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NIH ROLE IN DRUG PRICING WILL BE DISCUSSED DEC. 2

Executive Summary

NIH ROLE IN DRUG PRICING WILL BE DISCUSSED DEC. 2 as part of the next scheduled meeting of the advisory committee to the director of the National Institutes of Health. Eight speakers are lined up for a five-hour discussion entitled "Perspectives on Reasonable Pricing of Drugs." Five of the speakers are being allocated 20 minutes each, including Pharmaceutical Manufacturers Association President Gerald Mossinghoff. Three of the speakers are listed as discussants with 10 minutes each. Sen. Pryor's (D-Ark.) key aide in the area of pharmaceutical issues, John Coster, is the first of the three discussants. The other lead-off speakers are University of Minnesota professor Steven Schondelmeyer, NCI Associate Director of the Cancer Therapy Evaluation Program Michael Friedman, Office of Technology Assessment senior associate Judith Wagner and Health Insurance Association of America Director of Medical Technology Assessment John Cova. The two discussants in addition to Coster are William Hickman (director of the Office of Medicaid Policy of the Health Care Financing Administration) and Robert Dresing (president of the Cystic Fibrosis Foundation). The advisory committee discussion is timed to coincide with the final stages of premarket development for Bristol-Myers Squibb's cancer agent Taxol. As part of a CRADA (cooperative R&D agreement) between BMS and the National Cancer Institute, the government body has an undefined role to play in the determination of a fair price for the product. The CRADA acknowledges NCI's role by declaring the government's "concern that there be a reasonable relationship between the pricing of Taxol, the public investment in Taxol research and development, and the health and safety needs of the public." The Dec. 2 advisory committee will develop a public record for NIH in preparation for anticipated Capitol Hill hearings on the Taxol price decision and the role of NIH involvement in the determination of commercial prices for products developed under CRADAs. * Rep. Wyden (D-Ore.) is tentatively planning a hearing for January by his House Small Business/Regulation Subcommittee. Wyden has been keeping the issue in the public limelight during recent months ("The Pink Sheet" Nov. 2, T&G-5). NIH has been forced reluctantly in recent years into the area of commercial pricing. A year ago, NIH officials testified to the House Judiciary/Intellectual Property Subcommittee that the institutes were beginning work on a "framework" for determining a fair price for products codeveloped with government funding ("The Pink Sheet" Nov. 25, 1991, T&G-8). Recognizing that direct intrusion into pricing decisions would deter future cooperative agreements, NIH officials are trying to walk a tightrope: paying enough attention to pricing to ward off congressional criticism and not paying so much attention that future commercial developers will be scared away from cooperative projects ("The Pink Sheet" Dec. 9, 1991, p. 5). * The key concept throughout NIH's preliminary discussions of fair pricing has been that the new product should be priced in line with existing therapies for the same indication. That concept appears to allow room for commercial sponsors to take into consideration higher costs for manufacturing a difficult product and a premium for improved efficacy or safety. The deeper issue is how NIH will determine what type of price is "in line." In the Taxol case, the institutes have appeared to lean toward an attempt to equate profit margins between previous generation products and the newly-developed CRADA product ("The Pink Sheet" Nov. 2, T&G-5).
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