Venture Capitalists Avoiding New Drug and Device Companies
WASHINGTON, DC (October 6, 2011) – In a recent blog posted in the Venture Capital Dispatch blog of the Wall Street Journal, Timothy Hay said venture capitalists are beginning to steer their investment dollars away from fledgling pharmaceutical and medical device companies, a phenomenon he said would drive jobs and promising treatments overseas, according to a new survey of life sciences investors.
The chief reason, according to most of the 156 venture firms surveyed, is dysfunction at the Food and Drug Administration, an agency investors say is so unpredictable and risk-averse that young companies are now inclined to merely give up on trying to get on the market in the U.S.
These are the results of a survey done this summer by the Medical Innovation and Competitiveness Coalition, a partner organization to the National Venture Capital Association that is made up of medical-technology investors.
The group surveyed firms that account for some $10 billion worth of venture investing in life sciences over the past three years. Thirty-nine percent of those surveyed said they have cut their life sciences investing over the past three years, and the same percentage said they will continue to cut back in the coming years, some by as much as 30 percent.
Additionally, all firms said they expected to see major declines in investments in companies targeting cardiovascular disease, diabetes, obesity, cancer and neurological diseases, and instead invest in health care services and information technology—areas that are not regulated by the FDA.
The results of the survey were announced on Capitol Hill Thursday morning, where Sens. Michael Bennet (D-Colo.) and Richard Burr (R-North Carolina), both members of the Senate Committee on Health, Education, Labor and Pensions, were expected to stand alongside prominent VCs who focus on health care.
The involvement of Sens. Burr and Bennet is a milestone of sorts for life-sciences investors, many of whom have traveled to Washington repeatedly to try to get policymakers to pay attention to the issue.
While MedIC and NVCA are not asking for specific, immediate policy changes, they say that engaging lawmakers is the beginning of what they hope will be a long and productive dialogue about reforms. The first opportunity for actual legislative change will come next year.
Two laws affecting operations at the FDA—the Prescription Drug User Fee Act and the Medical Device User Fee and Modernization Act—are up for re-authorization next year, which will give lawmakers a chance to make changes to the agency, including to its funding.
Beth Seidenberg, a partner at Kleiner Perkins Caufield & Byers and the chair of MedIC, said her group will push for the FDA to be better funded, but stressed that her group is more concerned with coming up with ways to make changes to the agency’s approval process.
She said that MedIC, for the time being, is mainly asking for lawmakers to get involved with the issue, but has not put forward major policy suggestions or funding plans.
“We will get more specific as legislation [related to PDUFA and other laws] moves through,” she said.
Adam Bozzi, a spokesman for Sen. Bennet, said Bennet sees medical innovation as a crucial part of the country’s economic competitiveness, and that the senator has held meetings with FDA Commissioner Margaret Hamburg.
Just one day before the venture group and the two senators were to tout the new survey findings, Hamburg on Wednesday released a 40-page document outlining upcoming reforms to the agency, changes she said will help the regulatory process become more predictable and transparent.
Among the reforms are new liaison programs with entrepreneurs and business owners, the naming of a new deputy commissioner to oversee drugs, biologics and cell-based therapies, a new focus on personalized medicines and an expedited drug-development pathway for important new medications.
Seidenberg responded by saying investors are pleased that the FDA is listening to their concerns, especially a new initiative to “open source” a good deal of FDA clinical data, which will make it available for analysis, and hence make FDA decisions more transparent. But they were also disappointed that in their eyes few of the initiatives put forward are new.
“On the small-business outreach, I’m not sure there’s much new there,” she said. “The stuff about personalized medicine has been out there since 2004. As far as the rapid drug development, the FDA has shown some good progress on this over the past year, but again, it’s not new.”
Among the survey’s other findings:
- 36% of life sciences investors plan to increase investments in European start-ups, while 44% expect to steer more money to Asian companies.
- More than 40% said they would decrease investments in pharmaceutical and device companies, while about half said they would increase investments in information technology and health care services.
- Sixty-one percent of respondents said regulatory challenges were the top reason they were shying away from life sciences.
Older Cancer Survivor Population to Increase Substantially
PHILADELPHIA (October 6, 2011) — Over the next decade, the population of cancer survivors over 65 years of age will increase by approximately 42 percent.
