Advocate

Link to New York State Price Controls Proposal 

MEMORANDUM OF OPPOSITION TO THE HEALTH AND MENTAL HYGIENE ARTICLE VII BUDGET PROPOSAL S.2007/A.3007, PART D:

“Pharmaceutical-related Medicaid Redesign Team Recommendations”

NewYorkBIO strongly opposes Part D of the Health and Mental Hygiene Article VII budget proposal.  This proposal would allow the state to impose draconian price controls on all pharmaceuticals sold in New York and thereby disincentivize innovative drug makers from offering their products in the New York market. Most importantly, it would stifle the development of innovative therapies that target some of the most challenging and debilitating diseases in our lifetime.  

This Proposal Creates an Unprecedented Price Control Scheme in the State of New York

In short, the proposal would allow the Department of Health to arbitrarily force certain biopharmaceutical companies to report trade secrets and proprietary information regarding costs associated with the research, development and production of treatments.  The Department of Health would send that information to a Drug Utilization Review Board, which would then capriciously decide a “fair price” for that treatment.  Any amounts paid over that price would either be reimbursed back to the state (in the case of treatments paid for by Medicaid) or taxed at a confiscatory rate (for treatments paid for in the commercial marketplace).      

This Proposal Could Cripple Bioscience – New York’s Homegrown Industry 

NewYorkBIO brings together over 250 of New York’s bioscience companies, universities, research institutions, and others dedicated to advancing life science research and commercialization.  The New York area is the largest and richest bioscience community in the world:  Among other assets, the region boasts over 60% of Big Pharma national or global HQs; supports more than 75,000 direct biotechnology jobs and has been named Genetic Engineering News’s #1 region in the US to find a biotech job three years running; graduates more life science PhDs than any other region in the US; is home to over 25% of the cancer clinical trials in the US; and lays claim to the world’s largest concentration of academic medical centers.

The State of New York has long supported the bioscience industry, and a significant factor in the development of this sector in New York has been the state’s unwillingness to pass legislation that negatively affects innovation.  Unfortunately, this proposal represents one of the most aggressive interventions into the functioning of the bioscience industry.  Ironically, the State of New York stands to lose the most from such a proposal because, as discussed above, it has one of the largest bioscience sectors in the country.  It would be akin to the State of Iowa passing legislation that would harm the corn industry nationwide.   

    This proposal would be especially burdensome on the engine of biotech innovation – the small emerging companies with few or no marketed products.  These companies must use their limited resources as efficiently as possible to speed the discovery of treatments that can improve the lives of patients, ensure patients maintain access to these therapies once available, and to reinvest in future innovation.  Reporting requirements contained in this proposal would divert scarce resources to accounting and compliance activities that could be better used on developing therapies that patients need.

    Some might argue that the interventions permitted by this proposal would only be used against large biopharmaceutical companies, which could presumably afford the additional expenses associated with compliance.  Such a sentiment is a misunderstanding of how the dynamic bioscience industry operates.  The large publicly traded companies are some of the most significant investors in and partners to the small bioscience research companies that drive growth. Inflicting harmful price controls on those companies will in turn affect how they can invest in the growth of the industry generally.  And again, because New York has one of the most vibrant ecosystems for biomedical innovation, it stands to bear a disproportionate amount of the cost of enacting a proposal such as this. Indeed, in 2016 New York State medical schools alone spun out over 30 new bioscience companies, many of whose research and development was funded at least in part by large biopharmaceutical companies.

This Proposal Would Limit Future Patients’ Access to Innovative New Therapies in Return for a Speculative and Meager Cost Savings Today

    Harming the state’s bioscience sector is certainly ill-advised, but tragically, the group most harmed by a proposal such as this are the patients who will face reduced access to innovative treatments.  The U.S. marketplace fosters robust competition, which helps to control costs while allowing for development of innovative new therapies.  This ecosystem allows patients in the U.S. to enjoy more timely and robust access to innovative therapies than patients in countries that employ government-imposed price controls.

    The proceeds from the rebates the State expects to extract from the bioscience industry would not, in turn, be returned by the state to further research or to help patients, but would instead be deposited into a “High Priced Drug Reimbursement Fund.”  Funds collected would be paid out to health insurers and the state Medicaid system.  In other words, the state would do double harm by extracting potential research and innovation investment out of the system in order to redirect it into the state’s Medicaid system or to insurance companies in a fanciful attempt to lower the cost of premiums in New York.  Of course, all of this would have the effect of disincentivizing investors and researchers alike from doing business here.    

