Last year Gail Wilensky was the president's chief adviser onhealth care policy. She's now back at Project Hope, a health carepolicy research institute, from whence President Bush firsttapped her to run the Health Care Financing Administration(HCFA), which administers Medicare and Medicaid, beforedrawing her into his inner circle of advisers.

Wilensky remains very influential in Republican circles, buther thoughtful, non-dogmatic approach to policy enables her tocross party boundaries. She recently shared some thoughts onhow the biotechnology industry might face the future.

The industry will soon face a new economic environment. Inthe absence of price controls from the new administration, themarket will do what it always does. And at a time when drugprices have been escalating faster than the rest of health carecosts, which in turn have been rising faster than those in therest of the economy, it is not surprising that market forces arefinally kicking in.

"HMOs and hospital chains have discovered that if they go outas purchasers and demand a good price, they typically get agood price," Wilensky told BioWorld. Furthermore, they arekeeping a close eye on physicians' prescribing habits.

"The old permissive financing days, where if it was new, safeand a teeny-weenie bit better, you were in, are gone." Sheadded that "much more selective but appropriate use of newtherapeutics" could reduce sales volumes.

In the current environment, the biggest issue for biotech "iswhether they will be able to price new products at a level thatwill sustain them, and whether the new, higher-pricedproducts will be able to live in the economic environment ofthe future," Wilensky said.

"I think there is going to be a lot more discipline brought to thehealth care market for technology than has previously existed,"she said. "It's not going to be enough just to be better unlessyou are noticeably better in an area where there are fewalternatives, in which case people are much more tolerant ofhigher costs."

But Wilensky worries that the Clinton administration's healthcare reform program will supersede market forces.

"Clinton has surrounded himself with people who do not knowmuch about the institutional workings of health care. HHS (theDepartment of Health and Human Services) is crawling withregulators, and an awful lot of people who think the way to fixproblems is to have the government specify the solutionthrough control and mandates, and finance it in a major way."

The industry's political opinions will have limited impact,added Wilensky, if the administration establishes price controlsacross the board.

But if the pharmaceutical industry is singled out for an extra-strong dose of the cod liver oil, one way the biotechnologyindustry might distinguish itself would be through existingregulatory classifications, such as FDA approval processes, shesaid.

As for politicking, "hold your major fire until you know whatyou are fighting against," advises Wilensky.

Although the administration has "given every hint that theyare going to resort to price controls," virtually nothing has beensaid about what will be excluded from the benefit package orhow health care reform will be financed.

The biggest danger, Wilensky said, is that health care reformwill pass this year. If so, it will be because "the Democrats rollthe Republicans." But health care reform will probably waituntil next year, at which point, she said, the influence of morediverse points of view could result in a more thoughtfulsolution.

-- David C. Holzman Washington Editor

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