WASHINGTON -- The biotechnology industry, which was notinvited to a Senate Special Aging Committee hearing onTuesday, came under fire for high drug prices, though manymembers of the committee did come to the defense of theindustry.
"Market failure at its worst" is how Sen. David Pryor, D-Ark.,portrayed the drug industry at the hearing, "PharmaceuticalMarketplace Reform: Is Competition the Right Perscription?" Hesaid mergers and buyouts of generic drug companies beliedindustry's promises to compete. "Prescription prices areincreasing faster than all other medical services, and that saysit all," added Harry Reid, D-Nev.
"If nothing is done about prices like that (of Ceredase), it won'tbe long before we have another drug for $1 million a year,"said Abbey Meyers, executive director of the NationalOrganization for Rare Disorders. "We'd like to see some type ofemergency backup enforcement." However, she did praisebiotechnology companies for distributing drugs free to peoplewho could not afford them.
Judith Wagner, senior associate in the Health Program of theOffice of Technology Assessment, warned that under auniversal benefit program, demand for breakthrough drugswill become insensitive to price. Then, "only the strategic desireof pharmaceutical companies to preserve the good will of theircustomers will limit the entry prices of these drugs." But, sheadded, "an administrative process for controlling drug priceswould add a new source of uncertainty," dampening investorenthusiasm. Bovine somatotropin opponent Russell Feingold, D-Wisc., also weighed in in favor of price controls.
While the biotechnology industry was left out of theproceedings, the Pharmaceutical Manufacturers Association andthe National Association of Pharmaceutical Manufacturers, anassociation of the generic drug industry, were included -- andsome members of the committee were angry.
"I would have hoped that since we are talking aboutbreakthrough drugs, we would have asked a biotechnologycompany or trade association to testify," said Sen. ConradBurns, R-Mont., in his opening statement. "We have 19biotechnology companies in Montana."
Genzyme Corp., which had conducted the first successful clinicaltrial of cystic fibrosis therapy at the University of Iowa, wouldbe hard-pressed "to raise $400 million needed to bring thatdrug to market," said Sen. Charles Grassley, R-Iowa. Pricecontrols would hand over world markets to the Japanese, whohave boasted that they will be world leaders by the year 2000,added Larry Craig, R-Idaho.
As former chancellors of research universities, said Phillip Lee,assistant secretary for health of the department of Health andHuman Services, neither he nor HHS Secretary Donna Shalalawould exclude breakthrough drugs from Medicare. Hedefended the breakthrough drug committee as being next tothe weakest of possible price restraints. "I do see competitionas the principle way we will achieve cost containment," he said.Montana's Burns responded with a torrent of sarcasm.
Though he was not invited to the hearing, Henry Termeer, chiefexecutive officer of Genzyme, vented his feeling in an op-edpiece in Tuesday's Wall Street Journal. He wrote thatcompetition exists in the market for breakthrough drugs,pointing out that several competitors are developingalternatives to Ceredase. Japanese policy, prices for new drugsthat are two to three times higher than those in the U.S., andlower prices for old-line pharmaceuticals send a message to theindustry of "innovate or die," he wrote. A breakthrough drugcommittee and policies that allow costs of old-line drugs toescalate at the inflation rate would send the opposite message.
-- David C. Holzman Washington Editor
(c) 1997 American Health Consultants. All rights reserved.