Biotech enters every new year facing a wall of uncertainty. But with 2016’s wild-card Republican primary candidate becoming 2017’s POTUS, the list of outstanding questions confronting biotech this year is particularly long—and the implications of the answers could be significant.
The future of the FDA under a Trump presidency sits toward the top of the list of unpredictable political topics for biotech. Trump’s transition team has said it wants to “reform the FDA, to put greater focus on the need of patients for new and innovative medical products,” but is yet to flesh out what this will mean in practice.
In the absence of a defined strategy, observers have read the tea leaves based on the identities of the people reportedly in the running to lead the FDA if, as expected, Trump accepts the resignation of Dr. Robert Califf.
Perhaps unsurprisingly given Trump’s campaign and his picks for other positions, the list includes at least one candidate that is as far away from the incremental change, steady-as-she-goes approach typical of FDA commissioners.
Jim O’Neill, managing director at tech investment firm Mithril, is the candidate causing most concern in biotech circles. O’Neill lacks a scientific background or much healthcare experience. But he has the ear of Peter Thiel who, in turn, has the ear of the President-elect. And he has a radical, libertarian bent that may appeal to Trump.
Talking in 2014, O’Neill said: “We should reform FDA so there is approving drugs after their sponsors have demonstrated safety and let people start using them, at their own risk, but not much risk of safety. Let’s prove efficacy after they’ve been legalized.”
The potential for such an approach to unleash a wave of ineffective drugs driven more by marketing than science has caused consternation. And the idea that safety can be shown in isolation, without being balanced against efficacy and without running large, late-phase trials, is questionable given the fact few, if any, drugs cause no harm and rare side effects are only seen in big patient populations.
Trump may well be undeterred by such industry qualms, but he is reportedly also considering giving the post to more of an insider candidate, former FDA deputy commissioner Dr. Scott Gottlieb. Which candidate wins out and how able they are to enact their agenda will go some way to shaping the next four years and beyond for biotech.
Other potential headwinds and tailwinds for biotech under Trump include drug pricing and tax. While biotech initially basked in being free from Hillary Clinton’s price control plans, Trump has since put the topic on his agenda.
Offsetting this potential headwind is Trump’s plan to allow U.S. companies to pay 10% tax on cash brought back from overseas. With Big Pharma sitting on foreign fortunes, the repatriation plan could unleash a fresh surge in M&A.