WASHINGTON Q Drug price critic Rep. Henry Waxman, D-Calif.,chairman of the House Energy and Commerce Subcommittee onHealth and the Environment, on Tuesday heard strong opposition toproposed drug price controls. The administrationUs proposals for abreakthrough drug committee and Medicare rebates and blacklistingalso drew heat.

A parade of witnesses, notably the heads of three disease groups Qthe National Organization for Rare Disorders (NORD), the LupusFoundation of America and the Alliance for Aging Research Qexpressed fears that blacklisting and a breakthrough drug committeewould kill prospects for cures.

RIt may be that sustaining the current high productivity in publicand private biomedical research is on a collision course with short-range cost-containment goals,S said Daniel Perry, executive directorof the Alliance for Aging Research. RIf so, we should be honest aboutthis with the American people. Some proposals now on the tablemight freeze the development of new medicines by controllingintroductory prices of new drugs.S

However, Abbey Meyers, president of NORD, warned that Rtheindustry must show greater restraint in their pricing or they aregoing to find themselves in a position where price controls areinevitable.S She also recommended minimum standards forformularies under the Health Security Act, such as prohibiting that adrug such as Ceredase for GaucherUs disease or Betaseron for multiplesclerosis be barred when it is the only treatment for a disease.RBecause of the high cost of these drugs, they are the most likely tobe denied inclusion,S she said.

Committee member Ron Wyden, D-Ore., suggested that companiesthat provided data on cost and clinical effectiveness could be exemptfrom the scrutiny of a price review board.

Experts from academia as well as industry criticized price controls.Economist David Green, director of the Health and Welfare Unit of theInstitute of Economic Affairs in London, took issue with a recentGeneral Accounting Office report that Waxman used to support hisargument that the United Kingdom had achieved both low prices anddrug research.

RThe top British companies sell only 15 percent in the U.K. and half(of their products) in America,S Green said. RIf you are thinking ofcopying the British system, please donUt.S

Alone among economists, Stephen Schondelmeyer, professor anddirector of the Prime Institute in Minneapolis, supported pricecontrols. He argued that there is room to squeeze the U.S. drugindustry without crippling it.

Waxman said that only the existence of uninsured Medicare patientshas prevented companies from charging more than $10,000 a yearfor most drugs. RBut now (under health care reform) you will have aguaranteed market. What will keep you from charging $20,000-50,000?S

Roy Vagelos, chairman and chief executive officer of Merck & Co. Inc.,downplayed the financial drain of breakthrough drugs in overallnational health care because such drugs are few and are usuallyimitated within several years of their introduction.

Industry representatives also criticized allowing Medicare topurchase drugs directly from companies, which leads to MedicareUspower to blacklist. Since Medicare controls one-third of the nationUsdrug market, its choice of one drug for reimbursement over otherscould be too big a blow to the other companies, said GeraldMossinghoff, president of the Pharmaceutical ManufacturersAssociation (PMA). Currently, drug purchasers have no such clout.

MerckUs Vagelos suggested that pharmaceutical management groupscould compete for MedicareUs business so that revenues would bedivided among several companies. In addition, the PMA and BIO areboth working on their own proposals, with PMAUs to be released onFeb. 22.

-- David C. Holzman Washington Editor

(c) 1997 American Health Consultants. All rights reserved.