with Paulina Firozi


Want to advance hard-to-fund medical research? Get Wall Street to pay for it.

That's one way finance analyst Karen Petrou and her husband, Basil, are seeking to enlist the private sector in seeking a cure for blindness. Their idea: Packaging research loans into government-backed “Eye Bonds” and selling them to pension funds, insurance companies and other long-term investors.

The loans would be for projects traditionally hardest to fund, those in the preclinical trial phase in which scientists try to connect the basic science of disease with human medicine by conducting testing on animal or tissue samples rather than people.

Under their plan — which two members of Congress introduced as legislation last week — up to $1 billion in loans over five years would be made available to organizations doing this kind of early-stage research on blindness.

Petrou — who describes herself as “very blind” from retinitis pigmentosa, a disorder that causes gradual vision loss — hopes that the concept will one day be used to raise research funds for not just blindness, but a whole spectrum of other illnesses.

“What we’re really looking at is eye bonds as a pilot to create a new class of investments,” Petrou told me in a phone interview last week.

Here’s the problem the couple is trying to solve: The government funds a lot of basic medical research. And biopharmaceutical companies spend heavily on clinical trials to get new medicines to market. But bridging those two phases is a bit of a no man’s land.

Investors are reluctant to take risks on potential treatments in such early-stage research, so much so that this translational research phase is popularly referred to as the “valley of death.” Promising findings from basic research often fail to make their way into clinical trials, missing out on the chance to be developed into a therapy for patients.

But under the Petrous’ plan, researchers carrying out projects deemed especially promising by the National Eye Institute would get loans backed by the government. Through an Eye Bond Trust, financial institutions would package and sell the loans to investors in the form of 10-year bonds. The federal government would partially repay investors if the labs couldn’t.

“Bonds would provide funding for exciting therapies such as eye transplants that could restore vision for blinded wounded warriors, prevent and cure age-related macular degeneration and other inherited retinal diseases, address diabetes retinopathy, cover glaucoma, and otherwise hold out hope for vision for millions of Americans,” Petrou wrote in a summary of her plan.

The idea has bipartisan support on Capitol Hill. Last summer, Rep. Sanford Bishop (D-Ga.) introduced a bill to create Eye Bonds. He reintroduced the measure last week with Rep. Cathy McMorris Rodgers (R-Wash.) as a co-sponsor.

Bishop said if the pilot program is successful, the approach could be used to raise private funds for researching other diseases including cancer, Alzheimer’s and Parkinson’s.

“For far too long, we have had federally-funded research sitting on the shelf, waiting for private investors to put it into practice,” Bishop said in a statement. “When it comes to turning research into cures, we must seek new ways to tackle old problems.”

Medical research is one area Republicans in Congress have recently agreed should be funded more generously. Over the past four years, Congress approved significant increases to the budget for the National Institutes of Health, after a decade in which the agency’s finances had remained relatively flat. In contrast, the Trump administration has sought to compress NIH’s spending in all three of its budget blueprints.

Petrou, who sits on the board of the Foundation Fighting Blindness, said she got the idea for Eye Bonds after experiencing frustration that the foundation couldn’t afford to fund more blindness projects. Ophthalmic research is blossoming, with advanced cures on the horizon, but the funding isn’t always there, she said.

“We were looking at it on the board and seeing, say, 10 projects coming at us in applications, and we could only fund two,” Petrou said. “That means eight really great things we couldn’t fund aren’t moving forward.”


AHH: In a new civil complaint, state attorneys general are alleging that the executives of competing generic drug companies deleted text messages and coordinated to hinder an investigation into an alleged price-fixing cartel, our Post colleague Christopher Rowlands reports.

The lawsuit brought by prosecutors from more than 40 states alleges 20 companies worked on a scheme to inflate drug prices, sometimes by more than 1,000 percent. 

“The allegations are part of a sweeping, multiyear probe led by the Connecticut attorney general’s office into a pervasive system of alleged price-fixing by virtually all of the major companies that sell generic medicine in the United States,” Christopher writes, adding the latest complaint focuses on Teva Pharmaceuticals. "Teva maintained a list of 'high quality’' competitors that it colluded with, according to the complaint. From July 2013 to January 2015, Teva colluded with those competitors to significantly raise prices on at least 86 drugs, it said."

“That the biggest generic drug manufacturer in the world is one of the leaders of this marketwide collusion is beyond disappointing, and in some ways dispiriting,’’ Connecticut Attorney General William Tong told The Post.

In a statement, the company said: “Teva continues to review the issue internally and has not engaged in any conduct that would lead to civil or criminal liability.”

OOF: The story of a hospital in Fairfax, Okla. hanging on by a thread is one that’s familiar across rural America. More than 100 such remote hospitals in the country have found themselves in financial disrepair and closed in the last decade, leaving what is known by experts as “health-hazard zones” in those communities, our Post colleague Eli Saslow writes in this moving long-read.

When the Fairfax Community Hospital's CEO called a meeting to update staff about the facility’s fate, the emergency room had already been down to its final four oxygen tanks, the nurses were out of basic supplies such as strep tests and employees had gone several weeks without pay.

“The only reason the hospital had been able to stay open at all was that about 30 employees continued showing up to work without pay, increasing their hours to fill empty shifts and essentially donating time to the hospital, understanding what was at stake,” Eli writes.

