Biotech’s Next Challenge—Pricing, Public Health, and Policy Engagement

In Part 1, I explored the forces shaping biotech today—from clinical trial diversity and capital market shifts to global competition and regulatory uncertainty—while drawing insights from our recent Russo Partners Advisory Board Meeting. That discussion also underscored another set of challenges: drug pricing reform, public health appropriations, and the critical role of biotech leaders in shaping policy.

As the biotech industry grapples with these issues, it is clear that passive engagement may no longer be an option. In this section, I’ll examine how biotech CEOs can take a more active role in policy discussions and advocate for solutions that balance innovation, access, and sustainability. Now is the time for biotech leaders to shape the conversation—before others define it for us.

Drug Pricing and the Pharmacy Benefit Manager (PBM) Challenge

Drug pricing discussions often focus on pharmaceutical manufacturers, but a major factor driving cost is the role of pharmacy benefit managers (PBMs), whose financial incentives remain largely hidden from public view. PBMs act as intermediaries that extract a significant share of drug revenue through opaque pricing structures and rebate practices.

The Inflation Reduction Act (IRA), enacted in 2022, introduced price controls that could discourage future investment in small molecule drugs, accelerating a shift toward biologics and altering drug development strategies across the industry. This realignment can redefine how firms operate research pipelines and potentially leave a gap in the availability of affordable small-molecule treatments. Firms are “beginning to determine what they’re going to develop and what they’re not going to develop,” said one board member, “And that’s unfortunate for patients.”

Momentum is building for PBM reform, but if biotech leaders don’t actively shape the conversation, policymakers may dictate changes that further stifle innovation. Transparency and fair pricing must be industry-driven priorities—not just regulatory mandates. Without reform, opaque pricing structures and reimbursement hurdles will continue to restrict patient access to life-saving treatments.

Public Health Funding: Addressing Funding and Trust

Budget reductions for the FDA, NIH, and CDC could impact public health advancements, from regulatory oversight to medical research. Budget constraints could halt foundational research, weaken pandemic preparedness, and leave gaps in disease surveillance.

Beyond financial challenges, public skepticism of science remains a significant issue that biotech leaders must actively address. The rise of misinformation, fueled by low science literacy, poses a major challenge to public trust in biotech. Without public trust, even groundbreaking scientific discoveries risk rejection or dismissal.

Addressing these challenges means:

• Investing in science education at all levels to improve public understanding and rebuild trust in research
• Strengthening public-private partnerships to safeguard scientific achievements
• Increasing transparency in data-sharing to strengthen trust in medical research

The Role of CEOs in Shaping Biotech Policy

One clear takeaway from our Advisory Board is that CEOs can no longer afford to sit on the sidelines of the policy debate. Regulatory reform, drug pricing pressures, and global competition are all top-of-mind issues, and biotech executives need to become part of the policy-making process that impacts our industry. “A lot of what’s helped and hurt the industry over years is the regulatory environment. If the FDA is constrictive, our industry suffers. If it’s flexible and cooperative, we thrive.”

To ensure the industry’s interests are represented, CEOs need to:

• Engage with government policymakers to articulate the industry’s needs and challenges
• Participate in biotech coalitions to ensure industry perspectives that shape regulatory and legislative decisions
• Engage with investors and the public to highlight why biotech innovation is essential for global health.

Biotech has always been an industry of innovators, problem solvers, and visionaries. Now, we must extend our leadership to actively shape policy—because if we don’t—regulators, policymakers, and outside forces will shape the industry’s future.

A Call to Action for the Future

The biotech industry is at a crossroads. We can either lead the transformation or allow external forces to dictate our future.

“At the beginning of Biotech 2.0, we were the most admired industry in America. We went from being the most admired to the least admired at the end of Biotech 2.0. So, I think part of Biotech 3.0 is to have to deal with that reality.” Biotech’s next era isn’t just about scientific breakthroughs—it’s about rebuilding trust, shaping policy, and ensuring innovation reaches the people who need it most.

Now is the time for biotech leaders to act through advocacy, collaboration, and education. The future of innovation—and the health of millions—depends on it.