The FDA And CMS Need To Learn From Venture Term Sheets

Time for the US HHS to take a lesson from early stage venture capitalists re accelerated approval.

Recent case: drug found to have proof of concept but not of benefit (ie does not pass the “so what” test — yet.) So we permit full commercialization in exchange for a promise of eventually completing a confirmatory study proving the thus far hinted at benefit.

Full commercialization means premium pricing, co-pays — the works. With the usual “we don’t negotiate drug prices” hands off on the part of CMS. A great term sheet, if you can get it.

Substitute an early stage VC doing this deal. Yeah, we’ll pay up, but we’ll mitigate the risk. Tranches, commitment milestones, interim deliverables. So approve the drug. Then:

  1. Let the company market as much as they want, detail physicians, hold symposia, advertise to patients, to spend tons of their own money.
  2. Withhold all reimbursement until the first patient has been enrolled in the confirmatory study.
  3. Reimburse no higher than the higher of ASP of the existing drugs for the indication or a cost-plus of production, thus not giving the company a blank check to charge a premium until they’ve proven that their drug really deserves it.
  4. Suspend co-pays for the drug until the confirmatory trial is complete. Patients should not have to finance the proof of efficacy part of their own drug development. (Yes I know this last part is really complicated.) (But we are smart and motivated.)

Huge kudos for the work so far on the drug in question. When the drug has demonstrated clinical efficacy, its inventors deserve enormous returns for their work.

Unfortunately we have provided no incentive for them to finish the job quickly, and a perverse incentive to collect “mission accomplished” returns for work in progress.




bio fund manager, Columbia prof, ex-reproductive endocrinologist, roadie for @PriyaMayadas

Love podcasts or audiobooks? Learn on the go with our new app.

Recommended from Medium

Healthcare Consumers: Hungry For Better Customer Experiences

Avery Lipman on Company Valuations

Avery Lipman Net Worth

On-demand Manufacturing — an international Perspective on Digitalized Players

Vaibhav Global : Highly profitable e-commerce company


Transformation of SaaS providers to MSPs (Managed Service Providers) in Employee Transportation…

Major milestone reached as Gogoro produces its 1 millionth swappable EV battery

Home services industry – latest trend, app culture, and challenges

Get the Medium app

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store
David Sable

David Sable

bio fund manager, Columbia prof, ex-reproductive endocrinologist, roadie for @PriyaMayadas

More from Medium

The State of Innovation in 2021

Buy Now Pay Later: The New Challenger to Credit Cards

Origin Secures Funding to Make Traveling Easier

ISSB 101 — What Companies Need to Know