    Artificial interventions like price controls have such a devastating impact because the innovation ecosystem for new treatments is relatively fragile.  According to researchers at Tufts, bringing just one drug to market costs nearly $2.6 billion and takes 10-15 years.  In fact, of those rare treatments that proceed to phase-1 human clinical trials, only 12% win approval from the FDA.  Only 2 of every 10 treatments on the market ever earn back enough money to match the costs of research and development and the FDA approval process before their patent expires;  and only 1 in 10 biotech companies ever makes any profit at all. The incremental costs of failed drugs comes to many times the profits from any one successful therapy—these costs are not included in the state’s proposed pricing analysis, and therefore imposing additional costs and setting artificial price controls will only worsen those figures.

    In the past few years, many of the world’s leading research organizations have looked to New York specifically to access the talent, research, and technology being created here: the Pfizer Center for Therapeutic Innovation; the Roche/Genentech Translational Research Center; and the Johnson & Johnson Innovation’s JLABS have all come to access and bring to patients New York technologies. Further, growth companies from Europe and Asia such as France’s Cellectis and China’s WuXi have come here to build research alongside home-grown research companies like Regeneron, Acorda, and Intra-Cellular Therapies—all companies working to bring life-changing therapies to New York patients. And in the past year two years, Versant Ventures and Accelerator Coro, two leading venture capital firms without a previous presence in New York, moved into New York City to invest in early stage development opportunities and have together already launched four new biotechs based on New York technolgoy. Together, this constitutes a wave of innovation that could easily be snuffed out by the state’s pricing controls.

Conclusion

While there is great pressure to respond to passions temporarily inflamed by the recent actions of one or two bad actors in the industry, such sweeping interventions into the marketplace cause much more harm than good.   And as stated above, this proposal would specifically harm New York because we have fostered such a strong bioscience sector in this state.  Indeed, many of the advanced therapies that New Yorker have access to have been discovered at New York academic institutions, commercialized by small New York companies (who take on the full investment weight of bringing these therapies to market), and dispensed by New York doctors and hospitals.  Critically, it is the citizens and patients of New York that most benefit from a healthy, innovative bioscience marketplace. 

It is for these reasons that NewYorkBIO strongly opposes this proposal.  If you have further questions regarding this issue, please contact Joe Tortorice, VP, Operations & Business Development, at joe@newyorkbio.org or 212-433-2623.

Memorandum in Support A.7509(Gottfried); S.4788(Hannon)

“Relates to interchangeable biological products”

NewYorkBIO strongly supports A.7509 and S.4788, which would establish requirements for pharmacies to substitute and dispense interchangeable biological products.  This legislation updates New York’s laws regarding the substitution of generic drugs to reflect the more complex nature of emerging biologic therapies.  This update is necessary both to allow for the substitution of biologics in New York (which should lead to cost savings for consumers and to provide safeguards for patients to ensure they receive the most efficacious treatment possible.    

Biologics are cutting-edge therapies that are manufactured in a living system (like a plant or animal cell).  Most biologics are very large, complex molecules produced using recombinant DNA technology. These are drugs that target spinal cord injury, kill cancer cells and treat inflammatory diseases; attack Alzheimer’s, diabetes and heart failure; and address genetic disorders, addiction, and even alopecia.

Biologics differ from tradition drug therapies that are manufactured through chemical synthesis.  A traditional drug can be analyzed with specificity to ensure that it was manufactured with the exact chemical composition intended.  Thus, once a brand drug has lost its patent protection, the FDA can determine if a proposed generic version of that drug is “bioequivalent” to the brand drug.  Analogously, New York law provides a fairly straightforward process by which pharmacists can substitute generic drugs for name brand drugs.

Fundamentally, the present legislation ensures patient safety and access to innovative treatments by creating a pathway to bring biosimilars to consumers.  Addressing difficult maladies with biologics requires absolute certainty with regard to a treatment’s interaction with a patient’s system.  This legislation would update the New York law regarding drug substitution to require that a substitute biologic be “interchangeable” with a prescribed biologic.  Federal law defines whether a biologic meets the standard of “interchangeable” – a different standard that reflects the more complex nature of biologic products.  

Moreover, it contains transparency provisions which are critical to both prescribers and patients.  It is for this reason that 18 health care advocacy groups support this legislation, including the American Cancer Society – Cancer Action Network, the Global Healthy Living Foundation, the Latino Commission on AIDS, the Lupus and Allied Diseases Association and the Scleroderma Foundation Tri-State Chapter.  

In recent years, 31 other states have updated their substitution laws to reflect the distinction between traditional drugs and biologics, including California, Pennsylvania, New Jersey, Ohio, Washington, and Oregon

Conclusion

For the reasons set forth above, NewYorkBIO strongly supports this proposal.  For further inquiries, please contact Joe Tortorice, VP, Operations & Business Development at joe@newyorkbio.orgjoe@newyorkbio.org or (212) 433-2623

About NewYorkBIO

NewYorkBIO is the leading trade association for the life sciences industry in New York City and New York State, representing more than 250 biomedical companies, universities, research institutions, and others dedicated to advancing life-saving research. New York is the largest and richest bioscience community in the world. With the largest concentration of academic research centers in the world, New York graduates more PhDs than any other region in the country and is responsible for a quarter of all cancer clinical trials. The life sciences employ more than 75,000 New Yorkers at companies ranging from very small start-ups that rely on incubator space to the largest pharmaceutical companies in the world.

