[Congressional Record Volume 141, Number 164 (Monday, October 23, 1995)]
[Senate]
[Pages S15421-S15432]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                      GATT AND PRESCRIPTION DRUGS

  Mr. PRYOR. Mr. President, the Senate is in the midst of a crucial 
debate over Medicare and Medicaid. In the midst of this controversy, 
the fate of a single bill or amendment might be inconsequential. But 
today I rise to discuss a bill which speaks clearly and directly to a 
very simple question at the heart of all of this debate, and that 
question is this: Can the Senate do what is best for the American 
people?
  My colleagues, Senator Chafee of Rhode Island and Senator Brown of 
Colorado, and I have offered just such a proposal. Compared with the 
matter that we began debate on Wednesday in the reconciliation bill, 
our proposal is simple, and it is easy to miss. But it is important. It 
is crucial. It admits a congressional mistake, and it fixes a 
congressional mistake. It closes a glaring legislative loophole and 
saves billions of dollars in the process.
  But, most important, it sends a very simple message to the American 
people: Congress makes mistakes, but Congress can fix those mistakes 
when the interests of the American people are at stake.
  Mr. President, we offered this bill because the interests of the 
American people--both as taxpayers and as consumers--are clearly at 
stake here. And deep down my colleagues know it, too.
  Let me briefly describe our proposal. It enjoys broad bipartisan 
support in the Senate and in the House and has been endorsed by every 
single Federal agency involved with trade, patents, or drugs: the U.S. 
Trade Representative, the Patent and Trademark Office, and the Food and 
Drug Administration.
  Mr. President, here is what it does: When Congress passed the GATT 
Treaty last year, we enacted two transition provisions. First, we 
granted a generous extension to all current patents. Second, as a 
condition of that extension, we permitted generic competitors onto the 
market on the old patent expiration date if they had already made a 
substantial investment and were willing to pay a royalty. That was our 
agreement. That was our discussion as it related to GATT. These changes 
were universally understood by all of the negotiators from every 
country, from every industry, from every economic aspect of our 
economic life in America.
  Let me be very clear on this point. U.S. Trade Representative Mickey 
Kantor states categorically in a letter dated September 18 to me that 
the law was meant to apply universally, that there would be no 
exceptions. The GATT negotiators themselves--the experts who physically 
sat down at the table and negotiated the GATT Treaty on behalf of the 
United States--have personally confirmed that the transition provisions 
were meant to apply to every single person, product, company, and 
industry in the country.
  There was a loophole. And guess who came out smelling like a rose? A 
few pharmaceutical drug companies, who now--if we do not do something 
about it--are going to have a free ride for the next 3 years when 
generic competition is poised and ready to compete with them in the 
marketplace.
  This spring the Congress discovered this loophole. We failed to 
modify this loophole in the Finance Committee because of a technical 
problem. When we passed the GATT Treaty, we inadvertently gave the 
prescription drug industry a giant unintended windfall. Of all the 
companies, of all the products in America--from automobiles to zippers, 
computers and TV parts, everything--only prescription drug companies, 
only drug companies, received a competition-free patent extension, a 
free ride, a windfall.
  In fact, when one of the officials of Glaxo Co., that manufactures 
Zantac, heard about this loophole being discovered, his first word 
was--and I quote--``eureka.'' They got the extension, and they were 
mistakenly shielded from the competition intended by GATT. Without that 
competition, today a handful of drug companies are now, beginning 
today, receiving a whopping multibillion-dollar windfall paid for by 
consumers and paid for by taxpayers.

  This was a simple mistake of oversight, Mr. President. I wish to 
emphasize that. We make mistakes around here every day. Sometimes we 
correct them and sometimes we do not. But this is an opportunity to 
correct that mistake. Every authority that I have spoken to, every 
Member of this body, every Senate committee, and every Government 
agency admits this was an error, and now we have a chance to change it. 
Even the companies that gained this unjustified multibillion-dollar 
windfall admit it was a mistake.
  This is why my colleagues, Senators Chafee and Brown and myself, will 
be offering this amendment. This amendment does one thing and one thing 
only. It applies GATT to those few drug companies the same way it 
applies to every other company and every other product in this country. 
Unless we correct this loophole today, enormous profits, unjustified 
and unexpected, will go to those few companies. We have already taken 
the first steps to a solution, but 3 weeks ago we were blocked by a 
procedural technicality in the Finance Committee. And make no mistake. 
The only way to rectify this problem is here and it is now. The Senate 
is the court of appeals for this issue to be decided.
  If there is any doubt whether Congress should fix its own mistakes, I 
have some news for my distinguished colleagues. The Patent Office and 
the FDA have tried to correct this problem on their own. They failed 
because of 

[[Page S 15422]]
technicalities. The problem is, their hands are tied by the letter of 
the law in the GATT treaty.
  On last Thursday, despite their best efforts, a Federal court held 
that three drug makers that had filed suits in the court had actually 
won, which meant that they ruled against this loophole being corrected. 
The Federal court said that their hands were tied.
  Even worse, the court ruling now means that potentially hundreds of 
products could be affected. This could mean as much as $6 billion--I 
repeat, $6 billion--in unnecessary health care costs for every 
purchaser of prescription drugs--the elderly, hospitals, clinics, 
HMO's, drugstores, insurance companies and, not the least, the 
governments, State and Federal governments.
  According to securities analyists, the ruling could ``affect sales of 
billions of dollars of brand name drugs that would otherwise be open to 
competition from less expensive generic versions.''
  For the average person, this means money out of our pockets for no 
good reason. If they are one of the millions of people who take the 
world's best selling drug, Zantac, our legislation would cut the cost 
of Zantac by one-half. Think of it, cutting the cost of one medication 
by one-half that is the best selling drug in America.
  Our legislation would cut the cost of Capoten for hypertension by 
two-thirds. By over 65 percent we would cut the cost of this drug 
simply because there would be competition in the marketplace. That 
competition in the marketplace is going to be delayed unless the court 
of appeals, in this case the U.S. Senate, the last court of appeals, 
handles this matter and corrects this very tragic mistake.
  Let me tell you three other reasons why we should be supporting this 
amendment at the proper time. Our proposal will save the Government 
hundreds of millions of dollars for the poor, the veterans, active 
military personnel, pregnant women, Native Americans, and every 
American served by Medicaid, the Department of Veterans Affairs, the 
Department of Defense, as well as the Public Health Service and the 
Indian Health Service clinics. All of those would be included and all 
of those would benefit with the adoption of our proposal.
  Second, everyone wants to do what is best for older Americans, the 
sick and the poor and the consumers. How often do we hear that? Here we 
have an opportunity to do it. It is clear. It is evident that we can 
help these groups by supporting this idea. Our proposal is supported by 
senior citizens, consumers, medical practitioners. It is endorsed by 
the National Council on the Aging, National Consumers League, the Gray 
Panthers, the National Women's Health Network, the United Homeowners 
Association, the National Council of Senior Citizens, and the National 
Black Women's Health Project.
  Finally, this issue has been the focus of intense media scrutiny for 
the last several weeks. People are beginning to see how a big ripoff is 
about to happen unless we correct it. Articles and stories inspired by 
disbelief have appeared in the New York Times, NBC News, Associated 
Press, Los Angeles Times, Business Week, Reuters, Journal of Commerce, 
Roll Call, and the Orlando Sentinel, and the list goes on and on.
  Why is there so much attention on this issue? Well, the bottom line 
is there is a lot of money at stake. There are multibillion-dollar 
health care cuts being debated in Congress today, and here we are about 
to give an enormous windfall to one of the most profitable segments of 
our economic activity, the pharmaceutical companies.
  Why does anyone care about this particular legislation? I think the 
reason people care is because they know this bill is the right thing to 
do. They are sick and tired of the excuses that are given when we fail 
to do the right thing. Please let me repeat, this is not a partisan 
issue. It never has been. It is about fixing a mistake. It is about 
saving taxpayers' money. It is about precluding an enormous windfall in 
unjustified profit to several drug companies that have gotten, in my 
opinion, extremely greedy.
  This morning, Mr. President, I was just handed a page from the Roll 
Call newspaper, dated Monday, October 23, 1995, page 8. Here is an 
advertisement placed by the American pharmaceutical research 
companies--by the way, that is the old PMA--Pharmaceutical 
Manufacturers Association. They changed their name a few months ago, 
Mr. President, so they could add a little cloak of dignity emphasizing 
research. They take what we are trying to do apart and they try, as 
they say, separating fact from fiction in this particular ad. But the 
bottom line is what they have said is extremely misleading. It is 
motivated by economic gain. In addition to that, it is simply wrong. 
The motivation for this particular advertisement, in my opinion, is the 
continuation of economic greed by some of the pharmaceutical 
manufacturers.
  Just in the Wall Street Journal, I believe, on Friday, the drug 
companies talked about, well, they cannot sell drugs in America as 
cheaply as they can sell these same drugs in Europe or in the other 
industrialized nations. Look at this headline: ``Strong Global Sales 
Lift Drug Company Profits.'' So they are selling overseas these same 
drugs they sell to us for 40 and 50 and 60 percent more in this 
country, they sell these drugs overseas at so much less and they are 
making such an enormous profit that they see their stock is going up in 
these companies, and once again the drug companies find a way to take 
advantage of the American consumer and certainly the American 
taxpayer. If we do not correct this issue now, we are going to be 
actually a part, in my opinion, of a terrible mistake that we had a 
chance to correct.

