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The 21st Century Cures Act Won’t Cure Our Healthcare Problems

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December 5, 2016

Dear Reader,

Having passed the House with overwhelming support, the $6 billion 21st Century Cures Act is on track to become law. Its original purpose (before lobbyists spent more than $100 million to influence the legislation) was to accelerate the development and approval of new drugs and medical devices.

Faster regulatory approval would clearly aid patients who are denied access to unapproved treatments and cures. It would also heal the economy by addressing the rising cost of healthcare for the aged, which drives government spending and debt.

The CBO has explained the issue here, so I’ll just summarize. An increasingly older population means growing medical costs. This takes resources away from saving and investment, which create economic growth.

Former Fed Chair Alan Greenspan agrees with this assessment. He states that our employment and debt problems are not driven by bad economic policies. Rather, they’re the result of “age and health and the like.”

Research isn’t the answer

The problems of “age and health and the like” are solvable. But the Cure Act won’t be enough to do it. Why? Because it doesn’t clear the logjam holding back innovation. Rather, most of the money ($4.8 billion) would fund research into key areas. This includes stem cell or regenerative medicine. I’m generally in favor of increased research spending, but that’s not where our current focus should be.

We already have cures. The last two decades have seen more biological discovery than all those in previous history. In fact, many world-changing biotechnologies are already licensed to startups, but most of them are limping toward commercialization in a process that can take more than a decade.

Due to high regulatory barriers, drug development typically costs tens of millions of dollars in the early stages. Phase 3 trials cost even more. I’ll give you a good example.

Perhaps the most dramatic medical news in recent years came from Asterias Biotherapeutics. For the first time ever, quadriplegics with catastrophic spinal cord injury have had significant control and sensation restored. Moreover, these results occurred in the first three months of a 12-month trial using partial doses of genetically modified stem cells.

You might be surprised to learn that this isn’t even a 21st century technology. Michael West PhD created this therapy 20 years ago at Geron, the company he founded. But Geron was so ground down by the effort to move this cure to market, the board gave up. Later, West reacquired the rights to his breakthrough for BioTime (*see disclosure below). He then created a subsidiary, Asterias Biotherapeutics, to take the technology into trials.

Reforming the drug development process

Over the past 20 years, West has pushed the science of regenerative medicine much further. In fact, the embryonic stem cells used in West’s revolutionary spinal cord therapy are, according to him, now obsolete. But regulators won’t allow the use of non-embryonic pluripotent stem cells without a lengthy and costly approval process. West also seems to have applied for a patent on a biotechnology that would repair older spinal cord injuries as well as damaged organs and limbs. These are important breakthroughs that exist right now.

So why would we spend billions of dollars on pure research, including stem cell medicine, when a private company is decades ahead of academic researchers? It makes no sense.

The government of Japan knows this. Japanese law permits regenerative medicine procedures in patients after proving safety. That process might take only a few million dollars and six months. This allows companies to skip phase 2 and 3 trials, which account for most of the cost and delay associated with drug development. Instead, they can move from phase 1 to phase 4 (tracking and publishing results in real patients).

This is the real model for regulatory reform. If we truly want to speed up the development and approval of new drugs and medical devices, that’s how we should do it.

So where did the Japanese get the idea? They got it from Andrew von Eschenbach, former commissioner of the FDA. You can read more about his ideas here.

We live in very exciting times, and there’s a good chance we might see a shift to more de-regulation here in the US too. In my Transformational Technology Alert, my team and I closely follow these revolutionary developments and show you how to profit from the companies’ success.

That reminds me that until December 13, you can get my premium alert service plus five other excellent Mauldin Economics services for one low price by becoming a Mauldin VIP. Subscribing to this Six-in-One offer can save you thousands of dollars, and you’ll receive a weekly summary of all the buy and sell recommendations for a quick and easy overview. Click here for more information.

(*Disclosure: The editors or principals of Mauldin Economics have a position in this security. They have no plans to sell their position at this time. There is an ethics policy in place that specifies subscribers must receive advance notice should the editors or principals intend to sell.)

Patrick Cox
Patrick Cox
Editor, Transformational Technology Alert

Mauldin Economics


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