WASHINGTON _ As the pharmaceutical and biotechnology industries head fora health care reform shootout with legislators who advocate drug pricecontrols, experts and statistics are ricocheting at top speed off thewalls of congressional hearing chambers.The issue of drug pricing has become a factious, factoid-driven debateon Capitol Hill. A case in point: at a Tuesday hearing chaired by Rep.Ron Wyden (D-Ore.), a year-old study of drug prices done by a consumergroup got a burst of new life _ stories on the report appeared inThe Washington Post and The New York Times. The study was done byTaxpayer Assets Project (TAP), an arm of consumer advocate RalphNader's Washington-based Center for Study of Responsive Law. TAP'sdirector of economic studies, James Love, said he was "surprised"when press coverage of the event focused on his drug pricing studyand conceded, "it wasn't even really the topic of thehearing."The TAP data had a somewhat tangential connection to the primarysubject at hand _ a government report chronicling how La Jolla,Calif.-based Scripps Research Institute has underreported federalfunding of its patented inventions for the last 10 years and how theNational Institutes of Health (NIH) has lost track of governmentrights to research it funded. (See BioWorld Today, July 12, 1994.)But it's an accurate measure of media and public interest in thetopic of drug pricing that the TAP study eclipsed the more mundaneissue of NIH's internal patent and licensetracking systems.TAP concluded that, ironically, the public is paying more _ by afactor of three _ for drugs developed with federal funding than forthose developed without federal funding. The group showed that between1987 and 1991, the FDA approved 2,270 new drugs but only 117 of themwere New Molecular Entities (NME). The rest of the approvals weregiven to generic drugs or new combinations of existing compounds.Only 30 of the NMEs were for treatment of severe illnesses orrepresented a substantial gain in therapeutic value over existingdrugs (given an FDA rating of "A," "AA" or "E"). Of those 30, 15 weredeveloped using "significant" funding from the U.S. government, accordingto TAP.TAP data showed the median wholesale cost (one completed treatmentor a year's worth of medicine, whichever was less) of the 15 NMEsdeveloped without federal funding was $1,626. In contrast, the 15NMEs developed with federal funding had a median price tagof $4,854. Love offered one possible explanation for the pricedifferential: the government focuses its research grants on drugs"that are truly innovative and that treat severe illnesses." Buthe said the premium pricing of those drugs represents consumers'willingness to pay (for lack of any alternative therapy) ratherthan real development costs.The TAP data, if accurate, highlight several interesting trendsbut raise a host of questions as well (as do most of the "expert"reports floating around Washington these days).The data support the biotechnology industry's assertions thatmost of the large pharmaceutical companies _ which have wonthe lion's share of FDA approvals in the last 10 years _ focuson developing "me-too" drugs with minimal therapeutic value.According to TAP data, a measly 1.3 percent of all FDA drugapprovals between 1987 and 1991 were deemed "important" newdrugs by the agency's own rating system. The data suggest thatindustry-funded drugs are cheaper than taxpayer-funded drugs, butLove believes this demonstrates the extent to which thepharmaceutical industry has "ripped off" the government.He argues that the government has three main mechanisms forprotecting taxpayers' money when it comes to drug prices: 1) the"reasonable pricing" clause in Cooperative Research and DevelopmentAgreements; 2) "fair price" clauses in licenses signedbetween the government and individual companies; and 3) the"government rights" clause inserted into patents for inventionsthat were funded with federal grants. Love said the governmenthas almost never exercised its rights relating to these mechanisms,proving that the NIH, at least, is "in bed with industry."Chuck Ludlam, vice president of government relations at theBiotechnology Industry Organization (BIO), said the TAP studyhad no direct bearing on the biotechnology industry's conductin drug pricing (although Genzyme Corp.'s Ceredase helped raise themedian price of the 15 federally-funded NMEs considerably). He alsocriticized the TAP data for perpetuating misconceptions about drug prices."The (TAP) pricing figures are gross numbers with no qualitativemeasures of the cost-effectiveness of the drugs involved," Ludlamtold BioWorld. "One cannot extrapolate a public policy position fromthis type of data. This type of study creates a climate of totalignorance regarding the pricing and value of medicines."Ludlam said that an analysis of the money saved by using drugs insteadof other potentially more expensive interventions is the only relevantcontext in which to discuss drug prices. "We are swimming in acesspool on the drug pricing issue," he said. Recent public opinionpolls, as Ludlam noted, have shown that most Americans supportdrug price controls, policies which he claims could discourageresearch on new medicines.But Abbey Meyers, president of the New Fairfield, Conn.-based NationalOrganization for Rare Disorders, dismissed BIO and pharmaceuticalindustry warnings about decreased research development as "politicalposturing.""Price controls exist in every industrialized country other thanthe U.S. yet drug companies are innovating all over Europe and inJapan nonetheless," Meyers told BioWorld. Many of the world's largestdrug manufacturers are based in Europe."If biotechnology can deliver on its promise of creating cost-effectivedrugs to treat untreatable diseases, they'll have no problems, nomatter what health care system we have," said Meyers. "If biotechdrugs are better and outcomes research proves it, any price will bepaid for those drugs." n
-- Lisa Piercey Washington Editor
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