WASHINGTON Representatives of theClinton administration on Thursday squared offagainst their counterparts from the biotechnologyindustry at a hearing of the Committee onScience, Space and Technology'sSubcommittee on Technology, Environment andAviation, a body sympathetic to the concerns ofthe industry.The subcommittee is one of almost a dozen inthe House of Representatives that has partialjurisdiction over health care reform. Although thissubcommittee will probably wield little power inthe health care debate, it has a clear politicalagenda, as one congressional aide put it, topromote the health of the medical device andbiotechnology industries. As a result, most of thequestions posed to the administrationrepresentatives by members of thesubcommittee were sympathetic to industryconcerns about drug price-control mechanismsin the Clinton plan.About seven members of the 33-membersubcommittee wandered in and out during theproceedings. Most of them have already madeup their minds about health care reform,according to the congressional aide.Innovation Vs. CostAn exchange between the administration'srepresentatives Helen Smits, deputyadministrator of the Health Care FinancingAdministration (HCFA), and Risa Lavizzo-Mourey, deputy administrator of the Agency forHealth Care Policy and Research (AHCPR)and subcommittee members cut to the coredilemma facing health care reform planners: howto devise a system in which innovation and thecreation of new drugs and technologies ispreserved while costs are controlled.Smits asserted that the president's plan reliesprimarily on competition to keep costs down, butthe handful of subcommittee members whoshowed up weren't buying that argument.Rep. Martin Hoke, R-Ohio, said theadministration's plan amounted to convoluted,sophisticated price-fixing. Committee memberssaid the market trend toward managedcompetition has already begun forcing drugprices down, and they expressed doubt thatgovernment regulation could be as effective asthe free market in controlling costs.No one wants industry to come out of thisprocess crippled, lamented thesubcommittee's chairman, Tim Valentine, D-N.C.Specific elements of Clinton's plan that cameunder fire included the Advisory Council onBreakthrough Drugs (a committee that wouldreview the reasonableness of launch prices fornew drugs), a required rebate frommanufacturers to the government for drugscovered by Medicare, and expanded powers forthe secretary of the Department of Health andHuman Services (HHS) to negotiate rebatesdirectly with companies for new drugs and thenrefuse reimbursement of the drugs (also calledblacklisting) if negotiations fail.Smits argued that the breakthrough drugcommittee was not designed to regulate pricesbut rather to give consumers more informationabout drug prices. The theory of markets saysthat markets work best when consumers havemore information, she said.Smits said that the addition of a prescription drugbenefit to Medicare would create a huge newmarket for drugs, but that the government as abuyer will need tools for negotiating prices withsellers in that market. The power of HHS tonegotiate rebates based on average discountsoffered to other large buyers of drugs, such ashealth maintenance organizations, would protectthe government from paying too much for drugs,Smits said.Otherwise, there will be a natural tendency forcosts to rise in the unnegotiated part of themarket. Firms would then inevitably shift theircosts toward Medicare, Smits said.In the case of new drugs with no track record ofdiscounts yet established, Smits claimed that theHHS would need the right to negotiate a rebatedirectly.She acknowledged that the HHS secretary'spower to blacklist drugs was controversial andsaid that details of the Clinton plan were openfor discussion. Indeed, it is a virtual certaintythat core elements of Clinton's plan could begone after a health care reform bill makes itsway through the legislative process in the Houseand Senate.Lisa Raines, vice president for governmentrelations at Genzyme Corp. of Cambridge,Mass., countered that expanding the powers ofthe AHCPR would be a better way todisseminate information about drug pricing thana breakthrough drug committee. AHCPR, an armof the U.S. Public Health Service, evaluates newmedical technologies and drugs using outcomesresearch.Outcomes research as opposed to new-drugprice reviews does not discriminate against aparticular technology, said Raines. Instead, itlooks at the outcomes from surgery, diagnosticprocedures and pharmaceuticals equally. Sheadded that it was a legitimate governmentfunction to disseminate information to healthcare providers, payers and patients about thecost effectiveness of medical technology.031894Hearing

-- Lisa Piercey Washington Editor

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