Drug Profits

* Although a Times story (“Drug, Insurance Firms Cry Foul but Still May Profit From Health Plan,” Oct. 11), predicts that the research-based pharmaceutical industry will benefit from health care reform, there is strong evidence that an increase in utilization will be offset by factors that will drive down prices and profits.

For example, health care reform will accelerate the trend toward managed care, which enables large buyers to demand deep discounts. Health care reform will also provide substantial incentives to use generic drugs. And this will come at a time when patent protection will end for many important drugs.

Although the press foresees a boon, it is clear that financial markets and manufacturers themselves do not see such a rosy picture. Since last year, market capitalization of pharmaceutical stocks has declined by more than $90 billion. And just since September, when the Administration’s draft health care plan was released, U.S. pharmaceutical firms have announced work-force reductions of 13,600 jobs. “Taken together, we believe that the Clinton health care program, if enacted, could be tantamount to regulation of a public utility,” an Oct. 7 report by Merrill Lynch stated.

GERALD J. MOSSINGHOFF, President

Pharmaceutical Manufacturers Assn.

Washington