Here in Colorado, the bioscience sector has emerged as a shining star in our state’s economy. Our industry embodies the creativity, collaboration and risk-taking spirit that Coloradoans are known for. The men and women who work in bioscience develop breakthrough cures and treatments for patients facing devastating diseases. Sixty of these companies are located on Aurora’s Fitzsimons Innovation Campus, one of the most significant developments of its kind in Colorado. We plan to welcome more innovators and create additional jobs as we break ground on a newly-announced 115,000-square-foot Biosciences building.
These companies are part of a high-risk industry, one where failure is more common than success, and one we must be careful not to undermine.
For every innovative therapy approved by the U.S. Food and Drug Administration, nine others fail in clinical trials, according to industry data. That rate of failure explains why 92% of biotech companies are unprofitable. This life-saving science depends on private-sector partners who, in 2015, invested roughly $150 billion into biomedical research. That money represents real risk, particularly when faced with the fact that only one out of every 10 experiments will lead to a successful treatment. Without it, we would not have many of the medicines that are now treating dangerous diseases.
New discoveries from the brightest minds in science dedicated to the discovery of new cures or treatments. Right now, Colorado legislators are considering harmful measures with House Bill 1260 (HB18-1260), the Prescription Drug Price Transparency bill.
The bill would require biopharmaceutical companies to divulge sensitive and proprietary information if the price of a drug increases by more than a certain percentage from one
year to the next. It’s said these reforms will help patients. The truth is, these misleading reforms will not provide any relief to patients the next time they pick up a prescription.
How prescription drug costs are determined is extremely complicated. The price of a medicine depends on a wide range of factors, including the risk and investments necessary to bring the drug from the lab to patients. For example, drug wholesalers buy medicine from biopharmaceutical companies at discounted prices and then sell the medicine to pharmacies at a profit.
Then there are pharmacy benefit managers or PBMs, often overlooked middlemen in the biopharmaceutical supply chain. These middlemen negotiate substantial rebates with drugmakers on behalf of the insurance companies and major employers they represent and then hold some of those rebates as profit.
Meanwhile, insurance companies determine how much of the remaining savings are passed along to patients. Insurers also decide what patients’ out-of-pocket costs will be for the medicines they need, by setting copays, deductibles and other cost-sharing requirements.
In 2017, these rebates totaled approximately $127 billion, yet consumers see too little of these savings. Insurers often require patients to pay the full cost of their prescription drugs until they meet their deductible, a practice our FDA Commissioner, Dr. Scott Gottlieb, has raised concerns about.
There’s no question health care costs are too high, and patients deserve more transparency in how their health care dollars are being spent. But the misleading legislative proposals look at only a small piece of a larger picture, and as a result, they will fail to provide the lower drug costs patients are being promised.
Colorado has a large stake in how these debates play out. We have enjoyed growth in research, testing and medical labs. Currently, Colorado directly employs 30,000 people in the bioscience industry, creating over 159,000 direct and indirect jobs.
Innovation will drive Colorado’s future economic growth. It would be a mistake for the legislature to limit those opportunities by passing misguided legislation.
Steve VanNurden is president & CEO of the Fitzsimons Innovation Campus