Incubate Founder and Executive Director John Stanford spent a busy day on Capitol Hill this week making the case that the success of the domestic biotech industry is an issue of national security, health care access and economic competitiveness.
After Stanford met with the National Security Commission on Emerging Biotechnology (NSCEB) alongside other Big Pharma and venture capital leaders, the biotech VC advocacy group leader told Fierce Biotech he spent the day navigating the halls of Congress, educating lawmakers and their staff on how FDA inconsistency and price controls could affect broader political priorities.
Stanford met with NSCEB Vice Chair Michelle Rozo, Ph.D., Executive Director Caitlin Frazer and senior staff from a bipartisan group of congressional offices. They were joined by executives from the Incubate network, including leaders from Forge Life Science Partners, Pfizer PAVE, Ascenta Capital, Bessemer Venture Partners, NovaQuest Capital Management, Bright Frontier Capital and J.P. Morgan Life Science Private Capital.
These conversations took place against a backdrop of growing biotech competition from China, compounded by two key concerns: President Donald Trump’s push to codify his Most Favored Nation (MFN) policy and ongoing FDA instability.
MFN aims to lower drug prices in the U.S. by tying them to prices paid in other developed countries. While Stanford expressed sympathy for the goal of reducing drug costs, he argued that the policy could stifle innovation.
“The national security conversation that the commission has been pushing and the health care access and economic competitiveness conversation that we’ve been pushing are really the same conversation,” Stanford said. “If we embrace price controls through MFN, that undercuts our national security because it will further isolate our market and weaken our ability to bring new drugs forward.”
Stanford emphasized that the goal is not to contain China or limit foreign biopharma, but to implement policies and select leadership that enable American companies to out-innovate global competitors.
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He also pointed to the impact of the Inflation Reduction Act of 2022, which authorizes Medicare to negotiate prices for certain drugs that drive disproportionate government spending. Under the law, Medicare can negotiate prices for small-molecule drugs nine years after approval and for biologics after 13 years. Stanford argued that this so-called “pill penalty” could jeopardize the small-molecule sector, where the U.S. has historically been competitive.
Research from Vital Transformation found a 70% reduction in the median size of venture capital investments in small-molecule candidates targeting indications with high Medicare exposure since the law was passed. Other analysts say the threat of the IRA is overblown.
Stanford also stressed to lawmakers the importance of continued congressional oversight of the FDA and the need for predictable, stable regulatory guidance. While he praised the agency’s efforts to remain nimble, adapt to AI and accept single-arm phase 3 trials, he said greater consistency is needed.
“It’s got to be more than just words and headlines. We need technical guidance,” he said. “We need consistency, and those two things must go hand in hand to ensure the FDA remains the gold standard.”
Although there is significant financial opportunity for venture capital in China, Stanford said biotechnology is about more than returns. Investors face risks when operating in systems subject to centralized government control rather than open-market principles.
Stanford and his group argued that the Inflation Reduction Act, MFN and regulatory instability pose a threat to one of the country’s most important industries.
“It would be a huge loss for the U.S., from a geopolitical and national security standpoint, to lose our position as the world’s medicine cabinet,” he said. “We are running a serious risk of allowing China to take that role.”
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Looking ahead, Stanford said he is hopeful about the Ensuring Pathways to Innovative Cures Act, a bipartisan, bicameral bill designed to amend the Inflation Reduction Act. The legislation would eliminate the “pill penalty” by extending the Medicare price negotiation timeline for small-molecule drugs to 11 to 13 years, aligning it more closely with biologics.
The group is also focused on preventing MFN from being codified into law, a priority shared by other advocacy organizations such as the Midsize Biotech Alliance of America.
“VCs are adamantly opposed to codifying MFN, and we hope that message resonated on the Hill,” Stanford said.
He pointed to last year’s passage of the Orphan Cures Act, which allows drugs with multiple rare disease indications to be exempt from Medicare price negotiations, as evidence that advocacy efforts can succeed.
“That’s transformative and shows that good advocacy pays off,” he said. “We need to put some bad ideas, however well-intentioned, to bed.”
