Coming up with a life-saving medical product is hard enough, but getting through the lengthy U.S. Food and Drug Administration approval process — often a multiyear and multimillion-dollar ordeal — is even harder.
Coming up with a life-saving medical product is hard enough, but getting through the lengthy U.S. Food and Drug Administration approval process — often a multiyear and multimillion-dollar ordeal — is even harder.
Obviously, bringing a new medical product to market isn’t cheap. But for premarket approval by the FDA, a small pharmaceutical start-up is looking at spending an average $196,282 in fees alone.
Those prohibitive costs are largely why the pharmaceutical industry is ruled by a handful of large and powerful pharmaceutical companies that are able to sustain the costs of the lengthy trial process. For everyone else, steady funding is key, which government regulation is making harder and harder for biotech start-ups to find.
Galectin Therapeutics is a case in point. The biotech company is at the forefront of a hot segment of research into the treatment of liver fibrosis and fatty liver disease. Both afflictions are commonly a symptom of alcoholism, but can also be found in the obese. In all, the nonalcohol-induced variety, researchers estimate, may affect up to 10 percent of U.S. adults. Many who suffer have probably never even heard of the disease until they are in need of a transplant.
And when as many as 1,500 people die waiting for a liver transplant every year in the United States, anything that can reduce the number of patients waiting seems like a worthwhile endeavor.
But the biotech start-up, now publicly traded on the NASDAQ, suffered from the slow start common for such companies under a increasingly burdensome regulatory regime.
“We just sat on the bulletin board, going nowhere,” Jim Czirr, executive chairman of the Georgia-based Galectin Therapeutics, told us.
Provisions in the Sarbanes-Oxley Act, along with the PATRIOT Act and Dodd-Frank, have made it not worth the risk to invest in a fledgling biotech company, which likely won’t turn a profit until it has developed a marketable product.
It is a system in need of reform. Sarbanes-Oxley, in particular, has created a litany of costly requirements for publicly traded companies, from disclosing compensation to hiring independent auditors.
The 2012 JOBS Act tried to rectify this by easing some of the rules on smaller companies, but it only applied to companies that had their first sale of common equity after December 2011, leaving thousands of small companies, including Galectin, still out in the cold.
Clearly, more needs to be done. A better solution than the current legislative Band-Aid would be to repeal the more onerous provisions in Sarbanes-Oxley, along with the similar provisions in the PATRIOT Act and Dodd-Frank that block small business from their funding streams. In the meantime, Congress should act to extend the JOBS Act protections to all prerevenue companies so that they may create the next medical breakthrough.
— From the Orange County Register