By Paul R. Pescatello

THE medical research industry in Connecticut is booming. We were ranked recently by the Milken Institute among the Top 10 states in terms of innovation and technology use. We're currently ranked first in industry research and development.

On a per capita basis, Connecticut is fifth in the nation for bioscience venture capital investments, according to the Battelle Memorial Institute. Even with the current economic downturn, venture capital funding for the third quarter in Connecticut reached $43 million, a 16 percent increase over last year. A Shelton-based biotechnology company received the single largest investment, $12 million.

Unfortunately, all this could be at risk if Congress passes an importation law that contains a "forced sale" provision that would require U.S. drug companies to sell to foreign distributors at price-controlled rates. The companies' drugs could then be resold in America at the price-controlled rates.

Importing cheaper drugs from Canada or Europe might sound like a good idea at first glance, but it's precisely the kind of incentive-destroying action that would curb medical innovation.

There's no doubt that prices for brand-name drugs in the United States are high. They are about 50 percent to 60 percent more expensive than in Europe or Canada, where price controls are used. These countries are essentially piggybacking on U.S. medical research.

The solution isn't to punish U.S. companies. Rather, it's to encourage Europe and Canada to lend more assistance in the fight against diseases by creating friendlier tax and regulatory environments for research companies.

The United States leads the world in medical innovation. We produce nearly 90 percent of the world's pharmaceutical supplies. An importation law that imposes foreign price controls on drug developers would decimate the industry, choking off the development of new cures.

That's because high drug prices generate the funding needed for ongoing and future investments in research and development. American pharmaceutical companies invest 17 percent of all sales in research and development and there are 633 new biotech medicines now in development.

Due to the U.S. regulatory regime to ensure drug safety through a rigorous federal approval process, it costs approximately $1.3 billion in research and development and takes 12 to 15 years before a drug reaches the market. Fewer than one in 1,000 compounds tested will even make it to clinical trials, and only 20 percent of those will hit the market.

In addition, only 30 percent of marketable drugs make money. Seven of every 10 drugs brought to market never generate enough revenue to recover the average costs of development. Continued...

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Importation would result in up to 18 fewer drugs per decade, according to the U.S. Department of Health and Human Services. Moreover, it wouldn't even save consumers much. A London School of Economics study found that middlemen would eat up most of the cost savings, resulting in a "negligible reduction in drug spending."

Importing drugs via forced sale would cut dramatically into drug company profits, making it difficult for them to recoup the massive investments needed for research and development and the production of cutting-edge drugs. Any incentive for additional investments would be destroyed. The net result would be less innovation, fewer life-saving medical supplies and more human suffering.

More than any other industry, biotechnology and pharmaceuticals depend on massive levels of research and development financing in order to produce new drugs that often originate in small companies for whom recouping investments is singularly important.

Throughout the world, people suffering from any number of ailments are putting their hopes in research-intensive states like Connecticut. Let's not take those hopes away.

Paul R. Pescatello is president of Connecticut United for Research Excellence, or CURE, a nonprofit organization that advocates for and educates the public about life sciences research. Write to him at CURE, 300 George St., Suite 561, New Haven 06511. E-mail: PPescatello@curenet.org.

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