By Lisa Seachrist
WASHINGTON — Rep. Bernard Sanders (Ind.-Vt.) introduced legislation Wednesday to require biotechnology and pharmaceutical companies to enter into reasonable pricing agreements with the Department of Health and Human Services, in order to obtain licenses and patent rights to research conducted at the National Institutes of Health (NIH).
H.R. 3758, the Health Care Research and Development and Taxpayer Protection Act, would require the NIH to enter into a competitive bidding process in which final price to consumers would play a major role in determining whether a biotech or pharmaceutical company receives a cooperative research and development agreement (CRADA) to develop basic research into a marketable product.
The legislation is Sanders' third attempt to reinstate the reasonable pricing provisions that NIH Director Harold Varmus abandoned in 1995.
"Big pharmaceutical companies are getting rich while consumers are getting ripped off," Sanders said in a statement. "Millions of Americans cannot afford the prescription drugs they need, while they are helping to pay for the research, funded by the National Institutes of Health, to develop these drugs. Then, the government gives the pharmaceutical companies these new discoveries, and they turn around and charge whatever price they want. That's wrong, and it's particularly outrageous given that the pharmaceutical industry is enormously profitable."
Taxpayers Deserve Reimbursement, Said Sanders
Sanders maintains that the industry had corporate profits in excess of $16 billion in 1996, yet consumers have had to pay higher and higher prices for medicines. H.R. 3758 would reimburse taxpayers for the research investment made by NIH.
Sanders' bill, which has 11 co-sponsors, is opposed by both the Biotechnology Industry Organization (BIO) and the Pharmaceutical Research and Manufacturers of America (PhRMA) because it ignores the substantial investment that biotech and pharmaceutical companies make in bringing a drug to market.
"The reasonable pricing clause is a clumsy, one-size-fits-all approach that would discourage collaborative biomedical research and harm patients with unmet medical needs," said Jeff Trewhitt, spokesman for PhRMA. "A reasonable approach would be for each party to a collaboration to negotiate the terms for joint participation. For example, NIH could negotiate a royalty agreement."
Trewhitt claimed Sanders is confusing the division of labor in drug development. NIH, he said, works on basic research, whereas the biotech and pharmaceutical industries apply that basic research to developing pharmaceuticals. That effort, Trewhitt says, costs the industry $20 billion a year.
"To date it has been a smashing success," Trewhitt said. "That division of labor is one of the reasons that the U.S. is one of the most innovative drug developers."
A pricing agreement would require that industry establish the price for a product without knowing the costs the company will incur in steering the drug through clinical trials and FDA approval. Most companies are loath to commit to such an agreement.
In 1995, NIH Director Harold Varmus dropped the reasonable pricing clause from CRADAs because the NIH's primary mission is to conduct biomedical research, not establish product prices. In addition, Varmus set out to make NIH CRADAs more attractive to industry. The plan worked: In 1995, there were 32 CRADAs with industry, and by 1997 the number had jumped to 153.
Chuck Ludlam, vice president for government relations at BIO, and David Schmickel, patent and legal counsel for BIO, wrote in a letter to the House membership that co-sponsoring the bill is a "statement of no confidence in Dr. Varmus." In addition, they wrote that the legislation "would have only one predictable and inevitable effect: it would discourage our companies from entering into technology partnerships with NIH."
"The fundamental flaw in his bill is that he seems to think that working with the government is mandatory," Ludlam said. "If he succeeds in passing a bill that is too inimical to industry's interests, companies won't deal with the government; they will license technology to other companies or universities if possible."
Sanders introduced similar legislation in 1995, which was defeated in a vote of 141-284. In 1996, another version failed on a vote of 180-242. Because industry and even the NIH are against the measure, Trewhitt noted, the bill will likely not pass.
PhRMA Leaving Nothing To Chance
"We are leaving nothing up to chance," Trewhitt said. "We are going to make sure Congress knows why this bill is terribly ill-advised. This is very serious and very important."
Ludlam agreed, pointing out that Sanders gained votes from 1995 to 1996 and election year politics could come into play.
"Sanders has so fundamentally mischaracterized the situation, who knows what could happen," Ludlam said. "The timing of this bill could not be worse. We have a national consensus to double NIH funding. If this bill passes, it will destroy the technology transfer process and undermine the rationale for the increased appropriations." *