Biopolitics With Allan Shaw

Alan , welcome back , it's great to see you .

They're going to have you know , at least seemingly right . There's the the writings on the wall that there's a lot of change coming , uh , in life sciences industries and in the general , uh , public health space as well . Uh , so I want to . I want to start broadly with with the impact uh , potential impacts that is on on public health .

Um , if you look at the last Trump administration , it's clear that they were frequently at odds with NIH during COVID . There's a general consensus in the incoming administration that the NIH contributed to an erosion in public trust During that time . The NIH is a bulwark in the research community and a lot of money gets funneled through it .

So any volatility there , much less potential funding cuts , are understandably met with concern , and I'm seeing a lot of that concern online in conversations with folks in the biotech space . So let's start with that . Let's start with the NIH .

But to your question , the NIH plays a critical role in driving innovation , particularly in funding early stage research that private industry typically avoids . That's a gap that they fill and any instability in its leadership policy or funding could disrupt this vital innovation pipeline , especially in areas like vaccine development , cancer research and infectious diseases .

The challenging funding environment cuts or policy shifts would be detrimental to the progress we've made . With that said , the perception that the NIH's public trust has eroded during COVID complicates these efforts while rebuilding the confidence in the institution . With RFK Jr's pending appointment , there's both potential for positive change .

His calls for transparency and accountability could help restore public trust and risk . Given his controversial stance in vaccines and public health , his leadership may introduce a little bit of volatility or redirect priorities , adding uncertainty to a already fragile landscape .

But I think it's hard to dispute that the NIH's role is indispensable and bipartisan support will be key to ensuring its focus remains on science-driven , nonpartisan health advancements . In the end , maintaining stability at the NIH is essential for safeguarding long-term innovation and public confidence in healthcare .

There's there's a giant population of consumers and people and American citizens who distrust , perhaps , the the science and or the scientific advice , the health advice that's coming out of federal agencies .

And then you know , on the other hand , you've got this , this giant swath of people who distrust the appointment of nominees , who distrust science , right , like how you talk about bipartisanship . I don't know . I don't know how you reconcile , how you bring these two camps together .

And now that these camps are , at least seemingly , these are nominations , right , we can acknowledge that these are nominations . Rfk Jr he's been nominated . He hasn't been confirmed . You look at Vivek Ramaswamy , right Like he's been nominated , or he and Elon Musk have been appointed to . You know , create a new entity that's designed to slash government inefficiency .

Vivek Ramaswamy has a lot of opinions on FDA inefficiency right , really taken effect yet . But I'm just curious about your take on the likelihood that bipartisanship in a Congress that's controlled by Republicans , under a Republican president , is even an ideal , an ideal that we should take seriously .

You know we've grown accustomed to stagnation in Washington because of the gridlock that we've seen between , because the idea of bipartisanship has taken a vacation , yeah , but I would say that you know , with you know the recent changing of the God , you know there seems to be more of an ability that you can get things done without the gridlock if people can figure

out a way to row in the same direction . Yeah , just because you're in the same political party , it certainly seems to appears to be that it's while you're wearing the same jersey . You know you're running different plays . You know you could be on the field running a pass play while the other guy's running doing a running play .

I think it's always fundamental about expanding the investor base . I think you're never done expanding an investor base . So this is it may be a challenge . Right now it's all speculation . I think the bar is going to .

You know , the metrics and what is being used to allocate resources are going to be reevaluated and it's unclear what those priorities are going to be . So I think good science , at the end of the day , trumps all no pun intended . I think good science , at the end of the day , trumps all no pun intended , but you know .

So I think with good science you'll find it , you know .

But I do think there's an issue , general issue that in terms of funding innovation , if you don't have necessarily the right pedigree of folks behind you from the beginning pedigree of folks behind you from the beginning as you form your capital formation , it becomes harder to attract that so-called smart money , fundamental money , later on and in programs that are

unsexy , such as infectious diseases . The whole issue about antibiotics is a crisis waiting to happen . At the end of the day , that's not getting attention . So , you know , the NIH is going to have to play , as I said , step in where private industry is unwilling to step in . So an important role here .

You know , and as a friend of mine says , the pendulum never stops in the middle . So you know , I think the question is making sure it's properly calibrated . You know not who's to say that the level of funding today is the right amount , what's our return on it ? What's been the success on that ? What's the accountability on that ?

