Biotech council warns against drug imports

The Massachusetts Biotechnology Council distributed a not-so-subtle message on Canadian drug imports yesterday at the State House.

Tucked into information kits was a letter from a North Carolina official inviting Vertex Pharmaceuticals Inc. of Cambridge to pack up and move its 450 jobs south. The reason? Because the Bay State is considering bringing in cheaper foreign drugs that could hurt biotech companies.

"Come on down," the North Carolina letter said. "The business climate is fine."

Vertex said it has no intention of leaving. But the implication was clear: Despite the presence of Harvard University and the Massachusetts Institute of Technology, world-class teaching hospitals, and a high concentration of scientists, local biotech firms see the regulatory climate in Massachusetts as increasingly unfavorable when compared to other states.

The flashpoint yesterday was the biotech council's political counteroffensive against a bill that would require the state to ask for federal permission for a website providing links to Canadian Internet pharmacies. Governor Mitt Romney and House Speaker Thomas Finneran have already expressed opposition to the concept, but the idea has support among some rank-and-file lawmakers.

Vertex chairman and CEO Joshua Boger, one of two local biotech executives to testify yesterday before a legislative panel, said importing pharmaceuticals from Canada is the same as importing Canada's government price controls that keep drugs 20 to 80 percent cheaper than in the United States.

"If price control is imported successfully to the US," Boger said, "then Vertex and the rest of the adolescent biotech industry will simply and quite quickly vanish."

The biotech industry is especially susceptible to state regulations that might weaken revenue, executives said, because biotech companies typically lose tens of millions of dolllars for many years before earning any profits. Once their drugs hit the market, they are often extremely expensive, sometimes costing tens of thousands of dollars a year for a single patient.

If venture capitalists and large pharmaceutical companies, which frequently partner with biotechs, lose faith in the biotech industry's ability to command its high prices, then the supply of money to keep operating will dry up, the executives said.

"The notion of price controls at the end of the rainbow is anathema to the concept of these people investing this much money," said Richard Pops, CEO of Alkermes Inc. of Cambridge and chairman of the Biotechnology Industry Organization, the national biotech group.

But the Senate sponsor of the Canadian importation bill, Democrat Jarrett Barrios of Cambridge, said he does not believe that drug importation would harm any companies.

Drug companies "are not going to stop investing in biotech -- it's the drug pipeline, but it's also the pharmaceutical lifeline," Barrios said in an interview. "That is one of the arguments that is made to keep Americans in the dark and keep us the only suckers in the world willing to pay twice as much for our pharmaceuticals."

The biotechnology council also reiterated its opposition yesterday to a state "bulk-purchasing" program for prescription drugs, which would create a buying pool of state employees, state hospital patients, and Medicaid recipients. Such a pool could allow the state to get rock-bottom Medicaid prices in all areas of its drug purchasing. Romney has asked large pharmacy benefit managers to tell the state how much it could save with such a plan.

To illustrate its point that the state's reputation as an incubator is at stake, the biotechnology council released the two letters from North Carolina that specifically targeted Massachusetts. In the letter to Boger at Vertex, a North Carolina official last week cited efforts by state and local officials to import Canadian drugs.

"It is interesting to note that Massachusetts' once strong commitment to the biomanufacturing and pharmaceutical industry appears to be waning," wrote the official, North Carolina Senate President Pro Tempore Marc Basnight.

In the second letter, an open letter to all Massachusetts biotech companies, the North Carolina Biosciences Organization said Massachusetts political leaders have attempted to "push prices for your products to artificial and economically harmful lows."

Members of the Massachusetts House Medicaid Committee who sat on yesterday's hearing panel said the state needs to find ways to reduce drug costs. It has saved $160 million a year by requiring that Medicaid patients only use generic versions of some drugs and by establishing a list of preferred brands for other medicines. Patients who want to use other brands must get their doctors to apply for special permission.

Constituents, too, are angry about the high costs of drugs, committee members said. Representative Thomas O'Brien, a Kingston Democrat and vice chairman of the Medicaid Committee, said people don't understand why the same drugs can be sold for much less Canada.

"There's a real frustration from our constituents," he said, "about the availability of cheaper identical drugs elsewhere."

Christopher Rowland can be reached at crowland@globe.com