A bill (H.R. 6801) has been introduced that is designed to support the development of rare disease therapeutics. Known as the Rare Disease Fund Act, it was introduced by Congressmen Juan Vargas, Scott Peters, and Tom Rooney. For more detailed information, you can read Biocom’s reaction to it at Business Wire by clicking here, or view the legislation by clicking here.
The Funding Gap
The bill would address the funding gap for experimental therapies between early research and later clinical development. This funding gap often called the ‘Valley of Death’, occurs at the point when scientists make promising research discoveries but need more funding to carry out clinical development.
Investors often don’t want to fund experimental drugs at this point, because the research trials can cost hundreds of millions of dollars and have a high risk of failure. According to the introduced bill, for every five to ten thousand compounds that enter the drug discovery pipeline, on average only 250 will make it to pre-clinical development, and only one will actually become an approved drug. This high-risk, complex, and long-term developmental process can make it challenging to attract investors. As a result, many early research findings are never clinically researched as potential new treatments.
What the Rare Disease Fund Act Proposes
To address this investment issue, the bill proposes creating an investment fund that could be used to support drugs that need to bridge the funding gap. This suggestion involves making one large fund that diversifies its portfolio to reduce risk. The introduced legislation also proposes securing its finances by using both equity and issued debt. The bill cites research carried out at MIT that suggests a fund used for rare diseases could invest in ten to twenty compounds with $400 million in capital.
Reactions to the Bill
The introduced bill has been praised by Biocom (an association representing the life science industry of California) as “much-needed legislation” that would “address one of the industry’s most pressing challenges.”
