Biotechnology Wins Round in Fight on Drug Price Controls : Medicine: Federal cost review panel may be dropped from health care plan. Research investment is seen as endangered.

The biotechnology industry has achieved an important step in fighting proposed federal drug price controls that it contends would cripple research on “breakthrough” drugs.

In a meeting with industry leaders from California and other states, President Clinton’s top health policy adviser indicated that the Administration will not oppose in Congress the industry’s efforts to keep drug price restrictions out of federal health care reform legislation, industry leaders said Wednesday.

The statements, from White House adviser Ira Magaziner and other administration officials, was “the most encouraging news we’ve heard in a long time,” said Lisa Conte, chief executive of Shaman Pharmaceuticals, a South San Francisco biotechnology firm.

The biotechnology industry has been lobbying hard to persuade the Clinton Administration to drop two proposals from its health care bill that would broaden government powers to oversee drug prices.

The industry has warned that such proposals could cripple investment in the capital-hungry industry, forcing biotech firms to abandon research into drugs to fight cancer, AIDS and other illnesses.

Conte said Magaziner, in a meeting Monday, “made it clear that this is a battle that needed to be fought” with Congress, while indicating that the Administration would be willing to drop the drug price provisions if they became a sticking point in the health care debate.

The Clinton proposals at issue include a government advisory council that would review breakthrough drugs and rule on the “reasonableness” of their prices. Another would allow the secretary of Health and Human Services to exclude new prescription drugs from the Medicare program should their prices be deemed excessive.

The issue is critical to California’s biotechnology companies--concentrated in the Bay Area and San Diego County--which account for 40% of the industry’s 95,000 jobs.

Last month, Rep. John D. Dingell (D-Mich.), chairman of the House Energy and Commerce Committee, wrote Rep. Lynn Schenk (D-San Diego) that he would back her efforts to scrap the advisory council--a move that encouraged the biotechnology industry.

David Beier, vice president of government affairs for San Francisco-based Genentech, said the meeting with Magaziner touched on a number of issues besides reforming the medical care system, among them exports, intellectual property protection and research and development tax credits.

Others at the meeting were Kirk Raab, chairman of Genentech, and Gordon Binder, chief executive of Thousand Oaks-based Amgen.

“All along, the Administration has said it wanted to encourage innovation yet contain costs, and they came up with one way of doing that,” Beier said.

“The essential message they were giving the group is that Congress is revisiting that issue, and if they came up with another way of (containing costs), then that’s fine with them,” he said.