  Here is the alternative, Mr. President. We can stand here and do 
nothing, we can let these drug companies make off like bandits with 
these unjustified profits, or we can vote for the amendment offered by 
myself and, hopefully, some of my other colleagues. We can rob older 
Americans, HMO's and every single taxpayer in this country if we do 
nothing. We can enrich two or three drug companies, we can keep 
competition out of the market, or we can make certain that they do not 
receive money they do not deserve.
  We can let a loophole rob American consumers of as much as $6 
billion. We can let the intense lobbying efforts by one or two drug 
companies sway us. We can ensure special treatment to a few companies 
while the rest of the country plays fair, following the rules and 
obeying the law.
  Once again, Mr. President, a few pharmaceutical drug companies are 
the only companies that are excluded under this provision. They are the 
only ones given this mistake. They are the ones taking advantage, I 
should say, of this mistake in the GATT treaty. Now is our opportunity 
to change it. And in my opinion, Mr. President, this is the mother of 
all special interest issues.
  Let me read from the New York Times when they observed a few days 
ago:

       Some of the Nation's largest drug companies will have spent 
     and lobbied heavily against one bill that hardly amounts to 
     budget dust. While its impact on the Federal budget may be 
     minuscule, the measure means a fortune to these drug 
     companies.

  Mr. President, I urge my colleagues to join us in supporting this 
proposal. If we fail, it will allow the legal combination of a legal 
loophole, a procedural technicality, intense lobbying, big bucks, and 
our own failure of will, robbing the American consumers of billions of 
their taxes and their income. Every American citizen will be forced to 
continue subsidizing an outrageous, unintended windfall to a handful of 
drug companies simply because we do not have the courage or the 
foresight or the will to admit and to fix our own mistakes.
  Mr. President, I ask unanimous consent that documentation of savings 
from this proposal, letters of support, and recent media articles be 
printed at this point in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                [From the New York Times, Oct. 20, 1995]

       Three Drug Makers Win Suit To Extend Protection of Patents

       Alexandria, Va.--Merck & Company, the Schering Plough 
     Corporation, and Roche Holding A.G., have won a lawsuit 
     against the United States Patent Office and the Food and Drug 
     Administration, in which they had sought an extension on some 
     of their patents.
       The ruling, reached Monday by the Federal District Court 
     here, is a victory for brand-name drug makers who fought a 
     decision by the F.D.A. and the Patent Office to limit patent 
     protection.
       Securities analysis said the ruling could affect sales of 
     billions of dollars of brand-

[[Page S 15423]]
     name drugs that would otherwise be open sooner to sharp competition 
     from less expensive generic versions.
       Neil B. Sweig, an analyst with Brown Brothers Harriman & 
     Company, said that based on current sales in the United 
     States, the extension could result in $3 billion in sales of 
     Zantac, the ulcer treatment made by the Glaxo Wellcome 
     Company; $1.45 billion in sales of Mevacor, a cholesterol-
     lowering drug made by Merck, and $280 million in sales of 
     Capoten, a hypertension treatment produced by the Bristol-
     Myers Squibb Company.
       Mr. Sweig added that the court ruling had been anticipated 
     by investors and was already reflected in drug companies' 
     stock prices.
       Under a Federal rule that took effect on June 8, drug 
     makers could either have patent protection under the new 
     world trade organization or the previous system.
       The new patent protection for brand-name drugs would last 
     as long as 20 years from the date of the patent filing. Under 
     the old system, drug patents were protected in the United 
     States for 17 years after they were granted, plus some of the 
     time drugs were waiting, regulatory review by the F.D.A. In 
     some cases, protection would last longer under the old 
     system.
       ``The courts ruled that they were wrong, and you can be 
     protected under both systems,'' said Steve Bercham of the 
     Pharmaceutical Manufacturers Association.
       Mr. Bercham said, however, that the court had decided that 
     a patent could never result in exclusive marketing rights for 
     more than 14 years.
       As a result of the decision, Merck's patent on its 
     cholesterol-lowering drug Mevacor was extended to June 15, 
     2001, from Nov. 4, 1999.
       Gary Latchow, a Merck spokesman, said the patent for the 
     company's ulcer medication Pepcid had also been extended.
                                                                    ____



                                    U.S. Trade Representative,

                               Washington, DC, September 18, 1995.
     Hon. David Pryor,
     U.S. Senate, Russell Senate Office Building, Washington, DC.
       Dear Senator Pryor: Thank you for your recent letter 
     updating me on the ongoing concerns of the Congress, health 
     care purchasers and consumers over the exclusion of the 
     prescription drug industry from the scope of the Uruguay 
     Round Agreements Act (URAA) transitional ``grandfather'' 
     provision.
       As you note in your letter, I wrote to Food and Drug 
     Administration (FDA) Commissioner Kessler earlier this year 
     to inform him that the URAA ``grandfater'' provision language 
     was intended by its drafters to be generally applicable and 
     to permit generic pharmaceutical producers to market their 
     products where they had made substantial investments in 
     anticipation of the expiration of the unextended patent 
     terms. While the FDA found that the URAA did not permit it to 
     allow the generic pharmaceutical producers on the market 
     until the expiration of the extended patent term, it stated 
     that ``the language of the URAA does not reflect the 
     legislative intent'' which Congress desired.
       In light of these events, I applaud your effort to seek to 
     correct this situation through your introduction of the 
     Consumer Access to Prescription Drugs Act. The draft 
     legislation generally reflects the intent of the drafters of 
     the URAA.
       With regard to the issue of whether this correction would 
     either weaken patent protection under the URAA or diminish 
     our ability to campaign for stronger patent protection 
     abroad, I believe that any concerns in this area are 
     overstated. As you know, we intended to apply this 
     ``grandfather'' provision to the pharmaceutical area, and so 
     legislation of this type should result in a level of 
     protection that is consistent with our original intent. 
     Additionally, this level of protection is consistent with the 
     obligations under the intellectual property agreement 
     negotiated as part of the Uruguay Round, called the ``TRIPs 
     Agreement.'' Just as we are permitted to make limited 
     exceptions to the grant of additional rights as the result of 
     the TRIPs Agreement, so are our trading partners. As we have 
     already made certain exceptions to the rights granted during 
     the extension period for all types of patents other than 
     pharmaceutical patents, the application of these exceptions 
     to pharmaceutical patents should not weaken our ability to 
     insist on strong patent protection in our trading partners. 
     You can be sure that if a trading partner attempts to expand 
     these exceptions beyond those permitted by the Agreement, we 
     will vigorously oppose them.
       Consequently, I do not think that your efforts will have a 
     negative effect on our ability to ensure that the TRIPs 
     Agreement is fully implemented by our trading partners. I 
     look forward to working with you on this issue.
           Sincerely,
     Michael Kantor.
                                                                    ____



                                    U.S. Trade Representative,

                               Washington, DC, September 25, 1995.
     Hon. John H. Chafee,
     U.S. Senate,
     Washington, DC.
       Dear Senator Chafee: Thank you for your letter concerning 
     the Agreement on Trade-Related Aspects of Intellectual 
     Property Rights (TRIPs) and the intended effect of certain 
     provisions of the Uruguay Round Agreements Act (URAA). You 
     raise several significant issues related to the nature of the 
     United States' obligations under the TRIPs Agreement and the 
     way in which the United States implemented those obligations 
     in the URAA. In answering your questions, I would like first 
     to indicate the nature of certain of the obligations under 
     the TRIPs Agreement, and then to discuss the provisions in 
     the URAA that are intended to implement those obligations.


