Incubate in Inside Health Policy on Policy Headwinds and Industry Shifts

Incubate executive director John Stanford was recently featured in an Inside Health Policy article by reporter Gabrielle Wanneh on the pressures facing the pharmaceutical industry under President Trump's Most Favored Nation (MFN) drug pricing proposal, among other policy headwinds. 

While companies are publicly emphasizing growth, Stanford cautioned that beneath the surface the investment ecosystem is being reshaped by policies like the Inflation Reduction Act's pill penalty that contribute to growing uncertainty for small and emerging biotechs:

John Stanford, executive director of the coalition Incubate, says drug companies spotlighting the most optimistic achievements from the previous quarter does not mean the industry isn't suffering from efforts to control how much companies can charge U.S. payers and patients.

"It's worth remembering that an earnings call is an opportunity for a company to put its best foot forward and one of the challenges about talking through the damages of the IRA or some other policies is that companies are loath to publicly disclose things that aren't certain about what the impacts are going to be," Stanford told IHP.

Stanford notes that due to drug price negotiations, especially the provision that small molecule drugs are eligible for selection after nine years on the market while biologics are eligible after 11 years, investment behind the scenes is shifting away from small molecule treatments and shift toward biologics, even though the former are more widely used.

Stanford also said that while companies are surpassing revenue estimates, the industry is underperforming compared to other business sectors. The market is not rewarding the drug industry at the moment, Stanford said, because it knows that many of the products driving revenue now will soon lose exclusivity and competitors will enter the market to drive down prices.

"I think it's a half-trillion dollar patent cliff within the next five years," Stanford said. "And that's why, despite outperforming on the current set of drugs, Wall Street is still a little gloomy about this industry because they know those headwinds are out there, both from a policy standpoint and just because it's really hard to develop drugs."