WASHINGTON, D.C. -- Rep. Ron Wyden, D-Ore., announcedMonday that he will introduce next week legislation to requirecompanies seeking partnerships with the government tocompete for subsidies on the basis of the price they intend tocharge for resulting drug therapies. The bill would also directthe National Institutes of Health to co-license multiplecompanies as research and development partners to fostercompetition.
Wyden announced the legislation at a meeting of Rep. HenryWaxman's, D-Calif., Subcommittee on Health and theEnvironment. Waxman had requested a report from theGeneral Accounting Office on price differences between drugsin the U.S. and Canada.
"The companies have long argued that their prices are justifiedon the basis of the high cost for research and development,"said Wyden.
The GAO found that consumers pay 32 percent more for 121widely dispensed brand-name drugs in the U.S. than they do inCanada. The difference, said Janet L. Shikles, director of healthfinancing and policy issues for the Human Resources Division ofthe GAO, who presented the results, was due largely toCanadian government regulations designed to restrain costs onpatented drugs and to the buying power of the Canadianprovinces, each of which purchases the drugs used in itsjurisdiction.
The study did not address the question of whether pricerestraints would kill the R&D goose that lays the golden egg ofdrugs. Canada is not exactly bursting with new drugs, as laissezfaire partisans at the meeting were quick to point out. Theircost-containment opponents countered that Canada's market issmall (its population is about one-tenth the size of the U.S.) andpatent laws were very weak until 1987.
Shikles said that GAO will address this issue later this year instudies of several Western European countries with active R&D.
France and England use a variety of measures to restrain drugprices. In England, for example, profits deemed excessive mustbe plowed back into R&D or prices must be reduced.
"I think the British system has come the closest to balancing onthat tightrope (of cost vs. pricing)," said Rep. James Greenwood,R-Pa. "It has lowered prices and is extremely prolific with newproducts."
Richard J. Lane, president of the U.S. Human Health Division ofMerck & Co., said the company "looks forward" to developingsolutions to affordability and access to health care, includingpharmaceuticals.
Waxman then asked Lane why the price of Merck's Clineril, ananti-arthritic drug, rose 82 percent in five years. "Forcompetitive reasons," responded Lane.
"I thought you lowered the price for competitive reasons,"Waxman retorted.
Wyden then demanded to know whether the company'sconciliatory rhetoric was an effort to ward off regulation,recalling how the hospital industry had voiced similarsentiments during the Carter administration, and had then sentprices soaring as soon as the threat of regulation receded.
Wyden accused drug companies of "trying to hold the patientspolitically hostage. They say, in effect, 'Unless we can chargewhat we want, you won't see this R&D which will get us a curefor Alzheimer's disease.'
"Does it have to be one way or the other?" he asked. "It seemsto me we can have a measure of both."
-- David C. Holzman Special to BioWorld
(c) 1997 American Health Consultants. All rights reserved.