Link to New York State Life Science Initiative

Memorandum in Support of Gov Cuomo’s New York State Life Science Initiative

In mid-December 2016, Governor Cuomo announced an ambitious plan to support and grow the state’s life science sector through various tax incentives, direct investments, and policy initiatives. Those proposals were also included in the Governor’s budget, delivering a total investment of more than $650 million to New York’s life science sector over the next 10 years with the aim of creating 25,000 jobs in New York State. In particular, the Governor’s proposal examines the shortage of affordable lab space for researchers and pre-commercial companies; increasing access to capital for early research; and the critical problem of attracting and retaining scientific talent.

NewYorkBIO welcomes the Governor’s support for the life sciences, and since the announcement of this initiative has solicited feedback from our membership regarding how the various provisions within the proposal would affect our ability to research, develop, and commercialize life-saving technologies in the Empire State. Our findings and thoughts regarding the Governor’s Life Science Initiative are below, separated by subject area. 

Addressing the Lack of Affordable Lab Space

NewYorkBIO is enthusiastic about the Governor’s proposal to provide $200 million of capital funding for lab space, equipment, and technology. Several of our start-up companies have secured space at the SUNY Downstate incubator, the University of Buffalo Biotech Incubator, and other StartUp sites, and many more have identified this is a primary development concern.

While the availability of affordable lab space is a key, a high value is also placed on the density of life science companies where they locate. Accordingly, we also support the restructuring of the StartUP NY program to make it easier for companies to find tax-free space and to aid in the development of life science clusters tied to institutions of higher education. We strongly feel that these provisions can help offset the high cost of built out lab space, while at the same time encouraging co-location. 

Increasing Access to Capital for Early and Growth Stage Companies

Several of our members expressed the challenges that they have with the refundability of existing tax credits. Other states have addressed this problem by establishing an incentives exchange market. However, the refundable corporate tax credit contemplated in this initiative goes a step further to help early-stage companies access capital. In doing so, New York is demonstrating an astute understanding of the drug development lifecycle while at the same time providing capital to the companies that need it most among our membership. 

NewYorkBIO applauds this provision and encourages the state to consider expanding its eligibility requirements and revisiting the refundability of other existing tax credits for early and growth stage companies. Should the Governor expand the eligibility for Excelsior job credits, as proposed, we would strongly encourage those credits to be refundable for early and growth stage companies as well. We are additionally pleased with the proposal to provide a tax credit for angel investors, as well as to award promising early and growth stage companies through a quarterly launch competition.

Attracting and Retaining Top Scientific Talent

NewYorkBIO represents many of the state’s leading research universities, and they have expressed that it is difficult to attract and retain top talent, particularly in the downstate region where the cost of living creates an additional burden. The pressures are additionally pronounced for early and growth stage companies that must contend with the high costs of the New York metro area without being able to offer any of the advantages or resources that come with a large-scale research university.

The Governor’s plan acknowledges these challenges and seeks to implement a life sciences researcher recruitment program in conjunction with the academic medical colleges. Additionally, the Governor envisions creating an Entrepreneurial Advisory Panel that matches mentors with emerging innovators that can help them maneuver the various challenges that early and growth stage companies face. NewYorkBIO has a wide array of experts within our membership who are enthusiastic about these opportunities to increase the connectivity of our industry while helping the next generation of innovators succeed. 

Conclusion

NewYorkBIO strongly supports the Governor’s Life Sciences Initiative, and we welcome the opportunity to be an active partner in bringing it to fruition. As the state’s leading association for the life sciences, we look forward to further discussion with the Governor and his administration to make New York the premier destination for life sciences innovation and research. For more information, please contact Joe Tortorice, VP, Operations & Business Development, at joe@newyorkbio.org or (212) 433-2623.

About NewYorkBIO

NewYorkBIO is the leading trade association for the life sciences industry in New York City and New York State, representing more than 250 biomedical companies, universities, research institutions, and others dedicated to advancing life-saving research. New York is the largest and richest bioscience community in the world. With the largest concentration of academic research centers in the world, New York graduates more PhDs than any other region in the country, and is responsible for a quarter of all cancer clinical trials. The life sciences employ more than 75,000 New Yorkers at companies ranging from very small start-ups that rely on incubator space to the largest pharmaceutical companies in the world. For more information, see www.newyorkbio.org.