Incubate in Investor's Business Daily on "Most Favored Nation" Drug Pricing

Incubate executive director John Stanford was featured in an Investor's Business Daily article by reporter Allison Gatlin on the Trump administration's effort to implement a "Most Favored Nation" (MFN) policy for prescription drugs -- a proposal that would tie U.S. prices to those paid in other wealthy nations.

As policymakers push to curb drug costs, Stanford cautioned that policies like MFN risk undermining the investment ecosystem that fuels the development of new medicines. He noted that U.S. pricing plays a critical role in sustaining the research ecosystem that brings new treatments to patients:

Drugmakers often claim cutting into drug prices will have a direct impact on innovation.

John Stanford, executive director of Incubate, says the argument holds some water. Incubate is a nonprofit and national organization of venture capital firms focused on early-stage life sciences companies. He says lower U.S. drug prices mean companies will have to make tough decisions about where to focus their research and development dollars.

"Is it true that the rest of the world is free-riding on American innovation? 100%," he said in an interview. "But if we start paying (lower) prices, there just isn't enough left in the system to develop any new drugs. Net-net patients are worse off because they aren't going to realize the lower prices. Only the government will."

There's a saying in cooking: You have to break a lot of eggs to make an omelet. The same is true for making drugs. It takes billions of dollars to develop a successful medicine. Many efforts fail in testing. So, when a company prices its winning drug, it's trying to recoup the money it spent to create that drug -- and the costs tied to its failed experiments.