Pharmaceutical Official Warns of Price Controls

By Wolfe, Lou Anne | THE JOURNAL RECORD, June 16, 1994 | Go to article overview
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Pharmaceutical Official Warns of Price Controls


If health care reform includes price controls on medicine, the impact on daily life could be greater than most people realize, the senior vice president of a leading pharmaceutical corporation said Wednesday.

The types of price controls proposed in the Clinton health care plan would stifle research and development of new drugs, warned John D. Borgia, senior vice president of human resources and administration of Bristol-Myers Squibb Co.'s pharmaceutical group.

"The hope for curing diseases like Alzheimer's and cancer lies in future pharmaceuticals, those being researched right now," he said. "On average, it takes almost 10 to 12 years to get a drug to the marketplace, and it costs about $350 million.

"So my company and others are making bets now and spending a lot of money to research compounds that won't be around until the year 2000," he said. "If there's price controls at that time, it's starting to affect the decisions that are getting made relative to research, and that's not good."

Although the words "price control" are not used in the Clinton proposal, Bristol-Myers views three of the plan's aspects in that light, Borgia said.

"One is a global budget, where they fix an amount that can be spent, and if you run out of money, that's all you can spend. That's going to result in price controls," he said.

Another provision would "set up advisory boards in the health and human services area that are going to decide on the reasonableness of a certain price," Borgia said. "We don't think that should be left up to a bureaucratic group."

The third aspect would give authority to the secretary of the U.S. Department of Health and Human Services to decide whether a product could be included on a formulary, based on the secretary's feelings on whether the price seemed excessive, he said.

"That's very discretionary. We don't think the people will stand for that," Borgia said. "I don't want somebody in Washington arbitrarily saying whether or not that's on the formulary. We think the market should decide that."

This type of price control would inhibit research, he said. "We've seen that in other countries around the world, where people are not making investments in research because they don't think the government is going to put it on a formulary or allow the market to set the price," Borgia said.

"And that's risky. People are not going to invest in our companies to do that."

Borgia said his company appreciated the president and first lady for bringing the health care issue to the forefront.

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