BIO Testifies At Senate Committee: Private-Sector Drug Coverage Will Help Seniors, Not Price Controls

WASHINGTON, D.C. (June 13, 2000) - Paul Abrams, CEO of NeoRx Corp., testified today on behalf of the Biotechnology Industry Organization (BIO) at a U.S. Senate Health, Education, Labor and Pensions Committee hearing on drug pricing and proposals for improving Medicare beneficiaries' access to medicines.

Abrams, a member of BIO's Emerging Companies Section Governing Body, urged the senators to support private-sector drug coverage for seniors, not price controls initiated in the United States or abroad. He said coverage, not mere price discounting schemes, should provide seniors with access to medicines when they are the sickest and need help the most.

"BIO understands the need for access to drugs at reasonableprices," Abrams said. "However, we believe that private market competition, which works to drive down costs while at the same time encouraging innovation, is the winning solution. Private market mechanisms can and have effectively constrained costs for most sectors of the American public."

"The best way to provide affordable access to medicines is to offer coverage. Federally imposed discounting proposals of any stripe may in the short run help achieve a small percent decrease in drug costs, but coverage will help seniors more. The distinction between discounting and coverage can mean the difference between 10 to 15 percent off a $3,000 outpatient prescription drug or a $10 to $15 co-payment for that same product."

Abrams, whose Seattle company is nearing Phase III trials with apromising cancer drug, also testified about the negative impact of price controls on research-stage biotech companies.

"The biotechnology industry is very fragile," Abrams said. "It depends first and foremost on sources of cash 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 imposed controls. Compromise any one of these and investment dollars will scurry to more hospitable environments."

Abrams urged the senators to consider three essential points when considering Medicare reform proposals:

- Small biotech companies - many of whom are years away from having commercial sales - are in the forefront of discovering, developing and bringing to market the next generation of life-saving medicines. Many drugs are targeted at preventing or curing diseases that affect seniors, highlighting the importance of ensuring seniors' access to these medicines and helping them get drug coverage.

- Increasing seniors' access to prescription drugs through fiscallyresponsible, decentralized, private-sector coverage is the best way to help seniors access drugs that are safe and affordable.

- Efforts to implement price controls dried up investment inbiotechnology research and slowed drug development during the 1993-1994 Clinton health-care reform debate. Current price-control efforts in the House and Senate will have the same effect if they progress.

Abrams' complete testimony is posted on BIO's Web site at in the Issues & Policies section.

BIO represents more than 900 companies, academic institutions and state biotech centers in 49 states and 26 nations. BIO members are involved in the research and development of health-care, agricultural, industrial and environmental biotechnology products.