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Sanders: reawakening debate from 1995. Credit: AP

The US biotechnology industry has launched a strongly worded attack on a congressional bill that seeks to restrict the prices that pharmaceutical companies can charge for products based on federally funded biomedical discoveries.

The bill would require companies that enter research collaborations with government agencies, or exclusively license rights from them, to sign a ‘reasonable pricing agreement’ for any products that result. The same requirement would apply to agreements between companies and government grantees, such as universities.

The bill reawakens a debate from 1995, when Harold Varmus, the director of the National Institutes of Health (NIH), removed a ‘reasonable pricing’ clause that had been included since 1989 in cooperative research and development agreements and exclusive licences negotiated between the NIH intramural programme and industry (see Nature 374, 669; 1995).

The new bill, introduced last month, is sponsored by Bernard Sanders (Independent, Vermont). It has been broadly expanded from earlier versions, first introduced in 1995, which would have applied only to agreements with industry negotiated by the NIH.

Known as the Health Care Research and Development and Taxpayer Protection Act, the new bill would prohibit federal agencies that fund biomedical research — and non-profit institutions that receive funds from them — from entering collaborations or exclusive licensing agreements unless the company involved “first agrees to a reasonable pricing agreement with the Secretary of Health and Human Services”.

To arrive at a reasonable price, the bill says, the secretary should use a competitive bidding process where reasonable, but may waive the requirement if this would serve “the public interest”.

Supporters of the bill — which has 14 co-sponsors, from liberal Democrats to conservative Republicans — say that it is intended to prevent drug companies from making enormous profits on products that owe their existence to government research funded by taxpayers. “There's profit, and then there's profiteering,” says an aide to Fortney ‘Pete’ Stark (Democrat, California), a co-sponsor.

Sanders, who is the lead sponsor, calls current practice “insane”. The NIH is “giving the right to drug(s) over to the private sector with no negotiations whatsoever,” he says. “If the federal government has added value to the process, it is worth something; you cannot give it away.”

Sanders cites the example of AZT, the first anti-AIDS drug, the development of which was supported by the National Cancer Institute. Burroughs-Wellcome (now Glaxo Wellcome) launched the drug in 1987 at a cost of $10,000 per patient per year, prompting the NIH patent policy board in 1989 to require reasonable pricing clauses in agreements between the NIH intramural programme and industry.

But the bill has upset the Biotechnology Industry Organization (BIO). “It would have an adverse impact on every single relationship that the government and its grantees have with the research and development companies,” says Chuck Ludlam, a BIO lobbyist, who points out that the bill targets universities as well as the NIH.

Karen Hersey, president of the Association of University Technology Managers, which represents technology transfer professionals, says that a pricing clause would cause companies to shun agreements with the NIH and other agencies, leaving valuable government research sitting on the shelf.

It would be “enormously detrimental” to the commercialization of NIH-funded research, says Hersey, who is the intellectual-property counsellor at the Massachusetts Institute of Technology. Mark Grayson, a spokesman for the Pharmaceutical Research and Manufacturers of America, agrees. Reasonable pricing clauses, he says, “reduce the reward for collaborating and in the end they stifle innovation.”

Although Congress-watchers predict that Sanders' bill will not travel far in a Republican-dominated Congress, it has generated considerable attention. For example, it was featured in the Boston Globe newspaper last month and has been covered on the NBC television programme Nightly News.

Ludlam says that BIO is taking the bill “very seriously” for two reasons. First, it has grown in popularity in Congress, where it failed to pass the House of Representatives in 1996 by only 62 votes, as an amendment to the bill funding the NIH. (It was not brought up for a vote in 1997.) Second, he says, even if the bill does not pass this year, the prospect that it might do so in the near future could deter companies from entering into research agreements with universities and government agencies.