NIH drops clause on 'reasonable pricing' in pacts

April 12, 1995|By Bloomberg Business News

WASHINGTON -- Drug companies no longer have to promise to charge a "reasonable price" for products developed using basic research from the federal government.

The National Institutes of Health has dropped the so-called "reasonable pricing clause" from the contract companies must sign to bring scientific advances discovered in government laboratories to the corner pharmacy. The government routinely licenses its primary research to private companies for commercialization.

Pharmaceutical and biotechnology groups welcomed the decision yesterday as a victory for medical process and a step toward reducing the red tape that keeps many companies from working with the government.

Drug, biotechnology and other companies already pay fees and royalties to the government to pay for the research funded by Americans' taxes.

The clause was introduced after Burroughs Wellcome Inc., the U.S. pharmaceutical arm of Wellcome PLC, was roundly criticized for the introductory price of its AIDS drug AZT.

Instead of imposing price restrictions, the government now plans to encourage competition between companies that want to use government research, said Dr. Harold Varmus, director of the NIH.

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