Prepare for nuclear winter, folks 

… and I don’t mean the 24 degree morning we are having in D.C.

I have to admit, I was a bit skeptical myself when Steve Ubl, the CEO of PhRMA, told me and a group of reporters that H.R. 3 would mean “nuclear winter” for small biotech companies. But I’ve spent the last few weeks talking with CEOs, drug pricing experts, venture capitalists and economists, and I’ve got to say: The fear is very, very real that this plan could decimate the world of small biotech.

“This bill could have devastating effects on our industry, period. End of discussion,” one CEO told me. 

These firms don’t actually have pricey drugs on the market — meaning the Pelosi plan isn’t meant to impact them — but that actually puts them in the most precarious position of all. These firms rely on investments from venture capitalists to keep their lights on. Those venture capitalists bet that eventually the drugs these firms are developing come to market and there’s a big pay out, but if the entire drug pricing system is upended, those firms will invest much less in the industry or walk away from it entirely. 

And these doomsday predictions aren’t partisan. I spoke with Dean Baker, one of the most progressive economists I know, and here’s what he told me: “Will we have fewer of these biotech startups? My guess is we probably would.”

If you’re wondering: Why care about small biotech? Here’s a sobering reminder: More than 70 percent of clinical trials are currently being done by these firms, according to data from BIO. Read more.