Tell HN: An inside view of Montana's new biotech law
Montana passed a law called SB535, which builds on federal right-to-try (pre-approval access with informed consent, Phase 1 safety data, etc.) but goes further in addressing those laws' shortcomings. Alex Tabarrok called it "the most important regulatory innovation in drug approval in my lifetime." The author says they contributed ideas to the law and are now implementing it through their company, after years of investing in biotech and watching companies struggle, building the biotech ecosystem in Prospera as an alternative (which they concluded was too early), and deciding Montana is the best place to prove this model.
The motivation: when the FDA approves a bad drug, heads roll, but when it delays a good one, the deaths are statistical and nobody gets blamed — an "invisible graveyard" — so the incentive is overcaution. That is why the cost per approved drug has roughly doubled every 9 years for decades ("Eroom's Law"). Founders hit the "Valley of Death" around Phase 1: grants are no longer available and commercial money wants assurance the drug will pass the next trial. Only about 10% of post-Phase 1 drugs get approved, but 68% of failed trials stop for commercial rather than safety or efficacy reasons (Williams et al., PLOS ONE 2015). Federal Right to Try and Expanded Access have not fixed this, and federal reform is extremely difficult.
What Montana allows: a physician can give an experimental treatment outside a trial if it completed FDA Phase 1 under an active IND; a state-registered private review board (ETRB) approved the protocol; it is delivered at a state-licensed clinic; consent exceeds the federal standard; and adverse events are reported. Crucially, sponsors and clinics can charge.
The author argues this time is different because the risk-reward ratio is what is broken: Right to Try and Expanded Access do not let sponsors charge, so treating a patient is pure risk plus expense. Montana is described as the first state law where sponsors of IND-stage drugs can price in that risk. Trial recruitment today is characterized as a price-control system: per-patient cost is around $50,000–$100,000, with a ceiling on what can be paid to patients ("undue inducement") and a floor downward (no profit, only at cost under RTT/EA). Montana removes both, which the author acknowledges will spark debate.
This is not a free-for-all: the additional liberties come with tough oversight. An ETRB is Montana's version of an IRB — safety review, consent, mandatory outcome reporting, and a requirement that safety information cannot be withheld from patients — which the author calls a "truth-funding mechanism." For companies with a Phase 1 asset stuck in the Valley of Death, the law allows them to treat patients, negotiate payment, gather real-world data, and use it to sharpen Phase 2/3 design. Disclosure: the author's company formed the first ETRB, with a review-fee model like an IRB, no equity in applicants, and no payment by outcome.