Senator: Government shortchanged taxpayers on top cancer drug

Friday, June 6th 2003, 12:00 am

By: News On 6

WASHINGTON (AP) -- Federal scientists spent millions creating the cancer drug Taxol but got only a little of the money back -- despite $9 billion in sales -- after turning over Taxol to a pharmaceutical company, congressional investigators said Friday.

Royalties aside, Medicare paid more for Taxol than for other widely used cancer drugs, the report says.

Medicare's Taxol bill before cheaper generic versions hit the market: $687 million, "to buy a taxpayer-funded drug for the taxpayers who funded it," said Sen. Ron Wyden, D-Ore., who released the report by the General Accounting Office.

Wyden has long criticized the National Institutes of Health's 1991 deal that licensed Taxol to Bristol-Myers Squibb Co. Taxol's sale was approved the following year, and by 2001, it had become the best-selling cancer drug in U.S. history.

"This report proves that NIH does not understand that as part of its mandate to get drugs to market quickly, it must effectively move to make sure that patients can afford those products -- and that they should also work to get taxpayers a square deal," Wyden said.

The NIH researches but does not manufacture and sell drugs. Plus, Taxol was derived from the bark of the Pacific yew tree, and it took thousands of pounds of bark to produce a small amount of drug. So NIH needed a manufacturer equipped for mass production just to finish testing Taxol.

The NIH spent $80 million conducting studies necessary for Taxol's sales approval, and a total of $183 million in overall Taxol research from 1977 to 1997, the GAO said. While Taxol eventually generated $9 billion in sales, the NIH got only $35 million in royalty payments.

The government actually got much more benefit: more than $200 million in research funding and crucial Taxol supplies, responded NIH Director Elias Zerhouni.

"Examining the financial aspects of the development of Taxol in isolation from the NIH's mission tells only part of the story," Zerhouni wrote the GAO.

He called Taxol's pricing fair under the complicated circumstances -- it was expensive to produce and couldn't be patented simply -- and said the saga showed how determined efforts of government and industry created a drug that ultimately treated 1 million people.