“We can expect a dramatic increase in the number of older adults who are diagnosed with or carry a history of cancer,” said Julia Rowland, Ph.D., director of the Office of Cancer Survivorship in the Division of Cancer Control and Population Sciences at the National Cancer Institute (NCI). “Cancer is largely a disease of aging, so we’re seeing yet another effect of the baby boom generation and we need to prepare for this increase.”
Rowland’s report is part of the special focus on cancer survivorship, published in the October issue of Cancer Epidemiology, Biomarkers & Prevention, a journal of the American Association for Cancer Research. Rowland and colleagues analyzed data from the NCI Surveillance, Epidemiology and End Results Program. This report on cancer survivorship statistics will be updated and published on an annual basis.
They found that in 1971, the year the National Cancer Act was signed, the survivor population was approximately 3 million, which increased to nearly 12 million in 2008, the last year data are available.
In 2008, 60 percent of the cancer survivors were at least 65 years old. The NCI projects this number will increase to 63 percent by 2020.
The most common diagnosis among cancer survivors includes female breast cancer (22 percent), prostate cancer (20 percent) and colorectal cancer (9 percent). Researchers attribute this high survival to improved detection and screening. Lung cancer, which is by far the most diagnosed cancer in men and women, is much lower in the survivor population at just 3 percent.
Rowland said the health care community needs to prepare for the coming wave of cancer survivors who will present some unique challenges. As a population, the number of oncologists and geriatric specialists is decreasing just as the need for these specialists is increasing.
“We may be fortunate in that the aging population is healthier than in previous generations, and new technologies could allow for better communication and follow-up,” she said.
$6.7 Billion Spent on Unnecessary Tests and Treatments in One Year
NEW YORK, NY (October 3, 2011) — Researchers at Mount Sinai School of Medicine have found that $6.7 billion was spent in one year performing unnecessary tests or prescribing unnecessary medications in primary care, with 86 percent of that cost attributed to the prescription of brand-name statins to treat high cholesterol. The findings are published in a research letter in the October 1 Online First issue of Archives of Internal Medicine, one of the JAMA/Archives journals.
Led by Minal Kale, MD, a postdoctoral fellow in the Division of Internal Medicine in the Department of Medicine at Mount Sinai School of Medicine, the research team reviewed findings from a study published in the May 2011 issue of Archives of Internal Medicine, which identified the top five most overused clinical activities in each of three primary care specialties: pediatrics, internal medicine, and family medicine. With this information, they performed a cross-sectional analysis of separate data that were pulled from the National Ambulatory Medical Care Survey and the National Hospital Ambulatory Medical Care Survey. They found more than $6.7 billion was spent in excess healthcare spending in the primary care setting in 2009. Eighty-six percent, or more than $5.8 billion of the unnecessary spending, resulted from the prescribing of brand-name statins rather than generic versions.
“Our analysis shows astronomical costs associated with prescribing of brand name statins when effective, generic alternatives were available. Efforts to encourage prescribing of generics clearly have not gone far enough,” said Dr. Kale. “Additionally, millions are spent on unnecessary blood work, scans, and antibiotic prescriptions. Significant efforts to reduce this spending are required in order to stem these exorbitant activities.”
The remaining costs were attributable to the following:
- During physical exams, more than half of complete blood work ordered was not needed, resulting in more than $32 million in excess costs;
- Unnecessary bone density scans in younger women accounted for more than $527 million;
- CT scans, MRIs, or X-Rays in people presenting with back pain accounted for $175 million in excess healthcare costs;
- Over-prescription of antibiotics for sore throat in children, excluding cases of strep throat or fever, accounted for $116 million in unnecessary costs;
- Other excess costs included needless annual echocardiograms, urine testing, pap tests, and pediatric cough medicine prescriptions.
“We found considerable variability in the frequency of inappropriate care, however our data show that even activities with small individual costs can contribute substantially to overall healthcare costs,” said Dr. Kale. “In light of the current healthcare reform debate, we need more research examining how overuse contributes to healthcare spending. Research might focus on the potential role of reimbursement, defensive medicine practices, or lack of adherence to guidelines.”
The authors note that the analysis is limited to the data provided by the surveys and that they were conservative in their assessments. They conclude that this type of analysis should be extended to medical specialties outside of primary care and that physicians should make efforts in their own practices to evaluate costs and reduce them where necessary in order to achieve affordable, high-quality care.