By Lisa Seachrist

Washington Editor

WASHINGTON - Led by chairman Sen. Connie Mack (R-Fla.), the Joint Economic Committee conducted a day-long summit hearing focusing on the promise of biotechnology.

Titled "Putting a Human Face on Biotechnology," the summit featured testimony from patients, physicians, biotech CEOs, venture capitalists and biotech researchers. In the end, two issues took precedence: access to the new therapies and promoting federal policies that encourage biotechnology innovation.

"U.S. biotechnology is clearly outpacing the rest of the world. Our biotech industry is about five times larger than Europe's," Mack said. "Today's panelists of industry leaders, innovators and heroes are hear to help us understand what Washington can do - and what it shouldn't do - to ensure that the biotech industry continues to thrive and develop products that will improve our standard of living."

Much of the summit was spent discussing a way to overhaul the 34-year-old Medicare system, which doesn't cover the costs of prescription drugs, as well as advocating increased funding for the National Institutes of Health and ways to encourage private sector investment in the biotech industry.

Henri Termeer, president and CEO of Genzyme Corp. in Cambridge, Mass., highlighted the need to alter the health insurance systems to integrate new technologies more quickly to reflect the rapid advances being made in biotechnology.

"We are underestimating what is happening here," Termeer told the committee. "This is a revolution, not just advances in medicine. Prompt FDA approval of a product does not guarantee that patients will have access to it. Insurers are labeling new products as experimental and asking for additional studies."

Termeer called for changes in the proposed prospective payment system for outpatients, which would chronically underpay for biotechnology products, as well as changes in the current inpatient prospective payment system. In addition, he called on the Health Care Financing Administration (HCFA) to allow Medicare to automatically cover all FDA-approved products for their proposed uses, unless they are statutorily excluded from coverage, such as is the case with hearing aids.

"I don't think HCFA can absorb the level of innovation that is being created," Termeer said.

Christine Cassell, chair of the Department of Geriatrics and Adult Development at Mount Sinai Medical Center in New York, took a more radical approach to ensuring access to new technologies. She called for expanded access to Medicare and looking at the coverage situation in a whole new light.

"Inability to cover outpatients' medicines is just one part of the problem," Cassell said. "Part of the problem is that health care policy usually starts out as budget policy and we are all fighting against cost within an old system."

Mack agreed Congress may have to completely overhaul the Medicare program. But, he noted, that isn't going to be easy.

"We are so focused on the present system that there is going to be a great deal of resistance to changes," Mack said. "The political pressure is going to be not to affect the way the present system operates."

Peter Lynch, vice chairman of the Fidelity Management and Research Co., encouraged the legislators to increase funding of NIH. He noted since the early 1980s NIH funding has slipped from 1.7 percent of gross domestic product to 0.7 percent, a trend he said could limit the basic research available for biotechnology companies to apply to new innovative treatments.

"This is an aspect of spending that has a payback and it's a massive one at that," Lynch said. "These biotechnology companies today pay $1 billion a year in income taxes, plus the taxes their employees pay. Over the next two to three years that is going to triple. This is the kind of spending I like. The federal government puts money out and they get back new products, healthier people and cash."

In addition to NIH funding, several panel members called for making the research and development tax credit a permanent feature of the tax code. That premise is beginning to take hold with members of Congress.

"Biotechnology companies reinvest approximately 70 percent of their revenues in research and product development," said Sen. Edward Kennedy (D-Mass.). "Without a permanent [R&D tax] credit, the industry lacks the certainty needed to make long-range investments."

Carl Feldbaum, president of the Biotechnology Industry Organization (BIO), saw the event as a endorsement of the progress and stature the industry has gained over the past few years.

"This hearing by the Joint Economic Committee breaks new ground for BIO on Capitol Hill," Feldbaum said. "To have such a positive - indeed enthusiastic - opportunity to focus on patients in the midst of such divisiveness on Medicare and other issues testifies that our bottom-line message of benefits has arrived."

Such a high profile may give the biotechnology industry more authority as issues such as a Medicare drug benefit, permanent research and development tax credits and patent reform hit the floors of the House and Senate. However, such an opportunity comes with responsibility as well.

"We have to marshal this message credibly as we enter into tough fights on patents, medicine and other issues coming up in this same Congress," Feldbaum said. "It continues to be a long march, but a hearing like this was unthinkable only a few years ago."