The administration's trial balloon on drug pricing early last week sent tremors throughout the biotechnology industry.

Although the proposed price review board would have lacked teeth, its focus on unique drugs would have driven companies to invest in "me-too" drugs, Lisa Raines, vice president for government relations at the Industrial Biotechnology Association (IBA), told BioWorld.

But the shudders coursing through the community may have been premature. "There have been so many trial balloons floating around here it looks like London during the Blitz," Steve Jenning, a staffer on Rep. Ron Wyden's, D-Ore., Subcommittee on Regulation, Business Opportunities and Technology, told BioWorld.

Ultimately, biotechnology's treatment will depend upon how Congress deals with the president's health care reform proposal, which is due next month.

The administration's commitment to biotechnology runs deep at the highest levels. And in Congress, even those on the left are listening sympathetically to the industry's emissaries.

While he was governor of Arkansas, Clinton commissioned a study on two questions: Could Arkansas become the nation's hothouse for biotechnology, and did the U.S. need a national policy. The answers were no and yes, respectively, according to G. Steven Burrill, national director of the manufacturing and high-technology group at Ernst & Young, who conducted the study. Burrill also spent time with Gore long before the two politicians became a team.

Burrill also discussed biotechnology with Secretary of Health and Human Services Donna Shalala while she was head of the University of Wisconsin and Burrill was on the board of the business school. "I think she is a believer," he told BioWorld.

Clinton will probably make the final decision on drug pricing -- after consulting with his inner circle of health care task force advisers, Tufts University professor Norman Daniels, a member of the task force, told BioWorld. That inner circle includes Gore and Shalala, as well as Labor Secretary Robert Reich, who presided over a recent Office of Technology Assessment study on commercial biotechnology.

Once the White House issues the health care reform plan, Congress will legislate it. Even representatives well left of center have an understanding of the industry. Rep. Henry Waxman, D-Calif., chairman of the health and environment subcommittee, and Rep. Howard Metzenbaum, D-Ohio, "are very prepared to listen to the arguments we make," Henry Termeer, chief executive officer of Genzyme Corp., told BioWorld.

"The case for flexibility (to treat small biotechnology companies differently from larger pharmaceutical companies) has been made in an effective way by that industry group, the Industrial Biotechnology Association," Wyden staffer Jenning told BioWorld.

But there is no obvious consensus in Congress on price controls. A staffer on the Senate Committee on Labor and Human Relations, chaired by Massachusetts Democrat Edward Kennedy, told BioWorld that pharmaceutical prices should not be controlled. And if Rep. Fortney "Pete" Stark, D-Calif., favors price reviews, that "doesn't necessarily mean price-controlled," a staffer told BioWorld.

However, Democrat David Pryor, a senator from Clinton's state and a very close friend of the president, as well as chairman of the Senate Aging Committee, favors mandatory price ceilings, according to Jenning. But Termeer predicted that Pryor's influence on the president may wane "as a more balanced picture develops."

And Republicans are not about to stand for onerous legislation, James Derderian, legislative director for Tom Bliley of Virginia, the ranking Republican on Waxman's Health and Environment Subcommittee, told BioWorld.

Meanwhile, the industry is making its own compromises. "I still think some level of price control, quote, unquote voluntarily, as Merck is suggesting will have to be put into place," said Termeer.

And the IBA would have no objection to capping price increases at the level of inflation, said Raines. While no biotechnology drug has ever inflated at this rate, such a cap would alleviate any need for different rules for pharmaceutical and biotechnology prices, said Raines. "With regard to new drugs, it is not necessarily useful to distinguish between breakthrough drugs from a biotechnology company and other new drugs."

Washington, D.C., biotechnology lawyer Stephen Lawton's ironic statement shows the potential for a decent outcome. "I think it's fair to say that the more traditional PMA (Pharmaceutical Manufacturers Association) companies are going to benefit greatly from the work the biotechnology companies did."

-- David C. Holzman Washington Editor

(c) 1997 American Health Consultants. All rights reserved.