So the points raised by the critics , you know they're fair points . You know it's about right-sizing things , and I think what we as a government or as a process , is we kind of just take whatever's been approved in the past and now view that as an entitlement , and then we just layer on more things .

You know , I think it's always good to practice a zero-based budgeting approach as opposed to just assuming that you know what was done last year was the right thing and we're just going to build on it .

New administration is hinting that , uh , it would like to split the CDC into two distinct divisions One focused on on health surveillance uh , around infectious disease and the other , independently , focused on public health recommendations , and it's made clear that it wants to draw a stark line between these two departments . What do you see playing out there ?

If that were to come to pass , what implications should we be looking out for ?

By focusing each division on its core function , the CDC could become more agile , with surveillance arms dedicated to tracking outbreaks and trends and the recommendation arm focused on public guidance and policy . The upside could be a more transparent and accountable CDC , potentially restoring public trust . However , this split could create challenges .

Close collaboration between the two divisions will be crucial to ensure swift , coordinated responses during health crises such as COVID . Without it , there's a risk of mixed messages or slower reactions , undermining the CDC's credibility . You know which they actually did during COVID .

Nonetheless , if executed well , this restructuring could strengthen the CDC , but it will require clear communication and strong leadership to ensure the agency's mission stays unified , protecting public health . Therefore , it might be easier said than done , but conceptually , I do see the merits of it . Yeah , or maybe I can say I understand the merits of it .

And since it's the sandbox we all play in , I think it's important for it to be functioning well and is obviously collateral impact . But you know , as it could impact the industry directly at this point , I think there's too many variables . Yeah , yeah .

And in the time since I drafted some questions for Alan , which was like a day and a half ago , rfk has indeed been nominated for the position to head the HHS . So two days ago I didn't really take that potential , that speculation that was going on in the media that could RFK potentially become the head of the HHS . I didn't really take that seriously .

Well , then I saw that Trump nominated Matt Gates to be the attorney general and I was like , well , anything could happen . And indeed he has nominated RFK Jr to head the HHS . So I'm I'm interested in your perspective on that .

He's had some very , you know and maybe a lot of this might just be media bluster , you know they they fool us all the time but he's had some pretty , some some pretty , uh , lightning rod opinions around vaccines and fluoride and water .

Um , and I thought , well , you know , maybe that influence whether he's nominated or not , has already started to shape the Trump administration's take on what it's going to do with the HHS . Now that he's nominated , it's solidified right that his influence and his stance on some of these controversial topics is certainly influencing the administration .

What do you think about this ? What do you think about the potential of his influence on the HHS given , like I said , some of those controversial stances that he's made ?

So it just goes to show that literally everything is on the table and his appointment signals the administration's openness , in my view , to challenging traditional health policies . You know , the status quo isn't going to work .

I remember when I was younger , in my more formative years as an auditor at one of the big four firms , I remember sitting my staff down at the beginning of each engagement and I'd ask them why did you order to cross the road ? And uh , they'd look at me like I had five heads and I said because they did it last year , like closed day .

So you know , I think you know , challenging things is an important part of evolution . Uh , there's always potentially a better way of doing things . So , while JFK's Senate confirmation is uncertain , his views on vaccines and fluoride have already begun to shape public health conversations .

You know his possessions resonate with segments of the public calling for more cautious alternative health approaches which could push for greater transparency and debate on vaccine policy and environmental health . Even if he doesn't land the role .

His influence is already sparking a broader discussion around vaccine acceptance , environmental chemicals , public health and discussions around food . His presence has undoubtedly expanded the discourse and his views will likely continue to influence the administration's public approach on health for better or for worse .

I mean , there's no question that there's plenty of room for improvement and change in the space in terms of health outcomes .

In terms of health outcomes and I don't want to go too deep in the weeds here but what do you think his influence might lead to around the discourse that that that could be , could be upshot for , for industry , for the , for the pharmaceutical industry that they're right now is probably looking at this like you know , hey , if , if the people at the top are

like downplaying the necessity or value of vaccines , again with a broad brush , that's bad , that's bad for business , right , like ? What's the upshot ?

