WASHINGTON _ A National Institutes of Health (NIH)-appointedadvisory panel recommended on Thursday that the so-called"reasonable pricing clause" be eliminated as a standard feature of NIHintramural Cooperative Research and Development Agreements(CRADAs). Despite the unanimity and vigor of the panel's views, theoutcome of the long-running debate over the clause remains unclear.The clause was inserted into NIH intramural CRADAs in 1989 bythen-director James Wyngaarden and states that there must be a"reasonable relationship between the pricing of a licensed product"and "the public investment in that product." It further specifies thatexclusive commercialization licenses for NIH technologies mayrequire that the relationship be "supported by reasonable evidence."Although the NIH has executed 206 CRADAs since 1986, the clausehas never been enforced. Nonetheless, it has deterred companies fromcollaborating with the NIH and has become a source of controversy.The 15-member panel's verbal recommendations on the pricing clauseand other aspects of the NIH CRADA program will be summarized(and possibly revised) in a report that could be ready for review inthree to four weeks. Once panel members have signed off on thedocument, it will be sent to NIH director Harold Varmus.Varmus will then have to decide if, how and when to reformulate NIHCRADA policy based on the panel's recommendations. (Such policyshifts are often published in the Federal Register as "guidelines.")Deleting the pricing clause from the boilerplate CRADA documentcould be dicey politically and Varmus may act quickly or ponder theidea for months."The difficulty now is whether or not, in the current environment, NIHwill be able to take any action at all on the panel's recommendations,"said Jim Barrett, chairman and CEO of Genetic Therapy Inc. and anNIH CRADA panel member.If he retains the clause, Varmus faces the wrath of industry and thefrustration of his own top scientists _ the clear consensus atThursday's forum was that the pricing clause has hamperedtechnology transfer and damaged the NIH's CRADA program.Panel members presented other strong arguments against the clause,including the fact that pricing is not a part of the statute that governsCRADAs, the 1986 Federal Technology Transfer Act (FTTA). FTTAwas designed to promote the transfer of government technology to thepublic sector for commercialization."The voice of NIH's intramural scientists was clear today and there'sno question that companies are refusing to do business with the NIHbecause of this clause," Michael Gottesman, NIH acting deputydirector for intramural research, told BioWorld. "But there is alsoenormous public interest in this area, so a lot is at stake."If Varmus deletes the clause, he could face a brouhaha in Congress,where some members are committed to insuring that drugs which aredeveloped with significant federal funding are "reasonably" priced.Indeed, it's almost certain that Varmus' final decision will have to bereviewed and approved by top officials at the Public Health Service(PHS) and at the Department of Health and Human Services (HHS).The pricing clause actually represents PHS policy, not NIH policy.HHS Secretary Donna Shalala may make the final determination.Congressional advocates of pricing restrictions on drugs developedwith major federal financing include Rep. Henry Waxman (D-Calif.),chairman of the Energy and Commerce Committee's subcommittee onHealth and Environment and subcommittee member Rep. Ron Wyden(D-Calif.). The Health and Environment subcommittee hasauthorization authority over the NIH under Title 4 of the Public HealthService Act.In a testament to the subcommittee's clout, Varmus said at Thursday'sforum that he intends to "discuss" the CRADA panel's final writtenrecommendations with Wyden and his staff before making a decision."The path of least resistance may appear to be deleting the clause butthat path will be fraught with a great deal of resistance from people inCongress," David Schulke, Wyden's chief health aide told BioWorld."Wyden does not have a rigid position on this, but simply dropping theclause is not an option unless Varmus wants to cause great anxiety onthe Hill."Schulke said he agreed with panel members who argued that the NIHis not the appropriate _ or qualified _ agency to judge thereasonableness of drug prices. But, he added, "Wyden and Waxmanare not interested in relieving the NIH of this duty until anothermechanism to accomplish the same thing is in place."Schulke also called the CRADA panel an "industry panel" and said itdid not include representatives from the public. The panel wascomposed of five NIH officials, one FDA official, four pharmaceuticalindustry executives, two biotechnology industry executives, one officialfrom the Centers for Disease Control and Prevention, one hospitaladministrator and one attorney. (The hospital executive once ran abiotechnology company, and biotechnology and pharmaceuticalcompanies comprise half of the attorney's clients.)"This was not a definitive panel, it was a group of people with verystrong opinions," explained Gottesman. "It's certainly not the wholestory." Gottesman said he was surprised by the lack of diversity ofopinion on the panel and said that Varmus will seek opinions onCRADAs from other sources, as well.Industry representatives on the panel adopted a take-no-prisonersapproach on Thursday to anything short of annihilation of the clause.A suggestion by one NIH panel member to replace the price clausewith wording to require that companies provide "access" to drugs (i.e.,programs to distribute drugs free to those who can't pay for them) wasrejected. Another suggestion to set up specific criteria for CRADAsthat could exclude the clause was also rejected."If this recommendation is adopted by Varmus, Lee and Shalala, itwill revitalize the NIH intramural program," said Chuck Ludlam, vicepresident for government relations at the Biotechnology IndustryOrganization. "NIH needs the courage to stand up to Congress andexplain the rationale of the technology transfer program and whatmakes it work." n

-- Lisa Piercey Washington Editor

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