Inside the health care plan By Kris Herbst
Contributing Editor

WASHINGTON - Biotechnology drugs will be developed in an environment of government scrutiny of the "reasonableness" of new drug pricing, backed by stiff sanctions and strict federally imposed limits on the total expenditures for health care, according to a working draft of President Clinton's health care reform plan.

According to a copy of the plan obtained by BioCentury on Friday, drugs initially would not be subject to direct price controls. But indirect price restraints would prevail as health care plans sought to make a profit within a federal cap on expenditures when creating formularies.

In addition, the plan singles out new drugs for special watchdog efforts by the federal government to keep prices down.

On the other hand, as widely expected, the plan proposes to include billions of dollars of prescription drug reimbursements under its guaranteed benefit package and for Medicare.

New research initiatives

The document also creates a portrait of new government research initiatives focused on the development of new technologies and treatments for disease to improve the cost-effectiveness of health care delivery.

The plan also envisions funding new government research to create ways to measure cost-effectiveness and patient outcomes from treatments, in effect creating a cost-effectiveness endpoint for drug evaluation that could prove advantageous for biotech products.

But the 246-page document only vaguely refers to any mechanism by which the plan's benefit package would be adjusted to accommodate changes in technology or pay for novel technologies that provide desireable new benefits, but not breakthroughs, that result in upward pressure on the budgets.

The document outlines the American Health Security Act, which is the name given to the plan that is to be unveiled by President Clinton on Sept. 22. It remains to be seen what changes will be made in the final proposal as the administration gauges reaction to the plan after a week of orchestrated access to the document was ended when leaked copies began circulating on Friday.