        U.S. Obligations Under Article 70 of the TRIPs Agreement

       Article 70 of the TRIPs Agreement generally requires World 
     Trade Organization (WTO) Members to apply the high levels of 
     protection required by the TRIPs Agreement to all existing 
     intellectual property. In other words, if a WTO Member 
     provides an additional right or benefit to the owners of a 
     particular type of intellectual property as a result of its 
     implementation of the TRIPs Agreement, it must provide that 
     additional right or benefit to intellectual property created 
     in the future and to intellectual property already created 
     but still subject to protection. Accordingly, in the URAA the 
     United States modified the term of patents from seventeen 
     years from grant to twenty years from application for all 
     future patents, and also applied the new term to existing 
     patents, thereby giving some owners of U.S. patents a longer 
     term of protection.
       The primary provisions of Article 70 on treatment of 
     existing subject matter and ``newly infringing acts'' are 
     Articles 70:2, 70:3 and 70:4. Article 70:2 contains the 
     general requirement that TRIPs-consistent levels of 
     protection must be applied to existing intellectual property. 
     Article 70:2 also states that in the case of copyrightable 
     subject matter (e.g., books, movies, sound recordings, 
     computer software), copyright obligations, including the 
     grant of retroactive protection must be implemented solely 
     through the application of Article 18 of the Berne Convention 
     for the Protection of Literary and Artistic Works. This 
     provision makes clear that where copyrightable subject matter 
     must be pulled out of the public domain and granted 
     protection to comply with TRIPs, the terms of Article 18 of 
     the Berne Convention shall control.
       Article 70:3 of the TRIPs Agreement provides that no WTO 
     Member is obligated to restore protection to subject matter 
     which has fallen into the public domain. For example, an 
     expired patent need not be granted a new term of protection, 
     even if the patent would still be in effect had it been 
     granted a TRIPs-consistent term of protection. As noted 
     above, Article 70:2 expressly carves-out copyright protection 
     from Article 70:3.
       Article 70:4 provides that to the extent that certain 
     activities become infringing because of the higher levels of 
     protection required by TRIPs, WTO Members may allow a person 
     to engage in such infringing acts as long as they pay 
     equitable remuneration to the right holder. This provision 
     was intended to permit WTO Members to treat equitably those 
     persons who in good faith used or made a significant 
     investment in connection with the use of the intellectual 
     property right in a way that would be prohibited after a 
     TRIPs-consistent level of protection applied. For example, if 
     TRIPs requires an extension of the patent term in a WTO 
     Member, that Member may allow a person who built a factory 
     for the purpose of manufacturing a patented product when the 
     patent was previously expected to expire to make the produce 
     during the extension period, as long as that person pays 
     equitable remuneration to the right holder during the 
     extension period.
       Consequently, while Article 70:4 could apply to treatment 
     of inventory created before the application of the Agreement, 
     it was not intended to be limited to that situation. The 
     primary intent of this provision was to treat equitably those 
     persons who had made a substantial investment in reliance on 
     the pre-TRIPs level of protection. It was not intended to 
     allow nations with weak patent laws to protect domestic 
     industries while those nations came into conformity with the 
     new TRIPs standards. Investment must be substantial and it 
     must be made by a certain date.


        U.S. Implementation of Article 70 of the TRIPs Agreement

       The United States implemented its obligations under the 
     TRIPs Agreement in Sections 501-532 of the URAA. Section 
     532(a) of the URAA amended Section 154 of the Patent Act to 
     change patent terms from a seventeen years from grant system 
     to a twenty years from application system. As noted above, in 
     accordance with our TRIPs Article 70:2 obligations, Section 
     154(c)(1) of the Patent Act was amended to grant owners of 
     patents still in force the benefit of this new system to the 
     extent it increased their term.
       To treat equitably those persons who had made a substantial 
     investment in reliance on the old patent term, Section 154(c) 
     (1) and (2) of the Patent Act was amended to provide that 
     such persons would be able to make use of the patent during 
     the extension term as long as they paid equitable 
     remuneration to the patent owner. This provision was written 
     neutrally because it was intended to apply to all types of 
     patentable subject matter, including pharmaceutical products. 
     Conforming amendments should have been made to the Federal 
     Food Drug and Cosmetic Act and Section 271 of the Patent Act, 
     but were inadvertently overlooked.
       Our creation of the ``transition period'' in Article 154(c) 
     of the Patent Act is consistent with our obligations under 
     the TRIPs Agreement. The extension of this transition period 

[[Page S 15424]]
     to pharmaceutical products would also be consistent with these 
     obligations and the intent of the U.S. negotiators involved 
     in drafting the TRIPs Agreement.
       Finally, the extension of the Section 154(c) to 
     pharmaceutical products would not undermine ongoing U.S. 
     efforts to seek high levels of intellectual property 
     protection around the world. We are acting wholly within our 
     rights in establishing the transition period, as other 
     countries would be if they did the same. Furthermore, we have 
     already established under our law the transition period with 
     respect to all types of patents other than pharmaceutical 
     patents; extending it to pharmaceutical patents would in no 
     way increase the ability of our trading partners to justify 
     their failure to provide TRIPs-consistent patent protection. 
     You can be sure that if one of our trading partners attempts 
     to overstep the equitable treatment permitted under TRIPs 
     Article 70:4, or otherwise fails to live up to the TRIPs 
     Agreement, we will work vigorously to bring them into 
     compliance with their international obligations.
       I look forward to working with you further on this manner. 
     Please let me know if I can provide you with any more 
     information.
           Sincerely,
     Michael Kantor.
                                                                    ____


 [From Prime Institute, College of Pharmacy, University of Minnesota, 
       Health Sciences Unit F-7-159, Minneapolis, MN, March 1995]

  Economic Impact of GATT Patent Extension on Currently Marketed Drugs

                           Executive Summary

       At least 109 currently patented and marketed drugs will 
     receive a windfall patent extension if GATT rules are 
     retrospectively applied to previously filed or issued 
     patents.
       The average patent extension for the currently marketed 
     drugs would be more than 12 months with some drugs receiving 
     more than 28 months of added exclusivity.
       The windfall extension of patent exclusivity for currently 
     marketed drugs will mean that the introduction of lower cost 
     generics will be delayed. Therefore, the American consumer 
     will have to pay more for prescription medications.
       FDA approved versions of generic drug products typically 
     enter the market at a price more than 25% less than the 
     patented brand. Within one year the price of competing 
     generics will be 45% below the brand; at two years the price 
     will be 60% less and at three years it will average 75% less 
     than the brand name drug (Kidder, Peabody: Generic Drug 
     Industry Overview, October 5, 1994).
       FDA approved versions of generic drug products typically 
     capture 45% of the units sold within one year of market 
     introduction. After two years their market penetration 
     averages more than 50% of all units sold and by the third 
     year the penetration approaches 60% (Kidder, Peabody: Generic 
     Drug Industry Overview, October 5, 1994).
       The economic impact of extending the GATT rules to 
     currently marketed drugs can be estimated by applying the 
     recent pricing and market penetration performance of generics 
     to the actual and projected sales volume of currently 
     marketed drugs for the additional length of time that 
     American consumers will have to wait for access to lower cost 
     generics.
       The projected cost to American consumers from the windfall 
     extension of patent exclusivity for the 109 currently 
     marketed drugs affected by this change will exceed $6 billion 
     (1996 net present value) over the next two decades.
       Twenty of the most common prescription drugs will account 
     for an increased cost to American consumers of over $4.5 
     billion (1996 net present value) in the next two decades.
       There are at least 10 drugs whose patents will expire in 
     1995. The lack of generic competitors for just three of these 
     drugs will cost American consumers $1.2 billion (1996 net 
     present value) in 1996 and 1997.
       The lower price and high market penetration of generics, 
     when available, results in substantial savings to American 
     consumers. These savings are also of benefit to Medicaid, 
     federal and state government, private insurers, managed care, 
     employers, unions, ERISA plans, and others who pay for 
     prescriptions. The cost of this windfall extension of 
     exclusivity to Medicaid alone will be about $1 billion (1996 
     net present value) and the total cost to federal and state 
     government will exceed $1.25 billion (1996 net present 
     value).
       The projected cost to American consumers from the extension 
     of GATT rules to currently marketed drugs has been estimated 
     in a study conducted by the PRIME Institute at the University 
     of Minnesota. The PRIME Institute specializes in research 
     involving pharmaceutical benefit management, economics, and 
     public policy issues.
                                                                    ____


               [From the Associated Press, Oct. 19, 1995]

                      Drugs Get Extra Patent Time

       Washington.--A federal court has decided nearly 100 brand-
     name drugs may get an extra few years' monopoly in the 
     market, the pharmaceutical industry announced Thursday.
       At issue is whether the drugs could get two patent 
     extensions--one from a 1984 law and another under a global 
     trade agreement.
       The General Agreement on Tariffs and Trade, which went into 
     effect in June, extends patent protection to 20 years from 
     the date drug makers file for a patent. Until now, those 
     patents have had a 17-year life from the time they were 
     granted. Current patent-holders will get whichever expiration 
     date is later.
       A 1984 law already has offered brand-name drugs up to an 
     extra five years' patent life to help offset the time it 
     takes those medicines to get Food and Drug Administration 
     approval for sale.
       Makers of brand-name drugs said they were entitled to both 
     extensions, which could have given some drugs patent 
     protection for a total of 25 years.
       But the Patent and Trademark Office decided in June that 
     drugs that got the 1984 extension couldn't get one from GATT 
     too. The ruling affected 94 brand-name drugs and meant the 
     longest a medicine could monopolize the market was about 22 
     years.
       The drug industry went to court. Thursday, the 
     Pharmaceutical Research and Manufacturers Association 
     announced that a U.S. District Court in Alexandria, Va., had 
     ruled that both extensions were the law.
                                                                    ____


