WASHINGTON -- The latest version of President Clinton'shealth-care reform package -- announced last month --included some changes to the Breakthrough Drug Committeethat should be welcomed by the biotechnology industry.
New drug prices will be evaluated not just in terms of cost ofdevelopment, but relative to existing treatments. And ChrisJennings, an adviser to Ira Magaziner, Clinton's senior health-care adviser, told BioWorld that the committee will factor intoits analysis outcome measures of quality of life, such as abilityto return to work. By such measures, biotechnology'seffectiveness should outstrip that of conventional medicaltreatment.
In addition, the risk of blacklisting by Medicare has beenreduced by new legislation, Jennings told BioWorld. In the caseof drugs deemed excessively costly, the Secretary of Health andHuman Services (currently Donna Shalala) would beempowered to negotiate a rebate greater than the 17 percentthat the current legislation requires companies to tithe toMedicare. The secretary would be able to blacklist only if she isunable to negotiate that rebate. "The only way we envisionnegotiation," Jennings told BioWorld, is if "coverage wouldthreaten insolvency for the Medicare Trust Fund."
Jennings said the 17 percent rebate is about equivalent to theaverage discount among all hospitals and health maintenanceorganizations (HMOs), although for individual drugs, the rangeis roughly 5 to 70 percent.
Moreover, what the rebate would take from industry, therevenues from newly required universal coverage wouldreturn to its pockets, Jennings told BioWorld. (Theadministration will soon have precise figures for that, he said.)
The industry could hardly have hoped for better changes, giventhe politics of pricing. Sen. William Pryor, D-Ark., no friend tothe drug industry, "has great respect and admiration from thepresident and first lady," Jennings told BioWorld. During thepresidential campaign, the Clintons touted Pryor's work ondrug pricing from the previous Congress, and "it struck anextraordinarily responsive chord in the electorate," saidJennings.
But industry leaders still have concerns above and beyond theproposed Breakthrough Drug Committee. For example, insurerscould refrain from covering new drugs until the BreakthroughDrug Committee has acted, raising the possibility -- as AIDSactivists have -- that new drugs might remain unavailable topeople in need long after approval by FDA, Lisa Raines, vicepresident of government affairs at Genzyme Corp., toldBioWorld.
Industry observers also worry about more basic details.Biotechnology Industry Organization (BIO) President CarlFeldbaum, for example, wondered whether the committeewould safeguard companyies' secrets. "They are supposed toprotect trade information," said Jennings. "That's clearly statedin the legislation, and we'd be happy to work with industry onany appropriate language."
Feldbaum also cited terms that remain undefined; "specialmanufacturing requirements," "other relevant factors,""reasonableness" and "significant advance over existingtherapies" are just a few benign-sounding phrases that couldmask malignancy.
"We haven't defined 'inability to negotiate' in real stark terms,"said Jennings, when asked about that specific phrase, which isthe trigger for blacklisting. But "we are willing to work withindustry on that as well."
Now that the package is headed for Congress, theadministration has no plans to micromanage the legislativeodyssey, Jennings told BioWorld. However, Sen. Pryor is "veryinfluential, one of the most popular members of Congress."Moreover, consumer groups from Consumers Union to theAmerican Association of Retired Persons are pushing for lowerprices, Jennings added.
-- David C. Holzman Washington Editor
(c) 1997 American Health Consultants. All rights reserved.