WASHINGTON The topic was supposed to be "TheCompetitiveness of the U.S. Biotechnology Industry," but the first hourand a half of a late-afternoon Senate hearing here on Wednesday wasdominated by health care reform.Sen. John D. Rockefeller IV (D-W.Va.) chairman of the Subcommitteeon Science, Technology and Space, grilled Lisa Conte, president andchief executive officer of Shaman Pharmaceuticals Inc., on thebiotechnology industry's opposition to elements of President Clinton'sHealth Security Act.Conte, who had planned a speech giving a broad overview of theindustry, was happy to oblige. She focused her critique of Clinton'splan on the proposed Advisory Council on Breakthrough Drugs, acommittee that could make public declarations regarding thereasonableness of launch prices for new or so-called "breakthrough"drugs.Conte offered standard industry arguments against the proposal, sayingthat the breakthrough drug committee was widely perceived in theinvestment community as a direct price control mechanism and thatcapital investment in the industry had evaporated as a result of thatperception.Shaman of South San Francisco, Calif., was one of four biotechnologycompanies that managed to complete two public offerings in 1993one initial public offering (IPO) and one follow-on offering. Thecompany raised a total of $65 million, although the second offeringwas sold at a per-share price of $8.50, 40 percent less than the $15 IPOprice.Rockefeller said he was "mystified" as to why the biotechnologyindustry insists on equating the advisory council with price controls.The committee would have no legal authority to determine the price ofdrugs, he said. "If biotech firms perpetuate the perception of pricecontrols, won't that be a self-fulfilling prophecy?" he asked.Conte countered that any review of drug prices should be based onoutcomes research, a sophisticated analytical methodology forassessing the costs and savings of drugs and other medicaltechnologies. "I'm advocating putting patient outcomes in the finallegislation," Rockefeller said.Conte then said that the Public Health Service's Agency for HealthCare Policy and Research (see the related article on the AHCPR, p.1.)was more qualified to conduct outcomes research than a breakthroughdrug committee would be. "I know AHCPR does outcomes research,"said Rockefeller. "But nobody pays any attention to it."The exchange exemplified the gulf between lawmakers who see thebreakthrough drug committee as benign and industry representativeswho view it as unnecessary and harmful government meddling.Rockefeller said the government has a "fiduciary responsibility" to keephealth care costs in check, implying that the breakthrough drugcommittee would aid in that effort.Although the exchange between Rockefeller and Conte provided theliveliest moments of the first half of the hearing, four other witnessestestified, including M.R.C. Greenwood, associate director for Sciencefrom the White House's Office of Science and Technology Policy;Barry Jacobsen, dean of Montana State University's College ofAgriculture; Peter Perez, president and chief financial officer ofEnvironmental Remediation Inc.; and Mark Skaletsky, president andchief executive officer of GelTex Pharmaceuticals Inc.Greenwood said the Clinton administration has shown its commitmentto biotechnology by increasing funding for the National Institutes ofHealth (NIH) and the National Science Foundation. She said theadministration was studying how to redress several key grievances ofthe industry, from "fair price" clauses in Cooperative Research andDevelopment Agreements (CRADAs) with the NIH to the overloadedU.S. Patent and Trademark Office to making the research andexperimentation tax credit permanent.Greenwod said the U.S. is the undisputed world leader inbiotechnology. The key to the future of the industry, she argued, willbe a strong basic research program, fiscal and economic tax policiesthat encourage investment, a rational regulatory policy and an educatedpublic.

-- Lisa Piercey Washington Editor

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