WASHINGTON - The second 100 days of the GOP-controlledCongress will determine how much of the biotech industry'slegislative agenda is accomplished or pushed aside by deficitreduction, welfare reform and other more pressing legislation.

In its first 100 days, Congress enacted most of the Contract WithAmerica to place the federal government on a new course. Biotechcorporations hope to slide their FDA reforms and other legislativeobjectives on the new trajectory. Whether the industry will be able tokeep Congress focused on FDA reform is unknown.

Those first 100 days created an "aura of promise but nothing more,"said Carl Feldbaum, president of the Biotechnology IndustryOrganization (BIO). "We hope the surge for regulatory reform thatwas evident in the first weeks of this Congress session will translateinto a specific push for FDA reform."

Biotech lobbyists are walking a fine line by pushing forcomprehensive FDA reforms that might alarm some members ofCongress intent on preserving the agency's role as the public'swatchdog, said one lobbyist who asked to remain anonymous. "Ifthey ask for regulatory changes that are too broad they invite chargesthat FDA's role to preserve the public health will be compromised. IfCongress keeps the reforms too narrow, then industry would wind upwith nothing for all of its lobbying efforts."

The biotech industry's voice on Capitol Hill may be magnified if thevarious manufacturers regulated by the FDA can craft what they arecalling a "super bill," legislation that incorporates most of thelegislative objectives. But the divisions among the medical productassociations are more apparent than any common ground: BIO wantsrelief from Congress on the "front end" to loosen FDA demands onresearch standards. The Pharmaceutical Research and Manufacturersof America (PhRMA) is split between big pharma houses that don'twant to change the agency and smaller companies struggling to gettheir products to market.

Industry representatives will be able to tell Congress why the FDAneeds reform in May when the House Commerce Committee isexpected to open a series of hearings on FDA reform legislation.Senate hearings to be held by the Labor and Human ResourcesCommittee will be scheduled in July or August.

The House Commerce Committee hearings will show how involvedformer Committee Chairman John Dingell (D-Mich.) and HealthSubcommittee Chairman Henry Waxman (D-Calif.) _ bothadvocates of tough industry regulation _ will be in deciding how toshape the reform bill. So far, Dingell and Waxman have taken a lowprofile in this Congress.

New Commerce Committee Chairman Thomas Bliley (R-Va.) andHealth Subcommittee Chairman Michael Bilirakis (R-Fla.) have nottaken any public positions on FDA reform. And both chairman havelimited records on health-related issues.

The May hearings will reveal the depth of FDA Commissioner DavidKessler's resolve to embrace FDA reform so strongly suggested bySen. Barbara Mikulski (D-Md.) earlier this month. The FDA maypropose additional regulatory reforms.

FDA spokeswoman Monica Revelle said biotech firms should watchfor the Center for Biologics Evaluation and Research to announce a"managed regulation" plan aimed at stripping unnecessary regulatoryrequirements from biotech approvals.

Congress will suspend action on FDA reform and most otherlegislation during July and August when it takes up the massivedeficit reduction bill. If that debate extends to the fall, the prospectsfor enactment of an FDA reform bill dim considerably, Feldbaumsaid.

Liability Reform May Reduce Insurance Costs

After hitting a snag in full committee, proponents of product liabilityand malpractice reform expect to see their bill reported out of theSenate Labor and Human Resources Committee right after the Senatereturns on April 24, said Frederick Graefe, an attorney with theWashington-based firm Baker & Hostetler.

Chairman Nancy Kassebaum (R-Kan.) earlier this month was forcedto delay a final vote on the bill after committee democrats objected,complaining they had insufficient time to review her substitute bill.

A coalition of medical product manufacturers, hospitals and insurersis pressing for a Senate floor vote before the end of the month. Anamendment called "FDA Defense" will be offered. It would protectmanufacturers from punitive damages as long as a product has beenapproved and cleared for marketing by the FDA. The agency defenseprovision was included by voice vote in the bill passed by the Houseon March 10.

In the Senate, which in past years has stalled product liability billsthrough filibuster, proponents of liability reform now are working toimmunize this year's bill against a similar fate. The SenateRepublican leadership is asking that all amendments have at least 60votes behind them as an insurance policy to avoid filibuster, Graefesaid.

Product liability reform will "reduce the cost of doing business," saidLisa Raines, Genzyme Corp.'s vice president for governmentrelations. "I'm not aware of any biotech firm that has been sued,nevertheless, the cost of insurance is astronomical."

Ralph Nader's Citizen Action group on Tuesday released a studycharging that manufacturers seeking product liability reform haveintentionally misled Congress and the public about who is reallyresponsible for the avalanche of lawsuits now clogging the nation'slegal system.

Just two hours after the Public Citizen press conference, the HealthCare Liability Alliance, which includes among its members BIO andPhRMA, held a news conference where trial lawyers were blamed forblocking product and malpractice liability reform legislation. Thealliance urged the Senate to look to those states that have enactedliability reform for evidence that awards have been capped whilemaintaining patient satisfaction with the legal system

Capital Gains Cuts Could Make Biotech More Attractive

Within the Republicans' tax package, called the "Crown Jewel" ofthe GOP Contract with America, is a reduction in the capital gainstax "that will provide a significant incentive to investors," Rainessaid. The House-passed bill would slash the tax from 28 percent to 19percent and widen the gap between the capital gains tax rate and thetop 39.6 percent income tax bracket.

The capital gains tax cut makes biotech firms more attractive toinvestors than some other companies because of a promise of long-range returns, Raines added.

The fate of these cuts may hinge on how successful Congress is incutting Medicare, Medicaid, welfare and other entitlement programsto finance rollbacks in taxes. Tax cuts may be put off in the Senateuntil budget reduction bills are through Congress.

Patent Bill Could Block Some Imports

A House judiciary subcommittee in early May is expected to mark upa patent bill that allows a manufacturer to receive a patent for abiotech material. Under current law, biotech firms cannot blockimportation of a product made abroad using a process that involves amaterial granted a U.S. patent.

Henry Linsert Jr., chairman and CEO of Martek Biosciences Corp. inColumbia, Md., said foreign competitors of U.S. biotech firms nowcan circumvent liability for patent infringement.

The bill would protect biotech intellectual property and decreaseunnecessary litigation, Linsert said. The bill is backed by the ClintonAdministration. Judiciary Committee Chairman Orrin Hatch (R-Utah)is drafting a similar bill. n

-- Michele L. Robinson Washington Editor

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

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