WASHINGTON, D.C. -- For the second time this week, acongressional committee has slammed the pharmaceuticalindustry for the high cost of drugs.

But George Rathmann, president and chief executive officer ofIcos Corp. of Seattle, representing the biotechnology tradeassociations, said biotechnology companies should be treateddifferently from the pharmaceutical industry.

"Unlike established pharmaceutical companies," Rathmannstated in prepared testimony, "most ... do not currently haveproducts on the market and therefore cannot fund researchand development from sales proceeds.

"Instead, at least 90 percent of the $4.9 billion spent by thebiotechnology industry on R&D came directly from investors,"he said.

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

Sen. Herb Kohl, D-Wis., a member of the Senate SelectCommittee on Aging, set the tone at the hearing, "The FederalGovernment's Investment in New Drug Research andDevelopment": "It is clear that a day of reckoning has come."

Gerald Mossinghoff, president of the PharmaceuticalManufacturer's Association (PMA), argued that pharmaceuticalcompanies have shown restraint on pricing. For 1992, he said,the producer price index had dropped to 46 percent below thatof 1991. He acknowledged that Committee Chairman Sen. DavidPryor, D-Ark., had influenced the companies' pricing policies.

"Over 90 percent of new medicines ... in the United States arediscovered, tested, developed and produced by thepharmaceutical industry," Mossinghoff added.

Consumer advocate Ralph Nader had charged that not only doesthe National Institutes of Health fund 42 percent of allresearch, "but among new molecular entities," seven of the 10from 1991 had been developed with federal funds. Moreover,of 37 cancer drugs developed since 1955, "the federalgovernment ... played an important role in the funding ofclinical research for 34 of the 37," he said.

Michael Gluck of the Congressional Office of TechnologyAssessment concurred that "the federal government actuallyare the experts" in developing the drugs that break newground in the treatment of important diseases.

For example, "NCI (the National Cancer Institute) and thetaxpayers did all the heavy lifting" in developing the highlypromising anti-cancer drug taxol, said Rep. Ron Wyden, D-Ore.

"The government...produced taxol at a cost of 60-90 cents permilligram," said Wyden. "But the retail price worked outbetween NIH and ... Bristol-Myers Squibb has the public paying$4.87 per milligram of taxol."

Wyden faulted NIH for choosing the industrial partner withoutdiscussing price and agreeing to a price set at the median pricefor existing cancer therapies, but including in that list humangrowth hormone, an unrelated and extremely expensiveproduct.

Language in NIH's Cooperative Research and DevelopmentAgreements (CRADAs) in essence asks companies to bereasonable about pricing. This is worse than useless, since theagency has no teeth, said Pryor.

Wyden said he will submit legislation to require the federalgovernment to negotiate pricing formulas prior to signingagreements with private industry.

And Pryor told BioWorld he planned to take action "within afew weeks."

Zola Horovitz, vice president of business development andplanning for Bristol-Myers Squibb Pharmaceutical Group,responded in a prepared statement on Wednesday, saying thatSquibb has invested several times the $32 million spent onTaxol by the government -- and far in excess of the $114million required by the CRADA.

"Active government regulation of CRADA prices may appear tocontrol costs, but instead is very likely to reduce the number ofnew drugs made available to patients or to delay theirintroduction significantly," Horovitz said.

Exactly how much do pharmaceutical companies spend onresearch and development? "We have no way of knowing ...since they refuse to tell us," said Peter Arno, a health economistand professor in the Department of Epidemiology and SocialMedicine at Montefiore Medical Center/Albert Einstein Collegeof Medicine.

-- David Holzman Special to BioWorld

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

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