For over three decades, venture capital has spurred the creation and growth of healthcare innovation, such as in the biotechnology and medical device industries. Small venture-backed companies play a critical role in bringing revolutionary medical innovations and discovering groundbreaking treatments and cures aimed at diagnosing, treating, and curing the most deadly and costly diseases. In 2020, $36 billion in capital was invested into life sciences companies, 41% more than the previous annual record of $26 billion invested in 2018. In addition, investment in drug discovery nearly doubled from $8.8 billion in 2019 to $16.2 billion in 2020.
However, escalating time, cost, and uncertainty of new product development, combined with increasing coverage and reimbursement challenges, can provide challenges for venture capital investment in healthcare innovation. Approval processes at the Food and Drug Administration (FDA) and difficulties obtaining coverage and reimbursement for breakthrough products put pressure on teams of doctors, scientists, and investors that are working to bring next-generation therapies and cures to the American public. The result of these challenges is that many promising healthcare startups are not able to raise the capital they need to grow and prosper.
Policymakers must recognize that the medical innovation ecosystem in the U.S. is at a crossroads—rich with new scientific promise and opportunities to improve patient care, but harmed by outdated processes that slow and disincentivize promising new ideas from moving forward. The United States should make the advancement of medical innovation a national priority for patients and for our overall healthcare system.
Policymakers should adopt modern approaches to development, regulation and reimbursement policies.
NVCA supports policies that streamline the regulatory approval process at the FDA, particularly for novel technologies, as well as the reimbursement process at the Center for Medicare and Medicaid (CMS). Process improvements at these agencies are critical to encouraging investors to take the long-term risk of pursuing new medical innovations that will save and improve patients’ lives and spur U.S. job creation.
Proposals such as the Medicare Coverage for Innovative Technology (MCIT) pathway at CMS would benefit the Medicare population through immediate coverage of breakthrough devices and ultimately encourage greater investment into lifesaving products. Further, proposals to lower costs of prescription drugs should be cognizant of how reforms impact early-stage investment in new medicine discovery and the message changes send to long-term investors in new medicine.
The federal government must also re-commit to robust basic research funding and federal technology transfer programs so promising developments can be commercialized, thus creating jobs and increased innovation in our nation’s healthcare system.