Three years ago, MIT finance professor Andrew Lo proposed rallying private investors to raise an eye-popping $30 billion to develop cancer drugs. That idea went nowhere.
A California congressman plans to file legislation next week that would create a more modest version of Lo’s plan: A $400 million fund to finance development of drugs for rare diseases — with the federal government acting as a backstop, providing financial guarantees to attract private investment. If it works, Lo said, taxpayers could profit and patients could get access to new treatments.