In an effort to counteract negative criticism aimed atpharmaceutical companies by the Clinton administration andCongress, the Pharmaceutical Manufacturers Association (PMA)on Tuesday blitzed the media with a full-page ad defendingdrug prices and reiterating the companies' commitments tokeep those prices from escalating.

Titled "To The American People From the People Who Work inPharmaceutical Companies," the advertisement ran in 40newspapers nationwide and cost roughly $500,000 overall.

"Because we play a vital role in the health of every Americanand because you have been hearing so much negative criticismof us," the ad read, "we think there are several important factsabout us you should know."

The ad went on to state that drug price increases last yearwere the lowest in 15 years; that Americans work fewer hoursto pay for their average annual supply of drugs than people inmost other industrialized countries; and that drugs help to holddown health care costs by containing other medical expensessuch as surgery, hospitalization and nursing home care."

This could signal the start of a public relations campaign inearnest by the pharmaceutical industry.

The first volley was fired by P. Roy Vagelos, Merck & Co.'schairman and chief executive officer, on Feb. 19 in response toClinton's Feb. 12 accusation that the industry was making"unconscionable" profits from the prices of childhood vaccines.Vagelos took out a three-quarter-page ad in major selectednewspapers refuting criticism that the company was raisingprices faster than inflation. Vagelos called for "healing healthcare through cooperation not confrontation."

Hambrecht & Quist analyst D. Larry Smith, who has beenfollowing the pharmaceutical industry for two decades, toldBioWorld that this is the first time he's seen the pharmaceuticalindustry mount such a public relations campaign. "They'rereacting now like they should have 10 years ago," Smith said.Through the industry's lack of a PR effort, "they've allowed thecritics to seize the high ground. ... So now people think thatdrugs are priced too high and those prices are rising far morethan the rate of inflation, that drug firms are earning excessiveprofits, that drugs cost more in the U.S. than in other countries,that the companies only do research on 'me-too' products, andthat most of the discoveries come from the government, butare then sold by pharmaceutical companies at high prices."

The industry has got to dispel these ideas, Smith emphasized."The industry has to convince the public that it's going to makesacrifices."

Over the past month, drug-pricing issues have affectedbiotechnology stock performance. By and large, this is due tothe fact that "drug stocks and biotech stocks compete in thesame market," explained Smith.

But the biotechnology industry is now trying to distance itselffrom its pharmaceutical brothers. Last week, George Rathmann,president and chief executive officer of Seattle-based IcosCorp., representing the biotechnology trade associations at acongressional committee meeting, stated that biotechnologycompanies should be treated differently from thepharmaceutical industry.

"Unlike established pharmaceutical companies," he said, "most(biotechnology companies) do not have products on the marketand therefore cannot fund research and development fromsales proceeds."

Rathmann added that he believes that biotechnology companieswould commit to maintaining price increases at the consumerprice index, but that "biotech companies need to haveflexibility in determining introductory prices."

-- Jennifer Van Brunt Senior Editor

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