                   [From the Roll Call, Oct. 5, 1995]

                   Simpson Abstains Because of Stock

                            (By Amy Keller)

       In an unusual acknowledgment of the potential conflict 
     created by Members' financial holdings. Sen. Alan Simpson (R-
     Wyo) abstained from a Finance Committee vote Friday on an 
     amendment that could affect two major pharmaceutical 
     companies in which he owns thousands of dollars worth of 
     stock. Simpson, who chairs the Finance subcommittee on Social 
     Security and family policy, abstained from voting on an 
     amendment offered by Sens. David Pryor (D-Ark) and John 
     Chafee (R-RI), which according to Pryor would ``close a 
     multibillion-dollar loophole in the General Agreement on 
     Tariffs and Trade for the name-brand pharmaceutical 
     industry.''
       According to his 1994 financial disclosure forms, Simpson 
     owns between $1,000 and $15,000 worth of stock in both Glaxo-
     Wellcome PLC and Bristol-Myers Squibb Co.--two pharmaceutical 
     companies that stand to lose millions of dollars if the 
     Pryor-Chafee amendment is enacted.
       Simpson said yesterday that he ``just didn't feel 
     comfortable'' voting on the amendment.
       ``I abstained . . . simply because I own about . . . four 
     or five thousand bucks of Glaxo stock. . . . It is a serious 
     amendment and I just chose to abstain,'' Simpson said.
       The amendment seeks to put an end to exemptions granted to 
     name-brand pharmaceutical companies allowing them patent 
     extensions on drugs.
       As Pryor explains it, through GATT, the US ``agreed to 
     extend patents [on all sorts of products] we grant from 17 
     years to 20 years to conform with the rest of the world,'' 
     but the treaty also included language to allow ``generic 
     manufacturers to come on the market after the 17-year term 
     ended if they agreed to pay a sort of franchise fee to the 
     brand-name company.''
       After heavily lobbying Congress to keep the 20-year patent 
     extensions under the treaty, the pharmaceutical industry was 
     granted ``special protection'' for some 100 specific drugs.
       The United States Patent and Trademark Office later revoked 
     the protection of 94 of those drugs, and the Pryor-Chafee 
     amendment seeks to revoke the 20-year patents of the handful 
     of drugs that still carry such protection.
       Citing a study by the University of Minnesota, Pryor 
     contends that Glaxo, which makes the ulcer drug Zantac 
     prescribed to some 33 million Americans and is the world's 
     largest pharmaceutical company, and Bristol-Myers Squibb, 
     maker of the blood pressure medication Capoten (prescribed to 
     some 15 million), could net a ``windfall'' of $1 billion and 
     $100 million, respectively, if generic companies are 
     prevented from manufacturing the drugs for an additional 
     three years.
       Despite a 9-7 vote in favor of the amendment, the measure 
     failed when Finance Chairman Bill Roth (R-Del) ruled that the 
     amendment to the budget reconciliation bill was out of order. 
     Roth said the amendment was nongermane, thus requiring a two-
     thirds majority vote for passage instead of a simple 
     majority.
       Three other members of the 19-member Finance Committee--
     Sens. Bob Dole (R-Kan) and Larry Pressler (R-SD) and then-
     Sen. Bob Packwood (R-Ore),--also abstained from voting on the 
     amendment.
       According to Pryor press secretary Justin Johnson, Pressler 
     and Dole had prepared ``no'' votes by proxy and only 
     abstained from voting on the amendment when it became 
     apparent the amendment would fail with or without their 
     votes.
       And while Dole has no direct holdings in pharmaceutical 
     stock, his wife Elizabeth owns between $1,000 and $15,000 in 
     Bristol-Myers Squibb stock, and she holds between $1,000 and 
     $15,000 in Kimberly-Clark Company stock, another major 
     pharmaceutical corporation, according to 1994 financial 
     disclosure records.
       Pryor and Chafee have not given up the fight on their 
     amendment, however, and plan to raise the issue on the Senate 
     floor in the near future. According to Johnson, there will be 
     a modification to the amendment and it will be re-offered.
       And should the Pryor-Chafee amendment make it to the Senate 
     floor, at least five of Simpson's colleagues will face the 
     same choice the Senator did last week, on whether to vote on 
     a measure that could constitute a conflict of interest in 
     light of their private investments.

[[Page S 15425]]

       Among those also owning stock in the affected 
     pharmaceutical companies according to their 1994 financial 
     disclosure records are: Sens. Paul Coverdell (R-Ga), who 
     holds between $1,000 and $15,000 in Glaxo; Judd Gregg (R-NH), 
     between $100,000 and $500,000 in Bristol-Myers Squibb; James 
     Inhofe (R-Okla), between $1,000 and $15,000 in Bristol-Myers 
     Squibb; Lauch Faircloth (R-NC), between $1,000 and $15,000 in 
     Glaxo; and Claiborne Pell (D-RI), between $1,000 and $15,000 
     in Bristol-Myers Squibb.
       Simpson said he doesn't know if he will again abstain from 
     voting on the Pryor-Chafee amendment if it reaches the Senate 
     floor.
       ``I'll go sort it out again and see where we are, but at 
     least everybody will know that I have that type of holding in 
     Glaxo, which is listed in my [financial disclosure] reports 
     anyway,'' Simpson said.
       According to Rule 37 of the Senate Code of Official 
     Conduct, no Senator shall ``knowingly use his official 
     position to introduce or aid the progress or passage of 
     legislation, a principal purpose of which is to further only 
     his pecuniary interest. . . .''
       Still, it is exceedingly rare for lawmakers to abstain 
     themselves from a vote, an ethics expert confirmed.
       According to former House Counsel Stan Brand, ``[Conflict 
     of interest] is something that has been broadly construed in 
     the annals of ethical rule of the House and Senate, and it's 
     only in the most acute cases of a conflict that [someone] is 
     actually barred from voting.''
       In the first half of 1995, Glaxo-Wellcome's PAC gave 
     $94,300 in political contributions to Republicans and $28,500 
     to Democrats, while Bristol-Myers Squibb's PAC gave $22,800 
     to Republicans and $7,300 to Democrats, according to Federal 
     Election Commission records.
       Five members of the Senate Finance Committee--Sens. Max 
     Baucus (D-Mont), Alfonse D'Amato (R-NY), Charles Grassley (R-
     Iowa), Frank Murkowski (R-Alaska), Pressler, and Simpson--
     received political contributions from Glaxo.
       Baucus and D'Amato each also received contributions from 
     Bristol-Myers Squibb.
                                                                    ____


           [From the Reuter Business Report, Sept. 29, 1995]

          Drug Company Preserves Tax Break in Senate Committee

                           (By David Lawsky)

       A major drug company Friday won a fight in a Senate 
     committee, holding on to a loophole that opponents said will 
     cost consumers $3.6 billion.
       The Senate Finance Committee, which is considering an 
     omnibus budget bill, turned down an attempt to remove the 
     special treatment for Glaxo Holding PLC and other brand name 
     drug companies.
       Those against the break promised to bring the fight up 
     again on the floor of the Senate.
       Sen. John Chafee, R-R.I., proposed ending the break for 
     Glaxo because he said it was ``unanticipated and totally 
     inadvertent.'' In fact, Chafee said, when the lawyer for 
     Glaxo discovered the loophole, he said he had a `` `Eureka!' 
     moment.''
       ``I might say he's entitled to shout `Eureka!' when you've 
     got $3.6 billion'' at stake.
       A study cited by Chafee showed that without cheaper 
     competition by generic drug companies 13 drug companies stood 
     to reap $4.3 billion, with Glaxo getting most of it.
       Chairman William Roth, R-Del., ruled Chafee's motion out of 
     order. To the consternation of Chafee and his allies, Roth 
     said he was going to require a two-thirds vote to overturn 
     him, citing a rule.
       ``Mr. Chairman I've never known us to require a two-thirds 
     vote'' in such a situation, said Sen. Daniel Patrick 
     Moynihan, D-N.Y., who was chairman when Democrats held a 
     majority.
       But Roth held firm and although the committee voted 9-7 to 
     remove the break, Chafee lost.
       The issue arose out of the General Agreement on Tariffs and 
     Trade, which has a section that in many cases stretched 
     patents from 17 to 20 years.
       But that section would put generic companies at a 
     disadvantage if they had made expensive preparations to go 
     into business against a patent-holder, anticipating the end 
     of 17-year patents.
       So a special section was adopted that permitted companies 
     that had sunk money into competition to go ahead and market 
     their competing product, so long as they paid royalties to 
     the brand name company which won the extra patent time.
       U.S. Trade Representative Mickey Kantor said this week in a 
     letter to Chafee the section was supposed to apply to all 
     products but that ``pharmaceutical products . . . were 
     inadvertently overlooked,'' because they needed a special 
     change in the law governing the Food and Drug Administration.
       The measure was opposed by Sen. Orrin Hatch, R-Utah, who 
     called it ``complex,'' and by Sen. Carol Moseley-Braun, D-
     Ill., who said through a spokeswoman she was a friend of the 
     president of Glaxo and had traveled on the company plane to 
     speak at its headquarters.
                                                                    ____


