WASHINGTON -- Don't lump us with pharmaceutical companieswas the message that G. Kirk Raab, president and chiefexecutive officer of Genentech Inc., brought to Hillary RodhamClinton's Health Care Task Force at a public hearing on Monday.
Speaking on behalf of the Industrial Biotechnology Associationand the Association of Biotechnology Companies, Raab warnedthe task force that government-imposed controls onintroductory biotechnology medicines would strangleinvestment in the industry and, ultimately, contribute to risinghealth care costs.
Although pharmaceutical prices have been on the rise, Raabsaid: "Virtually all of the 22 biotech drugs on the market costthe same today as they did when they won FDA approval -- aslong as a decade ago. Raising prices on existing drugs hasn'tbeen a practice of the biotech industry.
"We don't develop 'me-too' medicines," Raab said. "We use ourhighly trained scientists to find effective treatments forcritically ill patients with severe disease."
Unlike pharmaceuticals, Raab said, biotechnology drugs are nomore expensive in the U.S. than they are overseas. "Three-hundred milligrams of G-CSF (granulocyte colony stimulatingfactor) costs $112 here ... $101 in Canada, $143 in France, $88in Italy and $378 in Japan."
Raab warned, however, that "the mere talk of government pricecontrols has led to a whopping 40 percent drop in ourindustry's market capitalization since November.
While giant pharmaceutical companies can use profits fromexisting drugs to finance their businesses, "biotechnologyfirms don't have that option," Raab said. "More than 90 percentof our money comes from equity financing. Government-setintroductory drug prices would have a chilling effect on thedesire of investors to let us use their money," he said.
"We do not have a positive cash flow," he said. "Price controlscould not only kill the industry, they could kill patients" bypreventing the development of the medicines that would savethem.
Raab told the panel that the best way for biotechnologycompanies to help solve the nation's health care crisis is "tocontinue doing what we do best -- finding cures and effectivetreatments for deadly, expensive diseases.
"Left untreated, these diseases will cost America a hugeamount of money," he said.
Raab described the promise of biotechnology with an examplefrom his own company. Genentech (NYSE:GNE) of South SanFrancisco, Calif., is working on a protein that has beenidentified with ovarian and breast cancer. He said that Phase IItrials are about to begin for an antibody to the cancer protein.
Raab and Robert Allnutt, executive vice president of thePharmaceutical Manufacturers Association, urged the panel tolet managed care control prices. Hospitals, Raab said, havebecome aggressive in dealing with drug costs. "I don't alwayslike it, but they are successful," he said. And unlike pricecontrols, this would not interfere with advancements in theindustry.
Nonetheless, he added, "Our industry is prepared to supportfederal action which creates strong incentives to limit futureprice increases in exchange for the right to continue to setintroductory prices in accordance with the need to provideequity investment in our industry."
"Managed competition will work (to hold down pharmaceuticalprices)," Allnutt insisted. "Give it a try."
-- David C. Holzman Washington Editor
(c) 1997 American Health Consultants. All rights reserved.