I think the data supports the vaccines that are on the market . So that needs to be bottomed out a little bit . But I my perception is it's a little it's . He may take a different stance , but certainly he has dialed it back and maybe we'll see . But yeah , yeah , being softer on that particular issue .

So he's had firsthand experience with the FDA and some of his suggestions around developing a more efficient FDA could be rather good for business , particularly for biotechs . You know he talks about excessive trials . You know phase three trials .

He talks about our inability or unwillingness to take other foreign agency observations and recommendations into account in our own approvals process , which seems counter to the globalization of healthcare , of healthcare , you know .

So some of the things that I hear him talking about , like I said , I mean at face value , I think well , these suggestions could actually be a boon for biopharma and biotech in particular . What do you think ? What do you think about not just his influence but the entire administration's potential influence on the FDA ?

You know his rhetoric about purging civil servants and ending what he terms the FDA's war on public health . Raises concerns about workforce instability , especially when skilled expertise is crucial to addressing public health challenges such as chronic health diseases . You know that's not to be taken lightly .

I understand there's a lot of open positions at the FDA and you know that might become more acute . You know political pressure has always played a role at the FDA in one form or the other . But these potential purges could amplify instability , jeopardize its ability to make science-driven decisions .

While RFK Jr supporters might frame this as a push for transparency and accountability , the risk is that this could lead to overly politicalized decisions and reduce effectiveness at a time when the FDA is grappling with systemic inefficiencies . Beyond political concerns , it's clear the FDA's clinical development process for chronic disease is overdue for reform .

Legacy practices , such as requiring large cardiovascular outcome trials after pivotal efficacy studies , drive up costs and prolong timelines , creating significant barriers to innovation .

This is particularly problematic for common chronic diseases like heart disease and diabetes , which remain leading causes of mortality yet attract fewer investment dollars due to the high costs and risks of development . You know this has recently changed through the renewed interest in cardiometabolics and you know the weight loss drugs driving outcomes on diabetes .

But I would say you know the process that you have to run to get these drugs approved . The costs associated with it do impact the ability of bringing drugs to market .

As noted by former FDA Deputy Commissioner , the agency's highly empirical statistical approach often results in overly large trials that serve populations broadly but fail to address the nuances of treating individual patients .

A shift towards a more flexible and conditional framework is needed , one that emphasizes smaller , targeted studies with population subsets , to hasten patient access to innovation therapies while de-risking the process . Leveraging real-world evidence and technologies like electronic health records could also improve efficiency and better reflect the actual patient experience .

Ultimately , whether through political influence or systemic reform , the FDA must address these barriers to innovation . Reducing unnecessary regulatory burdens would not only improve patient access to therapies but also encourage greater investment in tackling chronic diseases and areas that demand urgent attention .

I've had a number of conversations off the record with heads of CMC at clinical stage biotech companies who have told me that , regardless of the outcome of the Biosecure Act , whether it passes or not , that the specter has been raised and their stakeholders , their investors , their boards , are profoundly concerned , deeply concerned , about those companies' relationships with

Chinese outsourcers . Now , post-election , with Republicans , as I said , in full control of Congress , do you see that legislation being enacted as a foregone conclusion , the BioSecure Act ?

Passage of legislation , or some form of it , seems likely , but a full decoupling from China remains improbable due to the complexities of global supply chains . For CMC heads , the act is already shifting discussions with stakeholders , even if it doesn't pass .

The push for more secure supply chains is prompting companies to diversify with alternatives to Southeast Asia , india and North America . The BioSecure Act could accelerate this trend by offering incentives to source domestically or from trusted countries .

The legislation will likely target critical materials like APIs and essential medical supplies , which is phased with a phase shift away from China . A complete break , as I said , is unlikely , but companies should prepare by establishing contingency plans and alternative supplier relationships to stay ahead of an evolving compliance standards .

I would also say that I think some of this concern is a little misplaced . Going back to what you're saying , we're in a global world . To what you're saying , you know we're in a global world , you know and you know .

I don't know where the concept of doing good for humanity falls into that equation , but you know it is the consequences of all these things do shift costs and again it's a theme that we're touching on that it is going to . It certainly doesn't help innovation , let's put it that way .

