- The Washington Times - Thursday, December 15, 2005

The biotechnology industry this week cheered a vote by the Securities and Exchange Commission’s advisory committee to exempt small public companies from part of a business reform law.

The 19-member committee on Wednesday voted 18-1 to give smaller public companies, with market capitalizations under $700 million, an immediate exemption from some auditing requirements in the Sarbanes-Oxley Act.

That law, which was passed in 2002 to reform accounting procedures in the wake of corporate scandals like Enron and WorldCom, requires publicly owned companies to explain their internal controls each year and have outside auditors attest to the effectiveness of those controls.

Small companies, such as many biotechnology firms, have argued the regulation is too costly for them, costing about $1 million each year and doubling their annual operating costs.

“We are not recommending a legislative change to Sarbanes-Oxley; instead we are asking the SEC to ease sections that are creating harmful, unintended consequences for small public companies,” said Jim Greenwood, president and chief executive officer of the Biotechnology Industry Organization, a Washington trade group.

Committee research found that compliance costs make up more than 2.5 percent of revenue for smaller companies compared with less than 1 percent for bigger corporations.

The committees will gather public comment on the recommendations next month and send a final report to the commission in April, said SEC spokesman John Heine.

Herndon biotech firm wins contract

Iatrogen LLC, a Herndon biotechnology company, this week said it signed a service agreement with the Dow Chemical Co. to provide a medication-safety system.

Iatrogen, which would not disclose financial terms, on Monday said it will provide its system, called RXWise, to more than 118,000 employees, retirees, spouses and dependents with Dow, the Midland, Mich., chemical and plastics company.

The Internet-accessible software allows consumers to create a medication history, which includes prescription drugs, over-the-counter medicines and herbal remedies, and check for any dangerous drug interactions.

“We recognize that medications have an extraordinary benefit but can also be a significant factor in adverse health events and outcomes,” said Cathy Baase, Dow’s global medical director.

Quality pay plans stall

Many communities are still in the planning stages for setting up a pay-for-performance payment system, according to a report released this week.

The federal government for the past few years has been pushing for health care providers to set up a quality-based bonus system, with Congress this week considering a pay-for-performance plan in physician reimbursement for Medicare.

But only a handful of communities have such measures in place, said the study by the Center for Studying Health System Change, a Washington health policy research group.

The group, which tracked the pay-for-performance initiatives in 12 communities nationwide for the past decade, found that only two areas had significant reward systems for doctors who meet specific goals.

Health Care runs Fridays. Call 202/636-4892 or e-mail mhiggins@washingtontimes.com.

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