WASHINGTON _ According to House Speaker Newt Gingrich, thetop legislative priority for biotechnology CEOs is a cut in the capitalgains tax. "Nothing else is comparable [in importance]," he said.

Gingrich made the comments here at a press briefing on Republicanscience and technology policy on Wednesday night. House ScienceCommittee chairman Robert Walker (R-Pa.) also spoke at the event.

Gingrich, citing his speech to more than 100 CEOs at aBiotechnology Industry Organization (BIO) event last year, toldreporters that executives who attended the gathering were "virtuallyunanimous" in their conviction that "a clean, simple, dramaticallylower capital gains tax was the biggest single thing we could do fortheir industry." Walker, whose district includes Malvern-basedCentocor Inc. as well as numerous other biotechnology companies,said he had received the same message from his constituents.

In a wide-ranging question-and-answer session, Gingrich highlightedthe struggles of the biotechnology industry several times, presentingit as a victim of flawed federal policies. Echoing the arguments ofindustry representatives and lobbyists, Gingrich warned that the U.S.could relinquish its role as the international leader in biotechnologyunless the severe capital crunch is relieved.

"A combination of bad tax law and bad regulatory law means we areminimizing the likelihood of our dominating the world market [inbiotechnology]," said Gingrich. "If you take the trend lines over thenext 10 years, the odds are very high that the Germans and theJapanese are going to dominate a market that we should absolutelyown." The U.S. capital markets "do not generate the level of capitalnecessary for these corporations," added Gingrich.

BIO president Carl Feldbaum confirmed that enacting a capital gainstax cut, as well as other changes in tax law, is a top priority for theindustry. But, he added, "it's fair to say that FDA reform shares thespotlight with capital gains in terms of the biotechnology industry'sagenda."

Gingrich reiterated his well-publicized criticisms of the FDA onWednesday, but conceded that he had not yet developed an"intellectual model" to replace the agency. That effort, he said, isunder way at numerous think tanks.

"I'm a big believer in paradigms and I think it's clear that the FederalCommunications Commission, the FDA and the Federal TradeCommission are all paper-oriented, backward-looking and process-dominated systems that are totally obsolete for the information age,"said Gingrich.

He singled out FDA regulations regarding the export of unapproveddrugs, a sore point for many biotechnology companies, as"inexcusable."

"We export medical jobs and biological jobs and biotech jobsbecause it's better now to build a manufacturing plant in Canada orGermany because you can import here once it's approved and youcan manufacture it there for the rest of the world," said Gingrich."It's now illegal to make it here."

He then engaged in a little spontaneous rule-making. "I would sayyou ought to be allowed to export American goods to anysophisticated Western country that has, you know, a reasonablestandard. I'm not saying you ought to go ahead and dump poison onthe Third World, on a country that doesn't have any laws. But ifGermany, Japan, Italy and Canada make something legal, you oughtto be able to manufacture it in the U.S. and you shouldn't have toplace your factory abroad."

Gingrich said a securities litigation reform bill that recently passedthe House would aid "entrepreneurial CEOs," though it's fate in theSenate is unclear. He also said that making the research anddevelopment tax credit permanent was a top priority of Republicans.

Walker repeated his criticisms of the Commerce Department'sAdvanced Technology Program, calling it a misguided and doomedattempt at "strategic research." He said that government expenditureson science and technology should be focused on basic research.

"I don't think that science spending is entirely a federal budgetissue," explained Walker. "As I've said over and over again, I thinkwe ought to be accessing the $6 trillion economy and I want toadvocate policies to ensure that, by the end of this year or next year,we are spending more as a fraction of our overall national economyon research." He said Republicans would do that by "gettinggovernment out of the way" and changing tax policies.n

-- Lisa Piercey Washington Editor

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