The timing of the Biotechnology Industry Organization's (BIO)first annual meeting couldn't have been better. The morningafter President Clinton's speech to Congress on health-carereform, BIO's vice president for government affairs ChuckLudlam responded to the health-care reform agenda in front of150 attendees representing 130 companies.

BIO's take-home message: There was nothing in Clinton'sspeech to mitigate the industry's fears of indirect pricecontrols.

Moreover, the draft of the legislation that leaked out last week(see BioWorld, Sept. 14) still raises a set of disconcertingquestions Q even though Ludlam said BIO has "heard that onthe order of 200 changes will be made (to the draft)."

For instance, the draft proposed establishing a National HealthBoard that would retain the right to tattle publicly oncompanies with pricey drugs. Speaking for BIO, Ludlam said"We don't know who is eligible (to sit on the Board), or howmany members there will be." But price watchers "probablywould focus mostly on manufacturing costs...We suspect thebureaucrats would never see a price that was too low."

As for the draft proposal that grants the Secretary of Healthand Human Services power to blacklist drugs for Medicarefollowing the Secretary's failure to negotiate a price with themanufacturer, Ludlam suggested that such failures wouldabound and wondered "whether (blacklisting decisions are)reviewable in the courts."

Nonetheless, Ludlam pointed out, of 14 "ethical principles"listed in the draft, none addressed the importance ofdeveloping new treatments for diseases.

But Ludlam offered his listeners one ray of hope in all thisgloom. Ira Magaziner, Clinton's director of health-care reform,told Ludlam last week that the administration would forego theblacklisting provision, but that he didn't know whether or notthat would be reflected in the next reform draft proposal.Ludlam had prompted this response when he told Magazinerthat " have set industrial policy which willdiscourage investment in...breakthrough drugs, particularlythose that would be sold through Medicare, when theserepresent something like 1/500th of one percent of totalmedical costs in the U.S."

(Also last week, health-care task force member Arthur Caplan,a professor of bioethics at the University of Minnesota, visitedMagaziner and Vice President Gore. Caplan told BioWorld onWednesday, "I know, personally, that Al Gore and IraMagaziner are very aware of the need not to damage thebiotechnology industry. I think their plans for health-carereform will reflect a sensitivity to that.")

In responding to the draft of the health-care legislation, BIOfaces two dilemmas, said Ludlam. First, the likely high cost ofhealth-care reform will create pressure for short-termeconomies that would cost the nation in the long run, such asthe proposed 15 percent rebate that companies selling drugsfor Medicare would be forced to pay.

Second, the industry's fundamental dilemma Q companies'dependence on capital markets to fund their childhood andadolescence Q is too subtle to convey in sound-bytes. Educatingbusy legislators will be difficult.

Following Ludlam's speech, Susan Foote, senior health assistantfor Senator Dave Durenberger (R-Minn.) blamed health-carereform's threat to biotechnology on the administration'sinability to adhere to a single economic philosophy. (Foote saidshe was speaking for herself, not the senator.) At the core ofthe conflict are the competing forces of free market competitionand government control.

The administration would like to trust the market, said Foote,but it just can't. "The language of the administration says welive in markets, but we need back-up just in case."

Foote cited the breakthrough drug committee of the NationalHealth Board as an example of the administration's mistrust.

Foote was preceded by William Schultz, counsel to the HouseSubcommittee on Health and the Environment and an aide toRep. Henry Waxman (D-Calif.), who recited a familiar litany ofcomplaints about drug prices. Despite his disclaimer that hewas speaking for himself, Schultz' perspective is importantbecause "his subcommittee has jurisdiction over everything inhealth except for taxes" and will be one of the principalcommittees in the House of Representatives involved in health-care reform, Lisa Raines, vice president for government affairsat Genzyme Corp., told BioWorld.

Schultz enumerated some of the "extraordinarily high priceswe've seen for a small but significant number of newbreakthrough drugs, from AZT to Ceredase," noting that "Irealize each of these drugs is a major advance, and that makesit difficult (to do policy)."

Regarding the HHS secretary's ability to blacklist drugs,"everybody (on the health-care task force) agreed you've got togive the purchaser some ability to say no." For all that,"Everybody I have talked with about (the argument againstprice controls) is truly very sensitive to this issue," Schultz said.

BIO took advantage of its annual meeting to send its ownconstituents to Capitol Hill. This will go on long after BIO'smembers go home. BIO is also reaching out to patient groupsand working with entrepreneur groups. And look for actionalerts in the mail from BIO.

Finally, said Ludlum, "We will need witnesses for 16Congressional committees that have jurisdiction, over biotechand 25 subcommittees. This is your fight."

-- David C. Holzman Washington Editor

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