The hospital was the area’s largest employer. Some of the remaining staff had been born or given birth there. There was no other hospital within 30 miles.

“In the past decade, emergency room visits to America’s more than 2,000 rural hospitals increased by more than 60 percent, even as those hospitals began to collapse under doctor shortages and historically low operating margins,” Eli writes. “Hospitals like Fairfax Community treat patients that are on average six years older and 40 percent poorer than those in urban hospitals, which means rural hospitals have suffered disproportionately from government cuts to Medicaid and Medicare reimbursement rates. They also treat a higher percentage of uninsured patients, resulting in unpaid bills and rising debts.”

One physician assistant asked: “If we aren’t open, where do these people go?”

OUCH: A Trump administration plan to tighten rules to prohibit undocumented immigrants from accessing federally subsidized housing could also displace more than 55,000 children who are legal citizens or residents.

An agency analysis of the proposed rule, which was published in the Federal Register on Friday, found “half of current residents living in households potentially facing eviction and homelessness are children who are legally qualified for aid,” our Post colleague Tracy Jan reports.

The analysis found: “HUD expects that fear of the family being separated would lead to prompt evacuation by most mixed households … Temporary homelessness could arise for a household, if they are unable to find alternative housing.”

While current rules allow families with mixed immigration status to get federal housing subsidies as long as at least one person in the household, such as a spouse who is a citizen or a child who was born in the United States, is eligible, the proposed rule would require all household members to be eligible.

“Approximately 25,000 households, representing about 108,000 people, now living in subsidized housing have at least one ineligible member, according to the HUD analysis,” Tracy writes. “Among these mixed-status households, 70 percent, or 76,000 people, are legally eligible for benefits — of whom 55,000 are children, HUD says. The vast majority live in California, Texas and New York.”


— The House Budget Committee announced plans to hold a hearing on a single-payer health care system next week.  

According to a release from the panel, the hearing will focus on the financial considerations for establishing such a system and will examine the recent Congressional Budget Office report on single-payer health care. Three leaders from the CBO are scheduled to testify at the hearing. The Health 202 wrote this month on the CBOs 30-page report that outlined the complicated path that could emerge if the nation overhauls its health-care system into a single-payer system.

The May 22 budget panel hearing will follow a historic House Rules Committee hearing at the end of April on the Medicare for All Act.

— In a new interview with CNN, Sen. Kamala Harris (D-Calif.) clarified her position on Medicare-for-all, saying that she does not necessarily want to get rid of private insurance.

The 2020 Democratic contender told host Jake Tapper she wanted to explain what she meant when she said during a January CNN town hall that she wants to “eliminate all of that — let’s move on” when asked whether Medicare-for-all would mean people can’t keep their private coverage.

“It was in the context of saying ‘let’s get rid of all the bureaucracy,’” Harris said in the interview aired over the weekend. 

“Not the insurance companies?” Tapper asked.

Harris responded: “No. That’s not what I meant. I know it was interpreted that way. If you watch the tape, I think you’ll see there are many interpretations of what I said. What I meant was let’s get rid of the bureaucracy.”

Harris, who said she supports Medicare-for-all as her “preferred policy” insisted Sanders's Medicare-for-all legislation “does not get rid of insurance” because it allows private insurance to remain in place for supplemental coverage.


— California's board of education voted last week to approve a broad framework for revamping how sex education is taught in public schools from kindergarten through high school.

The board spent hours considering a draft framework for health education that included guidance for sex education topics  specified by grade groups, our Post colleague Valerie Strauss reports, including gender identity for grades kindergarten through three; sexual feelings, including masturbation, for grades four through six; consent and sexual abuse for grades seven through eight, and contraception and healthy sexual relationships — including advice for LGBTQ students -- for grades nine through 12.

The guidance is not mandatory, and parents can exempt their kids from sex education lessons. But some religious conservatives have expressed opposition. A mother of six who traveled hundreds of miles to attend the board meeting said, according to the Associated Press: “It’s just scary what they are going to be teaching. It’s pornography. If this continues, I’m not sending them to school.”

"Board members on Wednesday considered objections to explicit material that had been recommended for use and removed some of it," Valerie writes. "Concerns were expressed that some of the material was too explicit or seemed to be endorsing specific sexual activity."

— And here are a few more good reads: 


Coming Up

  • The House Veterans Affairs Subcommittee on Health holds a hearing on the Veterans Affairs Fiscal Year 2020 budget request for the Veterans Health Administration on Wednesday.
  • The House Ways and Means Committee holds a hearing on the economic and health consequences of climate change on Wednesday.
  • The Washington Post Live will host actress and mental health advocate Glenn Close and Sens. Debbie Stabenow (D-Mich.) and Roy Blunt (R-Mo.) for an event on mental health and addiction on Thursday.
  • The House Oversight Committee holds a hearing on the HIV prevention drug on Thursday.

The Post's Fact Checker on Sen. Cory Booker's (D-N.J.) claim that toy guns face more regulations than real guns

2020 Democratic contender Sen. Cory Booker (D-N.J.) claimed toy guns face more regulations than real guns, but hundreds of laws to regulate firearms (The Washington Post)