The FDA And CMS Need To Learn From Venture Term Sheets

David Sable
2 min readJun 11, 2021

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.



David Sable

bio fund manager, Columbia prof, ex-reproductive endocrinologist, roadie for @PriyaMayadas. I post first drafts.