WASHINGTON -- New Jersey Gov. James Florio has receivedassurances from "members of the Clinton administration" thatthe health-care reform package will not contain mandatoryprice controls for existing pharmaceuticals, Audrey Kelly,spokeswoman for the governor, told BioWorld on Wednesday.

Her statement confirmed a story that appeared in Wednesday'sNewark (N.J.) Star Ledger.

"From what the governor understands, the voluntary increaseswould be tied closely to the consumer price index (CPI)," Kellytold BioWorld. This jibes with an agreement among 17Pharmaceutical Manufacturer's Association (PMA) companies,which were responsible for about two-thirds of 1992 sales, tohold price increases to within the CPI, PMA spokesman SteveBerchem told BioWorld. Drugs with new capabilities from boththe biotechnology and pharmaceutical industries would beexempt from pricing guidelines.

Companies that do not adhere to the "voluntary" guidelinescould face sanctions, Kelly told BioWorld.

Steve Burrill, director of the manufacturing and hightechnology group at Ernst & Young in San Francisco, and LisaRaines, vice president for government relations at GenzymeInc., both corroberated Kelly's account. Burrill said he spokelast week with Greg Simon, domestic policy adviser to VicePresident Al Gore. Members of Clinton health-care adviser IraMagaziner's staff had informed Raines.

As for sanctions, a board would be established for this purpose,but it would have no regulatory authority, Raines toldBioWorld. Nonetheless, Burrill said, the sanctions "could makelife unpleasant and would have the same power as a pricereview board."

Despite the lack of restrictions on the prices of drugs with newcapabilities, the board would be empowered to pressurebiotechnology and pharmaceutical companies to lower pricesthat it believes to be too high.

"The review board would also review drug utilization practicesto ensure that drugs are being used in an efficient andmedically appropriate way," Raines said.

The administration also plans to include outpatient drugs in itsstandard benefits package, Raines told BioWorld. This had been"up in the air because potentially it's very expensive," she said.Currently only about half of all health insurance policies coveroutpatient drugs.

There would also be no cap for pharmaceuticals "because (they)are often the most cost-effective (treatment), and a ceilingmight force patients into more expensive and less-effectivetherapy, like surgery," Raines said.

Florio's interest in drug pricing has to do with the fact that NewJersey is home to more than 100 pharmaceutical companiesand about 20 percent of the U.S. pharmaceutical industry'sworkers, and he faces a tough re-election fight.

-- David C. Holzman Washington Editor

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