Sunday, Mar 28, 1993
Washington DC -- March 28, 1993 --G. Kirk Raab, president and CEO of Genentech, Inc., said Monday that government-imposed controls on introductory biotechnology medicines would strangle investment in the industry and, ultimately, contribute to rising health care costs.
"Government-set introductory drug prices would have a chilling effect on the desire of investors to let us use their money," Raab told the White House health reform task force.
Speaking on behalf of the Industrial Biotechnology Association and the Association of Biotechnology Companies, Raab also warned that price controls on new medicines would lead to higher health care costs in the future.
Responding to the panel's questions about the cost of biotech products, Raab said that virtually all of the 22 biotech drugs on the market cost the same today as they did when they won FDA approval as long as a decade ago.
He said the biotechnology industry's mission of trying to discover cures and effective treatments for the most deadly diseases would suffer tremendously if it could not attract equity investors. Such investment provides more than 90 percent of the industry's financing.
Raab said that since the overwhelming majority of biotechnology firms have no products on the market yet, capital investment is their only means of financing the expensive research and development that leads to breakthrough cures and effective treatments for the world's most serious diseases.
Raab noted that the industry lost $3.4 billion last year alone. "Surviving in this industry sometimes seems like a roll of the dice," he explained.
Because investing in biotechnology firms is risky to begin with, investors would simply invest elsewhere if the potential for a commensurate reward were removed, Raab added.
Raab told the task force that the best way for biotechnology companies to help solve the nation's health care crisis is "to continue doing what we do best -- finding cures and effective treatments for deadly, expensive diseases."
"Left untreated, these diseases will cost America a huge amount of money," Raab said. "I don't think it's an exaggeration to say that our health care costs today would pale in comparison to what they would be if baby-boomers reach their most disease-prone years and we still haven't found treatments for such expensive diseases as Alzheimer's, Parkinson's, cancer and AIDS.
"If this sounds like a drastic scenario, consider this: The mere talk of government price controls has led to a whopping 40 percent drop in our industry's market capitalization since November," Raab said.
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