Key House Lawmaker Opposes Clinton’s Drug Panel Proposal : Congress: Move by Dingell is seen as concession to get health care bill through his Energy and Commerce Committee.

House Energy and Commerce Committee Chairman John D. Dingell’s prospects for producing a health care bill from his panel brightened Wednesday after he made key concessions to the pharmaceutical and biotechnology industries.

In a letter to freshman Rep. Lynn Schenk (D-San Diego), the Michigan Democrat promised that he would work to eliminate the Advisory Council on Breakthrough Drugs proposed in President Clinton’s health care reform plan.

Dingell’s panel is considered the most difficult battleground for health care reform in the House, and he is having to use every bit of his much-vaunted legislative horse-trading abilities to cobble together a majority.

With several Democrats already indicating that they will defect and no Republicans expected to support the legislation, Dingell cannot afford to lose even one of the remaining Democratic votes.

Clinton’s proposed council would be charged with examining “the reasonableness” of the prices of new drugs as they come on the market. The pharmaceutical industry has been a major target of criticism from the Administration, which has accused drug firms of making exorbitant profits on their discoveries.

Schenk, whose district includes more than 100 pharmaceutical firms employing 15,000 workers, wrote in a letter to Dingell that the advisory council’s “mere inclusion in the President’s Health Security Act has already influenced the investment community and forced many small biotechnology companies to cut back on research and development efforts. . . . Venture capital has dried up, and those companies that are not cutting back are transferring their production overseas.”

Those firms, she added in an interview, “are the ones doing the research on AIDS and Alzheimer’s and cancer. It’s also an industry of the future.”

In his reply, Dingell wrote: “I do not desire to single out new or ‘breakthrough’ drugs for Draconian price regulation. I agree with you that the advisory council is not a good idea and that it should not be included as part of any comprehensive health care reform.”

Schenk is one of at least six committee members whose votes Dingell must nail down before he can officially begin drafting a bill. She said she still has concerns about other provisions of the bill--most notably its requirement that small businesses either pay for 80% of their workers’ health care benefits or pay a 1% tax.

But she added that with Dingell’s agreement to eliminate the drug board, “it’s really going in the right direction, and this today has given me a lot of comfort that they are listening to me.”

In a separate letter, Dingell also promised Rep. Marjorie Margolies-Mezvinsky (D-Pa.), another undecided member, that he would give close scrutiny to Clinton’s proposal to allow the Health and Human Services secretary to “blacklist” from the Medicare program drugs deemed to be overpriced.

Dingell said he hoped to replace that provision with “appropriate legislative language” aimed at giving the secretary the ability to “make sound decisions about coverage of prescription drugs under Medicare but will not create the impression that any new drug, no matter how important or how effective, will automatically be ‘rejected’ based on its cost alone.”

Meanwhile, the Administration may have underestimated by up to 20% the amount that consumers would pay in annual insurance premiums under the President’s health care reform plan, according to an independent analysis by a committee of the American Academy of Actuaries.

The study, to be released today, suggested that the White House has underestimated the cost of covering 38 million uninsured Americans, as well as overall health care expenditures.

If the analysis is correct, one academy actuary said Wednesday, the true cost of premiums could add as much as $125 billion to the federal budget between 1996 and 2000 if Clinton’s plan is enacted.

“We want to emphasize the uncertainty and the fact that if higher premiums are required, the effect on the budget could be pretty dramatic,” said Phyllis A. Doran, a Philadelphia-based actuary with Milliman & Robertson, a business consulting group.

Under Clinton’s Health Security Act, employers would be required to provide workers with insurance. Companies with fewer than 5,000 employees would join regional insurance-buying alliances, which would be required to offer members at least three different types of health plans, including a traditional fee-for-service plan.

While every American would be guaranteed a standard lifetime package of benefits, individuals would be permitted to choose a specific plan. The plans would range in cost because of varying out-of-pocket requirements and the range in choices of providers.

According to the Administration, the average standard benefits package would cost $1,932 for an individual, $3,865 for childless couples, $3,893 for single-parent families and $4,360 for two-parent families.

The actuarial study assumes stringent caps on insurance premium increases--as Clinton has proposed. Without such caps, Doran said, the premium costs could be 54% higher.

She said the Administration’s lower numbers may stem from having underestimated payment levels for hospitals and doctors under the fee-for-service option.

The Health Security Act does not specify a fee-for-service payment schedule; instead, it would leave it to each alliance to negotiate such rates with providers.

The 11,700-member academy is the public-policy voice of the actuarial profession.

Last year, the White House brought in eight outside actuaries to review the methodology and assumptions used in developing its 1,342-page proposal. That group eventually pronounced the Administration’s calculations of the private-sector premiums “sound and reasonable.”

Times staff writer Marlene Cimons contributed to this story.