WASHINGTON _ More than 30 top executives from biotechnologyfirms flew into Washington Wednesday in search of congressionalsupport for FDA reform and capital gains tax breaks. The fly-in,organized by the Biotechnology Industry Organization (BIO),enabled the executives to carry to Capitol Hill their message ofurgency to act on FDA reform despite escalating partisan rhetoricover budget cuts and domestic spending priorities.

"We told Congress that it needs to act this year on FDA reform, not18 months from now," said George Masters, CEO of Seragen Inc. inHopkinton, Mass. "A lot of biotech companies have less than twoyears of cash left. If Congress does not act soon, a lot of companieswill `hit the wall.' That could mean layoffs, bankruptcies and mergerswith large pharma houses," Masters told BioWorld Today.

The biotech executives were armed with a BIO report that gave somestark statistics on the poor financial health of the industry: Theindustry was able to raise only $724 million in the first half of 1995,compared with $1.225 billion during the same period in 1994, a 41percent decline. That decline followed a 24 percent drop in capitalformation in 1994 compared to 1993. (For more details about moneyraised by the industry, see BioWorld Financial Watch, June 12.)

The executives also pressed the issue of outmoded FDA regulationsof novel biologics. "Biotech products are still being regulated likehorse vaccines," said Edward Lanphier, executive vice president ofSomatix Therapy Corp., Alameda, Calif. "Congress needs to ensurethat FDA regulates us based on science today."

Lanphier said the aides he talked to understood the companies' senseof urgency about FDA reform.

But he added that there does appear to be a lack of focus in Congresson whether FDA reform should involve regulation of food, medicaldevices, synthetic drugs or biotech products, or all of these above.While BIO and the Health Industry Manufacturers Association havedeveloped legislative proposals, the Pharmaceutical ResearchManufacturers of America (PhRMA) remains divided on thepriorities of FDA reform and has not yet endorsed a unifiedapproach.

"Several members of Congress told us that this is a reform-mindedCongress and that this is a good year for FDA," said Lanphier.

Steve Burke, vice president of the North Carolina BiotechnologyCenter, Research Triangle Park, N.C., said his goal was to explain tothe various members of Congress how the shortage of capital andFDA regulatory delays are interfering in the process of bringing abiotech product to market. "That process takes time. It is long term. Ittranscends any political term in office," he said.

Several of the CEOs interviewed by BioWorld discounted any notionthat a strong conservative agenda to radically reform FDA had wonmany supporters in Congress. The debate on FDA reform earlier thisyear unfolded with newly elected House Speaker Newt Gingrich (R-Ga.) calling for a fundamental shift in the way the FDA regulatesmedical products. Gingrich's approach was echoed by severalconservative policy groups who called for replacing FDA'sregulatory apparatus with privately sponsored reviews.

"It's amazing how far the debate has come," said Chuck Ludlam,BIO's vice president for government relations. "In an incredibly shorttime it has shifted to a practical debate on how best to reform FDA."

The company officials were also seeking support for a two-tieredcapital gains tax that involves an across-the-board capital gains taxcut and a second tier targeted at direct investment in the stock ofemerging companies.

"Targeted capital gains will get investment back in the industry andencourage investors to hold onto their investments for five years,"said Alison Taunton-Rigby, president and CEO of CambridgeBiotech Corp., Worchester, Mass. n

-- Michele L. Robinson Washington Editor

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