmy Jackson, Biocom’s chief policy officer.
“There’s no requirement that their money go into biotech,” Jackson said. “They’ll just start investing in less risky spaces.”
That’s a plausible outcome, says Bhaven Sampat, a Columbia economist who studies the effects of policy on the life sciences.
“It’s a mistake to assume otherwise, that innovation would just go on as normal, like it comes from God or the NIH,” Sampat said. “The private sector does pay attention to expected prices.”
He sees another potential issue with reference pricing: Base your prices on what other nations charge, and drug makers might drive up costs in those countries, too.
A better approach, Sampat says, would be to encourage the one thing that reliably drives down drug prices: competition. Generic drug makers can quickly bring drugs to market if they show regulators that they’re using the same active molecule as a brand name drug — no clinical trials needed.
That’s harder to do for drugs made of large proteins rather than small molecules, Sampat says, where regulations are more cumbersome. Many of the most expensive drugs in the U.S. fall into that category: “If we want to think about real solutions to the drug price problem, this is one of them.”
Stem cell funding
On Nov. 3, Californians will vote on Proposition 14, which would give $5.5 billion to the state’s stem cell agency, the California Institute for Regenerative Medicine (CIRM).
CIRM was formed after voters passed Proposition 71 in 2004, which provided $3 billion for stem cell research. The agency awards funding to companies and academic institutes, but its funds had mostly dried up by 2019.
That’s why the upcoming proposition is so important, says Joe Panetta, president and CEO of Biocom, which endorses the measure.
“It’s placed California in a position globally of being the center of regenerative medicine research and development,” Panetta said. “It’s benefited San Diego tremendously.”
He points to local biotech ViaCyte, which has received more than $72 million in CIRM funding, as a prime example. The company is working toward what it calls a “functional cure” for type 1 diabetes, a disease in which the immune system wipes out the cells that make insulin. ViaCyte’s goal is to use stem cells to replenish insulin-producing cells, and it has clinical trials testing its approach in progress.
Stem cells can become practically any type of cell in the body — from the cells that keep your heart thumping to the neurons that keep your brain crackling with electrical signals. That’s why scientists are studying how stem cells can be used to treat everything from cancer to Parkinson’s disease.
But has California benefited from its investment?
That’s what UC Davis researcher Martin Kenney set out to answer. Kenney studies the forces that make high-tech industries innovative. He and a colleague analyzed data from before and after CIRM began awarding funding to see if the state’s investment gave California biotechs and research institutes an extra boost in securing venture capital, federal research dollars and patents for stem cell research.
His conclusion? Not really.
Kenney found that CIRM funding didn’t give California’s biotech scene, led by the Bay Area and San Diego, more of an edge in stem cell research than it already had over the nation’s other major biotech hub, Boston.
Kenney, who published his findings in 2018, acknowledges that it takes many years for basic research to bear fruit. But he thinks his observations underscore the risks in investing heavily in any one branch of research.
“If you (put) all of your money in one stock, is that a good investment strategy?” Kenney said. “That’s what this was.”
All (biotech) politics is local
San Diego mayoral candidates Todd Gloria and Barbara Bry spent an hour last week in a wide-ranging conversation with Biocom members about why each of them believes they’d be the best mayor to support the local industry’s rapid growth.
Topics ranged from dealing with persistent flooding on Roselle Street in Sorrento Valley, smack in the middle of biotech central, to which candidate could entice life science workers to San Diego.
“That’s been a huge issue for us because San Diego has always had to compete with the Bay Area and with Boston for capital, for talent and for attention on the world stage,” Panetta said.
Councilwoman Bry pointed to her years as an angel investor and tech entrepreneur as evidence that she understands what the industry needs. Assemblymember Gloria emphasized that he’d tackle the city’s housing crisis, which would help draw in life science employees from outside the county.
Biocom last endorsed Kevin Faulconer during his successful bid for mayor, but it has not endorsed either of the current candidates. That’s because they haven’t asked yet, according to Panetta. Once one of them does, the organization will evaluate both candidates and endorse one (not always the one who requested) or neither.
“It sometimes becomes a game of chicken as to who will request first,” Panetta said.
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