WASHINGTON -- Most industry observers on Monday said it istoo early to respond to a New York Times report that theClinton administration is planning to create a special board toreview drug prices. The Times also reported that Clinton isbacking away from drug price controls.

One administration source who watches biotechnology calledthe report "way too hypothetical to get all worked up about,"and Eric Christiansen, communications director for theBiotechnology Industry Organization, said BIO was in noposition to comment.

The Times gleaned from "work papers" of the Hillary ClintonHealth Care Task Force that "the board would collectinformation about prices, and it would establish guidelines asto a reasonable price for prescription drugs that have notherapeutic alternative. It would have the authority to publiclycondemn any companies that violated the guidelines."

In Canada, according to Brad Buxton, a professional staffassistant to Rep. Fortney "Pete" Stark, D-Calif., a similar effortfailed badly.

Nonetheless, news of such a review board is making theindustry nervous. "I'm very concerned about any price reviewboard that reviews pricing for innovative new drugs because Ithink investors are still going to be very concerned," said DavidHale, president and chief executive officer of GensiaPharmaceuticals Inc. "We all know that no biotechnologyfinancing is being done."

Hale recently led a group of California biotechnology companyexecutives to Washington to lobby against drug pricingcontrols. He has been planning a return trip, probably in thefirst half of June, and said the issue of a review board, if itpersists, will be on the agenda.

But Montgomery Securities biotechnology analyst BrandonFradd said biotechnology stock prices have been going up sinceApril and that Clinton alone was not to blame for the doldrumsin the biotechnology sector during the first quarter. Fraddpointed to problems at Amgen Inc., Synergen Inc. and Gensia,and "concerns about the market," as well as uncertainty overClinton's health care policy.

The AMEX Biotechnology Stock Index has picked up about 4points, to 119.51, from its first-quarter close of 115.37, whilethe Chicago Board Option Exchange Biotechnology Stock Index isup about 12 points, to 117.03, since March 31.

Even if Clinton proposes a drug review panel, theadministration source said he has sought to reassurebiotechnology companies "that no matter what happens, therewill be a natural distinction between the 'me-too'pharmaceutical drugs and the innovative biotechnology drugsthat address long-standing problems."

A larger threat might be HR 916, a bill for a price reviewboard, which Stark introduced in February. Rep. RichardDurban, D-Ill., introduced a complementary bill in March.Stark's bill would empower a board to recoup excess profitsand to contract with another company from production anddistribution. But the bill failed to make it to the floor last year,and has generated little interest so far this year.

Gail Wilensky, former health care adviser for the Bushadministration, said the government could best reduce thenational cost of new drugs by widely disseminating informationon their proper uses. New, powerful drugs are often over-usedby physicians, whose major education has come frommarketing and detail men -- company representatives whovisit doctors to promote drugs.

Regarding a possible board to review drug prices, Wilenskysaid that without incentives, such as changing tax laws toencourage purchasers to be more cost-conscious, "I'm notimpressed that voluntary price controls are going to be worthmuch of anything."

-- David C. Holzman Washington Editor

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