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Executive Summary

The Office of Technology Assessment's long-awaited study of drug research and development costs will be released and discussed March 4 at a hearing of the House Energy & Commerce/Health Subcommittee, chaired by Rep. Waxman (D-Calif.). In a Jan. 27 announcement, the subcommittee noted that the hearing also will review OTA's findings and discuss pharmaceutical industry profits. The study, requested by the Health Subcommittee and the Senate Judiciary/Antitrust Subcommittee, initially was targeted for release in 1991. OTA Health Program Senior Associate Judith Wagner has explained that one of the agency's difficulties in conducting the study involved measuring the relative investment risks represented by various segments of pharmaceutical company operations ("The Pink Sheet" Feb. 24, 1992, T&G-6). The March 4 hearing was one of three announced by the Health Subcommittee that will address pharmaceutical pricing issues. An anticipated hearing on the differences between pharmaceutical prices in the U.S. and abroad has been scheduled for Feb. 18. One focus of the Feb. 18 hearing is a Government Accounting Office study comparing domestic and Canadian prescription drug prices. That report was released by the subcommittee last fall ("The Pink Sheet" Oct. 26, 1992, p. 3). Waxman requested that comparison and a study comparing U.S. drug prices to those in Europe. The announcement states that the hearing "will examine mechanisms used in other countries to control prescription drug prices." Witnesses will include representatives of GAO and experts on the means used by foreign governments to control prescription drug prices. Industry representatives also may be permitted to testify. At a Nov. 19 seminar on GAO's U.S.-Canadian price comparison, Battelle Research Scientist Frederik Andersson, who has conducted studies for the industry, maintained the study contained "some methodological flaws" that might have biased the findings that drug prices were 32% higher on average in the U.S. than in Canada ("The Pink Sheet" Nov. 16, 1992, T&G-2). Waxman also is planning a hearing to review conditions under which government-researched drug products are licensed to the industry. The announcement indicates that the subcommittee will look into "government funding of research on prescription drugs and will examine proposals for the government to be compensated for its contribution." The California Democrat is the third legislator with an apparent interest in having the hand that rocks the CRADA (Cooperative Research and Development Agreement). Sen. Pryor (D- Ark.) will examine the pricing of government-developed drugs at a Feb. 24 hearing and Rep. Wyden (D-Ore.) held a hearing on CRADAs with respect to Bristol-Myers Squibb's anticancer drug Taxol on Jan. 25 (see following stories). The significance of Waxman's interest in the issue is that he chairs the subcommittee with legislative jurisdiction.

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