The idea that the Biosecure Act could accelerate that progress and it would be good progress towards more secure , robust , onshore , nearshore supply chains isn't lost on me . That idea is not lost on me . The thing that concerns me , I think , is just how quickly we can get there . Like , is the infrastructure anywhere near in place to make up that shortfall ?

Even if a significant percentage of that you know we , we don't it's certainly not going to happen . You know carte blanche across the board .

You know , as somebody once told me years ago , if you can't jump over the bar , you lower it . So my sense is that that's what's going to ultimately play out in practice .

I guess I haven't studied it too closely , specific to pharma and biopharma , but what do you see coming next year and beyond with this administration in terms of its , I guess , its receptivity to creating a more favorable M&A environment ?

But it did put an overhang on M&A and raised the spectrum of what could possibly be approved versus something that might get held up .

So I think , by no other changes , but by removing Lina Khan from the FTC , I think you're going to see a more favorable M&A environment and I think , when you factor that with the historical Republican practices that foster this , I do think that this will be very , very helpful .

You know , looking ahead , this should the shift in leadership should signal a return to a more business-friendly approach , which would likely spur M&A , enabling companies to scale , innovate and remain competitive . A robust M&A market is crucial , not only as a capital market catalyst , but also as a fundamental ingredient for healthy , dynamic biopharma markets markets .

While we may see less regulatory intervention , companies should still prepare for targeted antitrust concerns , particularly in healthcare , where large deals may face some scrutiny . But I do think that things will loosen up and I'm confident that we'll see more activity in that part of the market .

You know this is , this is a major part of his campaign In order to cut taxes , you know , across the border or to any degree they're going to need to be , you know , cut , the position is they're going to need to create efficiencies and spend less in government and in the first term , the first Trump administration , there was an attempt to make one of those

cuts the Affordable Care Act , obamacare . That didn't happen . Do you think that the ACA is on the chopping block again , kind of in the context of , like I said , the general desire to create some savings somewhere to enable tax cuts that he's promised ?

And from my perspective , I think full appeal remains unlikely , though I think there's a couple of reasons why that's the case . I wouldn't be surprised if it's tweaked a little bit , but I think for the most part it's had a lot of popularity over time .

You know provisions like coverage for pre-existing conditions and Medicaid expansion have built strong public support , making a full repeal politically risky in my opinion . Even with Republican control I can think consensus on a complete repeal is tough . But , like I said , I do think that there's room for targeted reforms that can be made .

And you know , given that Trump likes to kind of redefine everything as his , you know , you know I wouldn't be surprised in his Trump and ask activities that he makes a few tweaks and then calls it Trump . Yeah , may prompt budget cuts .

Outright appeal would disrupt coverage for millions of people and we're more likely to see cuts to subsidies , limited Medicaid expansion or more state control via block grants In the end , administration may focus on incremental changes that align with conservative priorities promoting private insurance , reducing regulations and expanding health savings accounts while avoiding the

political fallout of removing popular ACA benefits .

But I'm curious about your take on whether there's a place for an RFK-esque prevention and health forward approach and pharma's direct to consumer marketing . Is there a place or a world where you can see these two things peacefully coexisting in a constructive way ?

My mom's like 76 years old and we have a little inside running joke in our family where if she sees a pharmaceutical ad on television , she's suddenly afflicted by whatever indication that therapeutic is is targeting , like she's just learned about it for the first time on television and suddenly she has restless leg syndrome . You know that's .

Yeah , well , so that's what that is , yeah yeah , yeah , so I I can see how that people do that , you know . I think RFK's focus on prevention could reshape the conversation a little bit .

You know the DTC advertising , while effective at raising awareness , including your mother , is often criticized for promoting costly drugs and influencing patient demand outside of clinical guidelines costly drugs and influencing patient demand outside of clinical guidelines .

Rfk's prevention agenda and his focus on reducing chronic diseases through lifestyle changes , screenings and community initiatives could complement pharma's efforts and it's really consistent with patient engagement , as we've talked about and much has been said , and you know diabetes is the greatest , in my opinion , is the poster child for patient engagement .

If you know , if you just manage your lifestyle , you'd reduce a lot of the risks .

Simply put , and I think there's a possible compromise ultimately to your question , Instead of a ban , I would expect potentially tighter regulations on DTC ads , ensuring a balanced view of the benefits and the risks , and more public health campaigns integrating prevention with farmers' message , and I think that would also help farmers' bad boy image as well if you're

actually showing care for outcomes and prevention as opposed to just kind of being that perceived as that dead drug pusher on the playground .