              [From the Orlando Sentinel, Sept. 30, 1995]

                 Generic-Drug Talks Stall in Committee

                             (By Maya Bell)

       A bill that would allow generic-drug companies to begin 
     competing with brand-name rivals suffered a setback in 
     Congress on Friday.
       The Senate Finance Committee voted 9-7 to consider 
     correcting a congressional oversight that protected the 
     makers of 13 brand-name drugs from generic competition for up 
     to three years. Among the drugs are two best-sellers, Zantac 
     for ulcers and Capoten for high blood pressure.
       But committee Chairman William Roth, R-Del., ruled that 
     two-thirds of the committee had to agree to debate the bill. 
     Lacking that majority, the amendment was tabled.
       ``It's still a victory. The reason we couldn't get a 
     hearing was procedural,'' said Natalie Shear, a spokeswoman 
     for the Generic Drug Equity Coalition, a consortium of 
     consumer groups and generic-drug companies lobbying Congress 
     to correct its mistake. ``The bottom line was the senators 
     indicated their support.''
       Sen. Bob Graham, the only Floridian on the committee, voted 
     to consider the bill.
       A spokesman for one of the sponsors, Sen. Richard Pryor, D-
     Ark., said the measure would be brought up again in another 
     forum.
       ``It's definitely not dead yet,'' said Justin Johnson, 
     Pryor's press secretary. ``There will be a modification, and 
     it will be reoffered. We'll keep after it.''
       The bill is intended to correct what is widely acknowledged 
     to have been a congressional oversight. The mistake was made 
     when Congress adopted the language for the global trade 
     treaty known as GATT. While extending U.S. patent terms from 
     17 years to 20 years to comply with the General Agreement on 
     Trade and Tariffs, Congress inadvertently exempted 13 brand-
     name drugs from generic competition for up to three years.
       The drug coalition estimates that the oversight will cost 
     consumers, who won't have generic alternatives for some 
     prescriptions as early as anticipated, nearly $2 billion.
       Among the biggest beneficiaries are drug giants Glaxo-
     Wellcome Inc., the makers of Zantac, and Bristol-Myers Squibb 
     Co., which produces Capoten. Last year, Glaxo sold $2.7 
     billion worth of Zantac and Bristol-Myers $581 million of 
     Capoten in the United States.
       Neither company could be reached for comment Friday. Glaxo 
     spokeswoman Nancy Pekarek has said the company opposes the 
     GATT fix because it would send a message to other countries 
     that they, too, can tinker with the treaty to protect a 
     favored industry.
                                                                    ____


             [From the Journal of Commerce, Sept. 28, 1995]

                 Drug Firms Fight To Preserve Windfall

                            (By John Maggs)

       Washington.--A handful of powerful drug companies are 
     waging one of the most furious and extravagant lobbying 
     campaigns seen on Capitol Hill in years, all to preserve an 
     inadvertent change to U.S. law in last fall's trade bill that 
     promises them billions of dollars in unexpected profit.
       The drug companies are shelling out millions of dollars to 
     enlist the influence of distinguished former senators such as 
     Warren Rudman of New Hampshire and Dennis DeConcini of 
     Arizona, and former U.S. Trade Representative and Senator 
     William Brock of Tennessee.
       The prize for this largess is one of the biggest payoffs 
     for the smallest number of companies ever granted by Congress 
     without a word of debate.
       One company alone, Britain's Glaxo Holdings PLC, will rake 
     in $3.6 billion over the next two years as a result of this 
     legal twist of fate, all of it money that it never expected 
     to earn. This windfall will come out of the pockets of ulcer 
     patients, most of them in the United States, who will pay 
     higher prices for Glaxo's revolutionary anti-ulcer drug 
     Zantac.
       The explanation begins with last year's bill to implement 
     the Uruguay Round trade agreement, which lowered trade 
     barriers worldwide and increased protection for patented 
     drugs and copyrighted material. As part of that international 
     patent deal, the United States agreed to change the life of 
     new patents from 17 years after they are first granted to the 
     norm for the rest of the world--20 years from the date a 
     patent request is first made.
       The trade legislation sent to Congress made the patent term 
     change effective for all patents, so that those coming due 
     less than 20 years after they were originally filed were 
     automatically granted an extension. Mindful that this would 
     have handed drug companies an unwarranted windfall, the trade 
     bill provided that generic drug firms would be allowed to 
     begin manufacturing the patented drugs after the original 
     patent date, provided they pay a licensing fee to the big 
     drug companies.
       But unknown to the drafters of this legislation, a 1984 
     drug law effectively freed Glaxo and other big pharmaceutical 
     companies from this obligation to license their products. In 
     a moment of insight a lawyer for Glaxo discovered this 
     overlooked statute, and set off a bitter fight with generic 
     drug companies to reverse this inadvertent stroke of good 
     luck.
       This list of beneficiaries is a long one. Glaxo is by far 
     the biggest--it will receive nearly two years of extra 
     monopoly control over Zantac, earning $6 million a day more 
     than it would have earned if competing with generic drug 
     producers. Also benefitting are Squibb, which will get $311 
     million of added profits for its ACE hypertension drug; 
     Organon, which gets $108 billion for its Norcoron anestesia; 
     and Searle, which gets $102 million for its Cytolec anti-
     ulcer drug.
       Advocates of the generics have lined up the support of U.S. 
     Trade Representative Mickey 

[[Page S 15426]]

     Kantor in arguing that the windfall was an inadvertent one.
       As soon as today, Sens. David Pryor, D-Ark., and John 
     Chafee, R-R.I., are expected to offer an amendment to reverse 
     this windfall profit, but they face an uphill battle. Sen. 
     Jesse Helms, R-N.C., is leading the fight for Glaxo, whose 
     U.S. subsidiary is based in North Carolina. Sen. Helms faces 
     re-election in 1996 and some of Zantac's billions of dollars 
     in earnings would be useful in financing his campaign.
       Sen. Helms has lined up the support of majority leader Bob 
     Dole, who has in turn made preserving the windfall for the 
     drug companies a partisan issue. Few Republicans other than 
     Sen. Chafee have committed to support the Pryor amendment.
                                                                    ____


              [From the Journal of Commerce, Oct. 2, 1995]

                 Senate Panel: No Vote on Drug Loophole

       Washington.--Senate Finance Committee Chairman Bill Roth, 
     R-Del., refused to allow a vote to repeal a controversial 
     loophole in U.S. patent law, despite opposition to his 
     unusual ruling from a bipartisan majority of the committee.
       Behind the maneuvering was a huge amount of money for 
     British-owned Glaxo Holding PLC and the tight grip that 
     Senate Majority Leader Bob Dole, R-Kan., holds over the 
     Finance Committee.
       The issue apparently resulted from an inadvertent mistake 
     in drafting last fall's trade bill, which gave Glaxo an 
     unexpected windfall of $3.6 billion by extending for two 
     years its exclusive patent rights on the anti-ulcer medicine 
     Zantac.
       Generic drug companies are clamoring to put out knock-off 
     versions of Zantac, but cannot because government lawyers 
     drafting the trade bill overlooked a 1984 law that 
     effectively prevented these generics from starting 
     production. Career trade negotiators who worked on the 
     legislation confirmed Friday that it was an oversight.
       Sens. John Chafee, R-R.I., and David Pryor, D-Ark., Friday 
     sought to reverse this mistake with an amendment to the huge 
     budget reconciliation bill before the Finance Committee. 
     Although Finance was hearing other amendments on Medicaid and 
     Medicare, Mr. Roth deemed the patent measure out of order, 
     declaring that it was in the jurisdiction of the Labor 
     Committee and he refused to accept a letter from Labor 
     waiving jurisdiction.
       Behind his resolve was Mr. Dole, who had agreed to block a 
     vote at the request of Sen. Jesse Helms, R-N.C., who faces 
     re-election in 1996 and could use the financial help of the 
     U.S. subsidiary of Glaxo, located in North Carolina.
       In a perhaps unprecedented move, Mr. Chafee forced a vote 
     on Mr. Roth's decision. Little-used rules required a two-
     thirds majority to overrule the chair.
       Thus a 9-7 vote to overrule failed, despite the majority.
       Mr. Roth later declined to comment on whether the ruling 
     had been made under pressure from Mr. Dole. ``I don't discuss 
     my meetings with Sen. Dole,'' he said, ``but this was based 
     on the rules of the Finance Committee.''
                                                                    ____


              [From the Journal of Commerce, Oct. 5, 1995]

                        The Senator From Glaxo?

