In this week’s edition of InnovationRx, we look at the Administration’s latest demands on drug pricing, a biotech entrepreneur treating a rare genetic disease, new technology aimed at ending drug testing on animals and more. To get it in your inbox, subscribe here.
Over the weekend, President Trump told reporters that his administration had cut drug prices “1500%.” On Sunday he walked back this claim to say that it would happen in the future, despite the fact that this is a mathematical impossibility, unless the Administration were to somehow get drug companies to pay patients to use their products.
Still, Trump’s threats on drug prices have gotten louder. On Friday, the White House sent letters to 17 pharmaceutical companies, including AbbVie, Pfizer, Novo Nordisk and Eli Lilly, demanding that they cut prices by the end of September.
The Administration wants those companies to lower U.S. prices in line with what other countries pay as outlined in an executive order from May. That “Most Favored Nation” pricing order demands that pharma companies lower prices by 30% to 80% to match prices in other developed countries. Trump has threatened to “deploy every tool in our arsenal” to cut prices if companies don’t comply, but the Administration doesn’t have that many legal tools and Congress ignored Trump’s request to give him enforcement power earlier this year.
Another hiccup in Trump’s desire to cut drug costs? His trade policy. On Tuesday, the President told CNBC that he planned to put in place a 250% tariff on imported pharmaceuticals, to be phased in over the next two years. Assuming such a tariff survived court challenges (his authority to implement tariffs is the subject of multiple lawsuits) or was properly legislated by Congress, it would massively increase the price of drugs in the United States. Although drug companies have announced new manufacturing plants in the U.S., that’s too short a timeframe for many to get up and running. And the costs of making drugs in the U.S. make it unlikely that generics manufacturers would move here at all.
How A 60-Year-Old Drug Developer Built A $4 Billion Biotech For Treating ‘Butterfly Skin Disease’
Krystal Biotech’s Suma Krishnan
Jamel Toppin for Forbes
Longtime drug developer Suma Krishnan was in her late-40s when she had the idea for a topical gene therapy to treat a rare and terrible skin disorder in which the skin becomes as fragile as butterfly wings. In 2016, at 51, after a few months of modeling the idea and starting the process of patenting it, she and her husband Krish Krishnan, with whom she’d worked in biotech for more than a decade, cofounded Krystal Biotech.
Focusing on a rare disease, with just thousands of patients in the U.S., was unusual. So, too, was shunning venture capital in favor of self-funding a biotech startup, with some $5 million they’d made mainly from previous biotech companies. But perhaps the biggest bet was the science, taking a completely new approach to a problem with a gene therapy delivered as a gel that would potentially pay off big if it succeeded, but also stood a high chance of failure. “I had to work with the regulators because they had never seen this,” Krishnan told Forbes. “It was completely new.”
Just 18 months after launching the Pittsburgh-based company, the Krishnans took it public on the Nasdaq stock exchange. Krystal now has a market cap of $4 billion (as of Tuesday’s market close) with one FDA-approved therapy, Vyjuvek, for that “butterfly skin disease,” called dystrophic epidermolysis bullosa, on the market, and other gene therapies, including for cystic fibrosis and lung cancer, in various stages of clinical development. All rely on the modified herpes simplex virus, but they have different delivery mechanisms. The company’s revenue reached $291 million for 2024, up more than five-fold from $51 million in 2023. Net income surged eightfold to $89 million from $11 million in the same period.
The Krishnans have a combined 12% stake in the business. Suma, the company’s president of research and development, is worth some $275 million by Forbes estimates (as of Tuesday), almost entirely from her stake in the business and sales of stock over the years. Krystal’s stock has been volatile: It’s up more than 1,200% since the IPO, but has fallen nearly 25% over the past year.
“You have to be brave and bold to do this,” Krishnan says. “I was never afraid of risk-taking. I never felt like I needed a stable job.”