I haven't read anything about this , but I wonder what his take on on GLP , glp ones , is like , where he stands on that .

You know , I saw something recently where the FDA commissioner was talking about how he thought the FDA was working at a very high level and he was very concerned at the pending changes . So you know there's obviously different perspectives here and you know I've often quipped that there's always three sides to everything , at least three sides to everything .

So you know , I think , I think you know , taking a fresh look at how we do business and how we conduct things with through the lens of a broader public health priorities is a healthy exercise . I'm not sure if people are embracing the messenger , but I think certainly what the concept I think has merit .

I'm sure by the time this episode drops we'll have more news that we could have discussed on this episode . But given where you stand right now and what you're seeing playing out , are you , are you bullish ? Are you bearish ? Are you neutral ? Are you cautious , like what's ? Let me take your temperature on what how you're feeling about the next four years .

Key drivers of optimism for me are the scientific advancements targeted therapies , emerging modalities or revolutionizing disease treatment , offering new hopes for previously untreatable conditions . I think the economic conditions the backdrop is certainly better is trending in a much better direction , with interest rates starting to drop .

The economic backdrop is becoming more favorable and encouraging investment in the sector . As chronic diseases rise and global population ages , demand for innovative solutions for cardiometabolic health and rare diseases and oncology continue to expand . The industry is very resilient and adaptable .

Life sciences have consistently navigated regulatory shifts and challenges , ensuring ongoing progress and innovation . The life science industry remains very well positioned to making a lasting impact on public health and shape the future of medicine .

You know when I think about it , when you think about money spent on foreign aid defense relative to what's spent in drug development and pharma , you know our industry makes a much greater impact on humanity than any of those other endeavors . Why we're always the poster child is probably , you know , making of our own .

But you know , when you take a step back , there's a lot to be proud of of what we've done and continue to do , and I think that instills that , the optimism for the future .

I'm looking forward to , a couple months from now , having a drink with you at JP Morgan before then , but I am looking forward to hanging out with you in San Francisco , which , by the way , I'll be on site . This is for our listeners benefit . I'll be on site at JPM .

I think I'll be recording pretty much all day in person episodes on the 14th and all day on the 15th .

So , hey , if you've got any , any any great biotech execs , founders that are going to be a JPM and want to be on the business of biotech , it's a fine time to get in touch with me , like right now , to get on the schedule , because it fills up quickly . But in between all that recording , alan , we're going to make some time to hang out like we do .

I wanted to put some perspective on the US healthcare system and give it some context , because we talked about pharma and its impact , but I think it's worth noting that we spend over $4 trillion annually more than any country . Yet , with a younger population , our life expectancy still lags behind many Western nations .

We actually pay more for less , believe it or not . This stock disconnect reveals the deep inefficiencies in the system , especially when we consider that only 10% of healthcare spending goes to pharmaceuticals . I think people are focusing on the wrong target . Here's the real issue .

While everyone is talking about drug prices , they make up just a small fraction of total spending . It's like the tail wagging the dog . The real boogeyman driving up costs without improving outcomes lies elsewhere in the system . We need to focus on those broader structural problems . Reform isn't easy .

Our healthcare system is fragmented , with stakeholders siloed and often working in their own interests , not the patients . Imagine if ATM transactions took days because of misplaced records or if car manufacturers didn't monitor product quality Extreme . These may be extreme examples , but it highlights the systemic lack of accountability in healthcare . But here's the opportunity .

This dysfunction represents a chance to rethink how care is delivered . The key shift will be moving from volume to value , what I call risk sharing , where stakeholders share responsibility for patient outcomes . It's a tough shift , but necessary for real change . As Wayne Gretzky famously said , I skate to where the puck is going , not where it's been .

The system will inevitably change and while it won't be easy , the potential to transform healthcare is enormous . If we get it right , the next few years could bring radical change to both healthcare and the life sciences industry .

And , particularly , you know , the bottom line is we're not living longer , we're not getting a return on that money . Yeah , yeah . People should be less defensive and more open-minded , would be my perspective . There's a lot of money at stake and therefore it really does fall into the category of much easier said than done .

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