       When Sen. Bill Roth succeeded Bob Packwood as chairman of 
     the Senate Finance Committee, he had a cloud over his head. 
     Sen. Roth, so the thinking went, would be beholden to Sen. 
     Majority Leader Bob Dole and not act independently on 
     committee business. That may have been an unfair rap, but so 
     far it seems to be coming true.
       Consider a case involving patents that came before the 
     Finance panel recently. Last fall, as part of the new Uruguay 
     Round trade deal, Congress changed the term for patent 
     protection to make the U.S. standard match the norm in most 
     other countries. An oversight by government lawyers, however, 
     effectively extended the life of a handful of drug patents, 
     denying generic drug companies the right to compete with 
     these patent-holders.
       By far the biggest beneficiary of this mistake is British-
     owned Glaxo Pharmaceuticals, which will earn $3.6 billion by 
     gaining an extra 19 months of patent protection for a single 
     drug--its Zantac anti-ulcer medicine.
       To preserve this windfall, Glaxo has enlisted, among 
     others, Sen. Jesse Helms of North Carolina, the state where 
     Glaxo's U.S. subsidiary is located. Facing re-election in 
     1996, Sen. Helms reportedly went to Sen. Bob Dole and got his 
     support for squelching any attempt to repeal Glaxo's bonus.
       When Sens. John Chafee and David Pryor offered an amendment 
     to close the Glaxo loophole, Sen. Roth blocked them. Using a 
     parliamentary ruling from Sen. Dole's office, he ruled the 
     amendment out of order, even though it fell within the 
     committee's purview on health care and trade.
       Even though most committee members favored a vote on the 
     proposal, Sen. Roth ignored their pleas. In a move the 
     committee hadn't seen in decades, a majority of members then 
     voted to overrule the chairman on a procedural point, tossing 
     out a tradition of collegiality.
       In the end Sen. Roth prevailed, since two-thirds of 
     committee members were needed to overrule him. But he lost 
     this first test of leadership.
                                                                    ____


Transcript From NBC Nightly News With Tom Brokaw, Wednesday, September 
                     27, 1995--``In Depth'' Segment

       [Brokaw in studio standup.]
       Brokaw. More on Medicare reform as Congress looks for ways 
     to save. We've got the shocking story of how some drug 
     companies are cashing in--at your expense.
       [Video to footage of Congressional Hearing on Capitol 
     Lawn.]
       In the Medicare debate today, House Democrats held their 
     second hearing on the Capitol lawn, protesting what they say 
     is Republican unwillingness to hold official hearings.
       [Brokaw in studio standup.]
       In the Senate, gridlock as Democrats blocked the Finance 
     Committee from working on the Medicare proposal today. But 
     there is one area where Congress could help save millions of 
     taxpayers dollars--now. NBC's Lisa Myers has this Indepth 
     report.
       [Video footage of Florence Davis.]
       Myers. Ninety-year-old Florence Davis takes the 
     prescription drug Capoten for her high blood pressure. A 
     month's supply costs $125 at her pharmacy.
       Davis. If I could get the generic cheaper, I would.
       Myers. Her son, Norman, pays for the medication.
       Norman. For all of my mother's drugs, I pay for them. She 
     can't afford it.
       Myers. Mrs. Davis was supposed to be able to buy a cheaper 
     generic version of Capoten beginning last month, cutting the 
     cost by as much as half.
       [Video footage of pharmacist dispensing pills in pharmacy.]
       But, thanks to Congress, she'll have to wait until at least 
     February, and here's why.
       [Cut to video of Myers in Senate Hearing Room showing GATT 
     bill.]
       Last year, Congress made a costly mistake in this huge bill 
     implementing the trade agreement called GATT. It gave big 
     drug companies longer patent protection on about a dozen 
     drugs, enabling them to charge high prices without 
     competition.
       [Cut to video of Senator David Pryor (Democrat-Arkansas) 
     holding pill bottle.]
       Pryor. They're getting a two billion dollar a year 
     windfall. It is a bonanza. This is an absolute ripoff to 
     consumers and to taxpayers.
       [Cut to graphic of ``Big Winners'' showing Bristol-Myers 
     Squibb and Glaxo, with picture of drug products.]
       Myers. The big winners: Bristol-Myers Squibb, maker of 
     Capoten, taken by 15 million Americans last year, and Glaxo, 
     maker of Zantac, an ulcer drug prescribed to 33 million.
       [Cut to graphics ``Big Losers.'']
       The biggest losers: everyone who uses the drugs.
       [Cut to graphic of Zantac.]
       Take Zantac, the ulcer drug which costs about $83 a month. 
     Buying generic could cut that cost in half, a big savings if 
     you're on a fixed income.
       [Cut to video of Horning.]
       Horning. That can mean the difference between her having 
     lunch or not. It's simply that critical to some of our 
     elderly.
       [Cut to video of crowded street scene.]
       Myers. And if you don't use the drugs, you still lose. 
     Taxpayers have to pay $200 million more for these 
     prescriptions under health programs for the poor.
       [Cut to video of drug production line.]
       It's no wonder drug companies are fighting to save their 
     huge windfall. In fact, they claim it was no mistake at all.
       [Cut to video of Mossinghoff.]
       Mossinghoff. Congress knew exactly what it was doing. It 
     was extending patents across the board.
       [Cut to video of Chafee and Dole talking; video of Chafee.]
       Myers. However, Republican Senator John Chafee says that's 
     not true.
       Chafee. Each of us that were involved never thought that 
     this was taking place.
       [Cut to graphic on campaign contributions.]
       Myers. Still, fixing the problem will be an uphill battle. 
     Glaxo has given $600,000 in campaign contributions in the 
     last two and a half years: $375,000 to Republicans; $236,000 
     to Democrats.
       [Cut to video of senior citizen purchasing prescription.]
       Senior groups warn that if Congress does not correct its 
     mistake, it would send a powerful message to voters.
       [Cut to video of Horning.]
       Horning. It is a signal that, ``Well, we really don't care 
     about you because, you know, the pharmacies are giving me 
     campaign money.''
       [Cut to video of Davis.]
       Myers. Florence and Norman Davis say they can't afford to 
     have Congress and big drug companies conduct business as 
     usual.
       Lisa Myers, NBC News, the Capitol.
                                                                    ____


               [From the New York Times, Sept. 28, 1995]

                 Battle Over Bonanza for Drug Companies

       An army of lobbyists has been enlisted to do battle over a 
     loophole in a trade treaty that has created a windfall for 
     the makers of patent drugs.
       A Senate committee is considering amending a provision in 
     the General Agreement on Tariffs and Trade that extends the 
     life of patents on prescription drugs. Under the provision, a 
     handful of drug companies would receive billions of dollars 
     in additional profits by having a longer period to sell their 
     products without competition before other companies would be 
     allowed to make low-cost generic alternatives.
       On one side are companies like Glaxo-Wellcome, the world's 
     largest pharmaceutical concern, whose ulcer drug Zantac 

[[Page S 15427]]
     earns it $2.1 billion a year, a figure that could drop sharply once 
     generic versions of the drug are sold.
       On the other side is a coalition of generic drug makers and 
     consumer groups who say that failure to close the loophole 
     will cost consumers billions of dollars.
                                                                    ____


               [From the New York Times, Sept. 28, 1995]

               Drug Firms at Odds Over Patent Extensions


             special pleaders--a periodic look at lobbying

                           (By Neil A. Lewis)