BIOTECH AND PHARMA
Animal testing has been mandated by law since 1937, when a new formulation of a common antibiotic had a poisonous new ingredient — and killed more than 100 people. Nearly a century later, drugs are still being pulled from shelves because they have toxic effects, even though animal testing showed they were safe. Now politicians, scientists and entrepreneurs are pushing for new, more accurate ways to test drugs before they get to human clinical trials — potentially saving lives and billions of dollars in the process.
In 2022, a group of scientists ran an experiment with 27 known drug compounds that animal studies had clusters of cells embedded in a diminutive electronic device that can simulate an organ’s behavior. The researchers found that liver organs-on-a-chip accurately predicted which compounds were dangerous. More accurate testing using organ chips could save the industry more than $3 billion a year, the study’s authors calculated.
On top of safety, cost is another reason to move away from animal testing. Today, pharma companies can spend more than $2 billion to bring a single drug to market, with the industry spending nearly $300 billion a year on research and development. Despite these vast R&D expenditures, more than 90% of drug candidates fail. It’s a wasteful process, contributing to the flabbergasting prices of drugs that do make it to market.
Plus: Health and Human Services Secretary Robert F. Kennedy Jr. announced that he was cancelling nearly $500 million of grants and contracts for mRNA vaccines. That includes contracts to pharmaceutical companies that are working on mRNA vaccines. (Though interestingly enough one of the companies name checked in the announcement, Moderna, told Forbes that it has no current contracts.) The move threatens the United States’ ability to combat infectious diseases or a potential future pandemic and could undermine the American biotech industry.
DIGITAL HEALTH AND AI
Hungarian startup Turbine AI signed a research collaboration with Europe’s Merck & Co. to deploy its AI models in the fight against cancer. Turbine will use its AI foundational models to simulate hard to treat solid tumors in patients. There are many types of cancer that are hard to treat because the cells can’t be cultured in the lab, Turbine CEO Sazboics Nagy told Forbes. To train its AI models, Turbine will use data derived from these cancers as seen in animal models, organoids and certain kinds of patient data. Once trained, Nagy said, the virtual cell models can test drugs in a way that’s impossible in the lab, opening up opportunities for “tackling cancer in underserved patient populations.”
Plus: Oxford-based Ultromics, which has developed FDA- cleared algorithms for detecting cardiac conditions, raised $55 million led by investors L&G, Allegis Capital and Lightrock.
MEDTECH
SetPoint Medical received FDA approval for the SetPoint System, an implantable device to treat patients with moderate-to-severe arthritis who can’t be treated with existing drugs. The device electrically stimulates the vagus nerve to induce the body’s anti-inflammatory responses.
PUBLIC HEALTH AND HOSPITALS
Vaccination rates among children entering kindergarten fell during the 2024-2025 school year, according to new statistics from the Centers for Disease Control. The decline comes as the measles outbreak continues to grow, sickening more people than at any time since it was declared eliminated. The new data show vaccination coverage ranging from 92.1% for the diphtheria, tetanus and acellular pertussis (DTaP) vaccine to 92.5% for the measles, mumps and rubella (MMR) one.
Plus: The Gates Foundation pledges $2.5 billion to women’s health initiatives.
WHAT WE’RE READING
New colon cancer screening recommendations for patients under 50 have led to more people in their 40s being diagnosed early when the disease is treatable.
Medicare and Medicaid will experiment with coverage of weight-loss drugs under a proposed five-year plan by the Trump Administration, according to documents obtained by the Washington Post.
A new study finds that eating ultra-processed foods makes it harder to lose weight–even when the diet otherwise falls within dietary guidelines.
The Kentucky Hospital Association warned that Medicaid cuts will force hospitals throughout the state to cut services or even close their doors.
Google’s healthcare AI made up a body part in the brain, showing the potential seriousness of AI errors in clinical settings.
The mosquito-borne Chikungunya virus has infected more than 7,000 people across at least 13 cities in China.
Cases of Legionnaires’ disease in New York City reached 67 on Tuesday, as the growing outbreak in the city has resulted in three deaths.