WASHINGTON _ The National Institutes of Health's (NIH) secondforum on Cooperative Research and Development Agreements(CRADA), with a far more diverse and contentious advisory panel thanthe first, may have nonetheless sown the seeds for a compromise in theso-called "reasonable pricing" clause controversy.Although sharply divided on a number of issues, the 15-member panel_ composed of consumer and patient advocates, government officialsand industry representatives _ circled warily around a consensusduring last Thursday's forum. The broad outlines of a compromisecould include applying the pricing clause to CRADAs on a selective,risk-adjusted basis and exempting CRADAs involving research on rarediseases, since any resulting products would be covered by the OrphanDrug Act.The pricing clause, a standard feature of all NIH CRADAs, states thatthe Department of Health and Human Services (HHS) "has a concern"that there be a "reasonable relationship between the pricing of alicensed product" and "the public investment in that product." Further,the clause states that in the case of exclusive licenses for NIHtechnologies that relationship may need to be supported by "reasonableevidence." The clause, which has been blamed by industry forimpeding technology transfer between the NIH and the private sector,is now under review.Panel members appeared to support flexible use of the pricing clause_ which could be based in part on the relative risk undertaken by eachparty to the agreement, as well as the investment made. At one end ofthe risk continuum would be an early-stage research project, where theNIH's industry partner would bear most of the risk and investmentburden of bringing any resulting product to market. The other extremewould be a case in which the NIH assumed the lion's share of risk indeveloping a product before handing it off to industry. "The AZT andtaxol cases (two drugs developed by NIH researchers andcommercialized by industry) offended public policy because the NIHpaid for the reduction of a significant amount of risk," explained panelmember James Barrett, CEO of Gaithersburg, Md.-based GeneticTherapy Inc. "The companies invested after the point at which risk wasvirtually eliminated. But if all the risks of developing the technologystill lay ahead, those projects should not be subject to the pricingclause."Consumer advocates, who were sharply critical of the drug industry'spricing practices, cautiously agreed that risk could be an acceptablefactor in determining the appropriateness of a pricing clause. "Riskshould be on the scale," said panel member Abbey Myers, president ofthe National Organization for Rare Disorders. "We should explore arisk scale to remove the clause on a selected basis," added Jeff Levi, aWashington-based consultant and consumer activist.No Final CompromiseNo final or definitive agreement was reached and it is still unclearwhich individual or agency will make the final decision on how, if andwhen to change NIH CRADA policy. Although NIH director HaroldVarmus will play a key role, his actions will be circumscribed bypolicy makers at HHS and the Public Health Service (PHS) and bycongressional scrutiny. Varmus, as one panel member noted wryly, willneed "political cover" for any decision he makes about the clause.William Corr, Deputy Assistant Secretary for Health at PHS and apanel member at the forum, told BioWorld that the pricing clause is a"PHS-wide policy issue" and that HHS Assistant Secretary for HealthPhilip Lee is "personally interested" in the matter. Corr declined tocomment on what he thought of a risk-adjusted application of theclause, but he stressed repeatedly that the clause addressed animportant public policy concern."Underlying this policy is the idea that public investment has takenplace and has benefited industry," said Corr. "If we believe there is apublic investment for which there should be some return, it's essentialto look at other ways to achieve the goal (of the pricing clause).Reasonable pricing is the hardest nut we'll ever try to crack. The mainpoint is that we want people to have access to these products."A potential solution to the problem of access surfaced repeatedly at theforum: replace the reference to "reasonable" pricing in NIH CRADAswith a requirement for companies to assure "reasonable access" to theirproducts. This could involve companies submitting an accessibilityplan (i.e., a program to distribute drugs to those who can't afford them)before signing a CRADA.However, both consumer and industry representatives found someflaws with this idea. Consumer advocates claimed that the so-calledindigent programs run by most large drug companies are a "farce" tootangled up in paperwork and too under-advertised to provide poorpeople real access to drugs. Nevertheless, Levi said such programs, ifheld to stringent standards of accountability, are "good public policy."But Genetic Therapy's Barrett pointed out that his company's genetherapy product for brain tumors, if it ever reaches the market, wouldbe difficult to assure access to _ the drug can only be delivered via a$25,000 procedure done by brain surgeons.Any indigent care program would have to provide access to the drug,pay for surgery and provide extensive follow-up _ a costly scenario.Panel Members' Opinions VariedPanel members at the second forum represented starkly differentviewpoints and interests. Consumer advocates voiced strong supportfor the notion that the fruits of taxpayer-supported NIH research shouldbe accessible and affordable to the American public. They expressedthe belief that the clause, although it has never been enforced, is onemethod of achieving that end.Industry warned that the clause represents an incipient attempt toimpose price controls and that such controls are not within the NIH'sstatutory mandate or expertise to enforce. Meanwhile, NIH scientistsargued that policy issues such as the pricing and accessibility of drugsfall well outside of the intramural program's mission to pursue basicresearch.Industry's contention that the pricing clause has led to a decrease in thenumber of CRADAs was contradicted on Thursday by data fromBarbara McGarey, deputy director of the NIH's Office of TechnologyTransfer. She said the number of CRADAs has remained relativelystable since 1989 (the year the clause began to be routinely inserted inCRADAs). The numbers did flatten out between 1993 and 1994,stabilizing at roughly 40 CRADAs per year."They're not falling [numbers of CRADAs] but I don't think you canconclude that they're not affected by the clause," said McGarey. "Ournumbers don't show for example, how many lost opportunities therehave been or the types of CRADAs that are being entered into. Wedon't know that."Anecdotal evidence suggests that both industry and NIH intramuralscientists are frustrated by the clause, though for different reasons. NIHscientists say the routine insertion of the clause severely restricts theiraccess to industry's proprietary compounds _ which they would liketo use in experiments.CRADAs must be used to transfer materials into the NIH for testingbecause if a new or novel use of a drug is found in the course of NIHexperimentation, the agency cannot _ under current policy _ pre-assign patent or licensing rights to a company without the clause inplace. Because of this, companies are reluctant to allow NIH scientiststo experiment with their proprietary drugs under CRADAs. n
-- Lisa Piercey Washington Editor
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