       Washington, September 27.--By the time the Senate Finance 
     Committee resumes consideration of the Federal budget's 
     multibillion dollar issues Thursday, some of the nation's 
     largest drug companies will have spent and lobbied heavily 
     against one amendment that hardly amounts to budget dust.
       But while its impact on the Federal budget may be 
     minuscule, the measure means a fortune to the drug companies.
       The amendment at issue would close what appears to be an 
     unintended loophole in an international trade treaty enacted 
     last year that extends the life of patents on prescription 
     drugs. A handful of drug companies are fighting to protect 
     the provision for billions of dollars in additional profits 
     they would receive by having a longer period to sell their 
     products before other companies could make low-cost generic 
     alternatives. On the other side of the issue are members of 
     the generic drug industry, which in coalition with consumer 
     groups argues that the failure to close the loophole will 
     cost patients billions of dollars.
       While both sides have their teams of lobbyists, the major 
     drug companies have enlisted a virtual army of advocates, 
     including one former Senator and several former senior 
     Congressional aides who have been clustering outside the 
     Senate hearing room in which the committee has been meeting 
     this week. One company, Glaxo-Wellcome P.L.C. of North 
     Carolina, which probably has the most at stake, has retained 
     the most influential phalanx of lobbyists.
       Donations from Glaxo's political action committee to 
     members of Congress have more than doubled in the most recent 
     reporting period, compared to the same period two years ago, 
     according to records of the Federal Election Commission.
       Glaxo, the world's largest pharmaceutical company, has the 
     patent on Zantac, widely used drug to treat ulcers. The drug, 
     which retails for about $2 a tablet, accounts for about $2.1 
     billion in annual sales for the company, said Nancy Pekarek, 
     Glaxo's manager of corporate relations. This revenue will 
     drop sharply once generic versions of Zantac are permitted.
       That the issue of the patent extensions arises from an 
     unintended loophole is generally beyond dispute.
       Glaxo's lawyer told Business Week magazine in May that he 
     had ``a Eureka! moment'' when he was poring over the details 
     of the General Agreement on Tariffs and Trade signed into law 
     last year and discovered that the language could be read to 
     extend patents on prescriptions drugs. The drug companies 
     pressed their interpretation on the Food and Drug 
     Administration, which last May reluctantly acknowledged they 
     were correct. Mickey Kantor, the United States Trade 
     Representative who negotiated the treaty has written a letter 
     to the Senate saying the negotiators did not mean to incur 
     this consequence.
       Senator David Pryor, an Arkansas Democrat, has been trying 
     to enact an amendment to the budget bill that would do just 
     that, eliminate what he said is a ``windfall'' for the drug 
     companies. His amendment would restore the 17-year limit on a 
     drug company's patent of a new medicine, the period during 
     which other companies are prohibited from making a generic 
     equivalent.
       ``It's absolutely an unjust enrichment,'' he said. ``A 
     classic case of the law of unintended consequences.''
       What happened to create this fortuitous situation for the 
     drug companies was that when the trade agreement was 
     negotiated, it included a provision for bringing all 123 
     countries onto the same standard for patent protections. It 
     required the United States to switch from granting 17-year 
     patents from the time of their approval to giving 20-year 
     patents from the time of the application for a patent.
       Depending on how long it took to gain patent approval, the 
     law gave companies up to three years of extra protection for 
     their products. About 10 drugs are affected, and Glaxo's 
     Zantac would gain 19 extra months of patent protection.
       Ms. Pekarek of Glaxo said that her company was not fighting 
     the amendment because of its effect on Zantac, but because of 
     ``a much broader issue of worldwide patient protections.''
       She said that it was important not to tamper with the trade 
     treaty because, ``if we do anything to undercut it that would 
     be opening the door for other countries to make special 
     provisions on patents for their products.''
       The United States is the world's leader in producing new 
     medicines, and the pharmaceutical industry has long argued 
     that its profits during the patent protection period finance 
     research on new drugs.
       Among those Glaxo has employed to lobby the Senate is 
     William Brock, a former Republican Senator from Tennessee. 
     Mr. Brock is also particularly suited to press the point 
     about worldwide patent consistency because he is also a 
     former United States Trade Representative.
       He has been making that argument this week in the 
     Republican cloakroom to which he has access as a former 
     Senator. Mr. Kantor, the current trade representative, has 
     disputed that argument.
       The amendment sponsored by Mr. Pryor as well as Senator 
     John H. Chafee, a Rhode Island Republican, may come up as 
     early as Thursday.
       But its fate is uncertain, since it is a tenet of Capitol 
     Hill that it is more difficult to pass something than to 
     defeat it. Most of the Democrats are expected to support the 
     measure but at least one Senator Carol Moseley-Braun of 
     Illinois declared her opposition today.
       Senator Moseley-Braun said through a spokeswoman today that 
     she was a longtime friend of Robert Ingram, president and 
     chief executive of Glaxo. She flew on the company's jet last 
     March to Glaxo's headquarters to give a speech and meet with 
     community leaders.
       She said through her spokeswoman, Joanna Slaney, that she 
     opposed the amendment because she believed the trade 
     agreement should not be tampered with.
                                                                    ____


         [From the Food and Drug Inside Report, Sept. 29, 1995]

   Glaxo Rolls Out ``Big Bucks'' Card in GATT Battle on Capitol Hill


   republicans uneasy with heavy-hitter lobbyists and score sheet on 
              campaign contributions being touted by glaxo

       When the congressional staffers working on H.R. 5121 sat 
     down last November to draft the specific language that would 
     implement the GATT in the United States, it must have been 
     very late when the final draft was completed. It would, after 
     all, be understandable that these staffers would be tired 
     after laboring for months on multiple versions of the 
     implementing statute for GATT. The complexities of the GATT 
     Agreement are legion, and even experienced international 
     trade lawyers were hard pressed to provide clear explanations 
     of a great deal of the sections of GATT. The bottom line, 
     borne no doubt from those difficult conditions, the Congress 
     made a mistake.
       Like much of the grinding machinery of the legislative 
     process, the impact of that mistake took some time to assess. 
     In this case, the mistake was a simple oversight by the 
     drafters who failed to contemplate the importance of 
     including conforming amendments to the Federal Food and 
     Cosmetic Act and Section 271 of the Patent Act.
       Shortly after passage of H.R. 5121, no doubt in the richly 
     paneled offices of one of Washington's expensive law firms, a 
     lawyer by the name of Marc Shapiro was laboring on the 
     language of the newly passed legislation. No doubt it was an 
     effort to advise his client, Glaxo Holding PLC, of what they 
     needed to do to comply with the various. For Marc Shapiro, 
     who is known among his colleagues as a professional with a 
     deep understanding of his craft, it was a mind numbing 
     experience when he read the plain language that set forth 
     Congress' view of how GATT would be implemented in the United 
     States.
       In order to comply with an ``international harmonization'' 
     of patent terms with member nations of GATT, the United 
     States adopted changes to the patent term to commence at the 
     date of filing with the patent office and extend for a period 
     of 20 years. That contrasts with the previous U.S. patent law 
     that had provided for a 17-year patent term which commenced 
     from the date of approval of the patent by the Patent and 
     Trademarks Office (PTO).
       The GATT includes a section known as Trade-Related Aspects 
     of Intellectual Property Rights (TRIPs) which requires member 
     countries to apply high levels of protections for existing 
     patent holders. The United States fulfilled its obligations 
     under TRIPs by amending the Patent Act of grant owners of 
     patents still in force the benefits of the new terms to the 
     extent that it increased their patent protection term.
       But TRIPs also had specific provisions to protect those 
     individuals who had made a ``substantial investment'' in 
     anticipation of the expiration of the patent under the old 
     system. To balance the interests to the existing patent 
     holders, those who had made substantial investment would be 
     required to pay ``equitable remuneration'' to the patent 
     holder.
       Marc Shapiro, while sifting through the legislation, had 
     what he characterized to a Business Week reporter as a 
     ``eureka moment'' when he discovered that Congress had 
     extended the patents of a number of Glaxo products, and had 
     provided no protections for generic drug manufacturers even 
     if they had made the required substantial investment.
       For generic drug manufacturers, it was a setback. For 
     senior citizens on fixed incomes who rely heavily on access 
     to generic drug products to ease the financial burden of 
     needed prescription drugs, it was a disaster. For low-income 
     families with children who are forced to rely upon generic 
     drugs in difficult economic circumstances where the choice 
     is often not to fill a needed prescription because of 
     cost, it was a horrible calamity. For the U.S. government 
     health care programs like Medicare, Medicaid, Veterans 
     Affairs, Indian Health Service, and the Public Health 
     Service, it is an unmitigated catastrophe. 

[[Page S 15428]]

       Glaxo executives and lobbyists, however, were whooping it 
     up like they had just won the Super Bowl. In a certain sense, 
     they had.
       The flagship Glaxo product, Zantac, was granted an 
     additional 19 months of patent protection. It was totally 
     unanticipated by Glaxo. Indeed, they had priced their product 
     over the 17-year patent term in anticipation of the old term, 
     and the passage of the new law occurred within months of the 
     expiration of the patent. The overall revenue gain was 
     billions.
       Glaxo lobbyists now bristle at the characterization of the 
     revenues raked in during the extended patent term as being 
     ``windfall profits.'' ``That is not fair because we all know 
     that we gave up a lot to the generic industry back in 1984. 
     We're just seeing a justified correction,'' claims one Glaxo 
     lobbyist.
       The 1984 Drug Price Competition and Patent Term Restoration 
     Act, commonly referred to as ``Hatch-Waxman,'' did indeed 
     involve a carefully crafted compromise between the brand 
     industry and generic drug manufacturers. The generics got 
     pre-expiration access to patented raw materials to conduct 
     testing to theoretically allow FDA to approve the ANDA on the 
     date of patent expiration. The brand industry got a guarantee 
     of 14 years of market exclusivity despite any delays in FDA 
     review.
       Many have credited the Hatch-Waxman Act as having been the 
     catalyst for a rapid expansion of the generic drug industry. 
     Senior citizen groups and consumer advocacy groups have 
     lauded the Act as key to improving the health of financially 
     fragile purchases who often deferred purchasing needed drugs 
     simply because of the high cost of brand name drug products.
       There has not been any serious attack on the Hatch-Waxman 
     Act as having been ``unbalanced'' to one side or the other 
     over the first ten years of its existence. But now, in 1995, 
     Glaxo points to the need for restoring some balance to the 
     brand industry for injury heaped on it by Hatch-Waxman.
       The Generic Drug Equity Coalition, a group of consumer 
     advocate groups, senior citizen lobbying groups, and generic 
     industry supporters, sees the issue a little differently. 
     ``Glaxo has no legitimate gripe with the proposed fix. It 
     will simply mean they won't get to keep the multi-billion 
     windfall profit they received solely from a legislative 
     mistake. They didn't earn that windfall profit. They don't 
     deserve that windfall profit. But they want to take those 
     profits right out of the pockets of people who can least 
     afford their high prices,'' complained one Coalition FDA 
     Insider.
       Capital Hill staffers are caught in a tough situation. 
     Privately, of 33 staffers contacted on this issue, none 
     disagreed with the fact the mistake needed to be corrected. 
     None disagreed that the consumers and government would have 
     to pay unjustified higher prices for products that should 
     have generic competition. All of the staffers agreed that 
     Glaxo did not deserve the billions they would receive from 
     this mistake. But only 1 staffer was absolutely confident 
     Congress would correct the mistake.
       ``What can we do. Glaxo has made campaign contributions to 
     all of our bosses. The Chairman of the company [Glaxo] has 
     been demanding personal meetings with our bosses. Is there 
     any doubt about the subtle message being conveyed. `We are 
     here to pick up the chit.' This is going to be a case of pure 
     political conflict, with the consumers on the side of the 
     angels and Glaxo with the gold shillings. I just don't know 
     how it will come out,'' laments one Senate Finance Committee 
     staff FDA Insider.

