WASHINGTON, D.C. (April 4, 2001) - Carl B. Feldbaum, president of the Biotechnology Industry organization (BIO), today issued the following statement to all members of the House of Representatives in response to the announcement by U. S. Rep. Thomas Allen (D-ME) of “The Prescription Drug Fairness for Seniors Act of 2001”:

The Biotechnology Industry Organization (BIO) believes that Medicare beneficiaries should have better access to prescription biologics and drugs. We believe that private market competition - not explicit price control legislation - will work best to drive down costs while at the same time encouraging innovation. Price control legislation, such as the “Prescription Drug Fairness for Seniors Act of 2001” (HR 1400) introduced by Representative Tom Allen (D-ME) today, is not a winning solution.

The biotechnology industry is quite sensitive on this subject. Our member companies depend first and foremost on market financing to sponsor research. That money, in turn, depends upon some confidence that patents will be granted and maintained, that reasonable regulatory requirements will be imposed, and that prices will be governed by the mix of forces inherent in all competitive frameworks without Federal price controls. Compromise any one of these elements and investment dollars will scurry to more hospitable environments. More importantly, if innovation in the biotechnology industry is threatened through price controls, patients will ultimately be harmed by not having access to breakthrough treatments.

I urge you not to support this or any other ill-advised price control legislation for prescription biologics. Consider the following:

· Reference pricing schemes are explicit price controls-Reference pricing proposals would use the same bad ideas that have been used in Canada and other countries with government price controls that harm innovation in drug development. The United States, not Canada or Europe, is the leader in biotechnology. Let’s keep it that way.

· Majority of biotech companies still in research and development phase - Most of BIO’s member companies don’t in fact have any FDA-approved products in the market. More than two-thirds of biotechnology companies employ fewer than 135 persons. Don’t slow the progress of biotechnology’s innovation.

· Biotechnology is a costly endeavor and is not risk free - Biotechnology is one of the most research-intensive industries in the world, spending $9.9 billion on R & D in 1998, with net losses totaling $5.1 billion. Our member companies spend the majority of their scarce resources on research and development efforts.

· Price Setting Will Dry Up Biotech Investment and Slow Research Progress-Our future prospects for biotech innovation - and the resulting therapies and cures - are tied to the flow of capital for R & D. That flow of capital can be turned off quickly if investors expect legislators or regulators to embrace price setting for biologics-potentially hurting patients by destroying small entrepreneurial companies that could be the sources of new lifesaving or life-enhancing therapies, particularly for rare disorders.

In closing, I again urge you not to support price control legislation. The Allen bill does not provide coverage. Let’s find other winning solutions for providing Medicare prescription drug coverage. Several more thoughtful proposals have already been put forward.

I have included a copy of our Medicare prescription drug “Principles”. BIO represents more than 950 biotechnology companies, academic institutions, state biotechnology centers and related organizations in all 50 U.S. states and 33 other nations. BIO members are involved in the research and development of health care, agricultural, industrial and environmental biotechnology products. If you have any questions regarding our concerns, please contact our Vice President for Health Policy, Sharon Cohen at 202-962-9200.


Carl B. Feldbaum
Biotechnology Industry Organization

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