                         The battle lines drawn

       The political battle lines are not clearly defined. For the 
     generic coalition, Senator John Chafee (R-Rhode Island), 
     Senator Hank Brown (R-Colorado), and Senator David Pryor (D-
     Arkansas) have been working to correct the mistake in the 
     GATT language. For Glaxo, there is less public enthusiasm, 
     but a lot of fire-power by virtue of the campaign favors that 
     are being called in. Senator Alfonse D'Amato (R-New York) has 
     obviously been pressed into service by virtue of his position 
     as Chairman of the Republican Senatorial Campaign Committee. 
     Some other Republicans are concerned about the 
     appropriateness of the high-level of visibility that D'Amato 
     has taken on the issue, but sources at the Campaign Committee 
     bluntly told FDIR that ``Glaxo was taking no prisoners'' on 
     this issue.
       Senator Jesse Helms (R-North Carolina) has dutifully 
     stepped to the plate to help his home state Glaxo workers 
     (the U.S. Glaxo operations are in the Research Triangle in 
     Raleigh, North Carolina). Beyond that, there are only a group 
     of stealth Glaxo supporters who are desperately hoping that 
     something will happen to allow them to get off the end of the 
     Glaxo spear. For most it is a horrible political position to 
     be in to appear to oppose access to lower cost generic drugs 
     for senior citizens and low-income families.
       The Congressional Budget Office (CBO) scored the 5-year 
     savings to Medicaid at $150 million. That is no small 
     potatoes to Republicans seeking savings. But that amount is 
     minuscule compared to the $2 billion cost to consumers 
     identified in a Muse & Associates economic impact analysis. 
     At that number the political pain becomes much deeper and the 
     potential for future constituent problems becomes very real.
       The strategy for correcting the GATT legislation mistake is 
     to include a provision in the Budget Reconciliation Act as an 
     amendment in the Senate Finance Committee markup. Glaxo 
     supporters are trying to argue the amendment is not germane 
     under the ``Byrd Rule'' since the savings flow to the 
     Medicaid block grants and not to the Federal deficit. But 
     Glaxo critics argue the block grants are unique to the 
     Finance Committee review cycle this time around, and 
     virtually all of the provisions technically trample on the 
     Byrd rule in order to facilitate the block grants being 
     transferred from the Federal Government to the states.
       The central substantive argument Glaxo has relied upon has 
     been that any change now would upset the delicate balance 
     with World Trade Organization (WTO) members who have a 
     history of poor enforcement of patent infringements in their 
     countries. Glaxo points to certain language in the GATT and 
     TRIPs they claim was in fact incorporated in the strategy of 
     the H.R. 5121 drafters. The thesis, then, is that there was 
     no error or mistake, but the language was clearly set forth 
     to express the specific intent of the U.S. Congress.
       ``They must have their fingers crossed behind their backs 
     when they sling that BS up here,'' commented on House Ways 
     and Means Committee staffer. ``It was a mistake, we know it, 
     and they know it.
       Senator Chafee wanted to know the truth of the matter, so 
     he sought the advice of USTR Ambassador Micky Kantor. Kantor 
     was succinct in his view: ``This provision [Section 154(c) 
     (1) and (2) of the Patent Act] was intended to apply to all 
     types of patentable subject matter, including pharmaceutical 
     products. Conforming amendments should have been made to the 
     Federal Food Drug and Cosmetic Act and Section 271 of the 
     Patent Act, but were inadvertently overlooked.''
       The key part of the Glaxo argument is directed at the 
     problems encountered around the world with poor enforcement 
     of patents, particularly with some members of WTO. They 
     advance the argument that any tinkering with the present 
     language would send a strong message to our trading partners 
     that they need not aggressively enforce patent rights. It is 
     an argument that seemingly was sufficient for Glaxo 
     supporters to hang their hats on.
       But Ambassador Kantor punched big holes in that argument, 
     and has left Glaxo very vulnerable to the charge that they 
     are just trying to keep an unjustified windfall profit. It is 
     a message that Glaxo has tried to gussy up with an elite 
     lobbying corps. Former Senator Warren Rudman and former 
     Senator Bill Brock were both brought in to shore up an 
     eroding Glaxo position. That augments a term of virtually 
     every high-powered lobbyist in Washington available to work. 
     ``The `alligator shoe' crowd is apparently out in force,'' 
     commented one House Commerce Committee staff FDA Insider.
       The generic drug industry, on the other hand, seems to have 
     placed its fate in the hands of a rag-tag band of consumer 
     advocates and senior citizen advocacy groups. It seems to be 
     working. Congressional staffers report a substantial interest 
     in the issue among talk show hosts around the country.
       ``Our phone lines are burning up with senior citizens who 
     are just hopping mad over the prospect we may add costs to 
     drugs. I don't think we want to be in that position,'' 
     observed a Senate staff FDA Insider.
       Whatever the Senate Finance Committee does on this issue in 
     the Budget Reconciliation markup, it promises to be a hot 
     issue over the next several weeks. For Marc Shapiro, he is 
     surely hoping his ``eureka moment'' doesn't turn into a 
     ``Maalox minute.'' Certainly it is a comment he wished he 
     could take back and recast it in less flammatory language.
       ``This battle boils down to a simple issue. Is there any 
     justification for allowing Glaxo to keep the billions of 
     dollars they will get simply from an error in drafting a 
     piece of legislation.
       ``Did Glaxo earn these windfall profits? No.
       ``Did Glaxo expect or need these windfall profits to fund 
     R&D for the product? No.
       ``Did Glaxo project these windfall revenues into pricing to 
     recover a fair return on their investment? No.
       ``I have not yet heard one compelling argument to justify a 
     vote to let them keep money Glaxo will get on the backs of 
     senior citizens and poor families. Glaxo is getting access to 
     various members because they have been strong campaign 
     contributors. But they didn't buy votes with those 
     contributions, particularly when they have no credible 
     argument to justify themselves. It is only a lot of smoke and 
     mirrors. No substance. It is a no-brainer to me. Vote to 
     protect consumers.''--Senate Finance Committee Staff FDA 
     Insider.
       ``The Hatch-Waxman Act established a delicate balance in 
     the pharmaceutical industry between the interests of 
     research-based companies and the generic industry. Any 
     responsible look at the proposal by the generic companies 
     would upset that balance and result in a serious injury to 
     the innovator drug industry. We have no reason to apologize 
     for the revenues that result from the research and 
     development efforts of our company. We are responsible in our 
     pricing policies, and we recognize the needs of low-income 
     families in acquiring our products. Truly needy families can 
     get assistance from community organizations we support.''--
     Glaxo Lobbyist FDA Insider.
       ``Finally, the extension of the Section 154(c) to 
     pharmaceutical products would not undermine ongoing U.S. 
     efforts to seek high levels of intellectual property 
     protection around the world. We are acting wholly within our 
     rights in establishing the transition 

[[Page S 15429]]
     period, as other countries would be if they did the same. Furthermore, 
     we have already established under our law the transition 
     period with respect to all types of patents other than 
     pharmaceutical patents; extending it to pharmaceutical 
     patents would be in no way increase the ability of our 
     trading partners to justify their failure to provide TRIPs-
     consistent patent protection.''--Ambassador Michael Kantor, 
     the United States Trade Representative, Letter to Senator 
     John H. Chafee, September 25, 1995.
                                                                    ____


               [From the Orlando Sentinel, Sept. 3, 1995]

                    GATT Puts Generic Drugs on Hold

                             (By Maya Bell)

       Miami.--Interested in saving money, Phylis Tannen routinely 
     requests generic prescriptions for her ulcer.
       So Tannen, 74, was surprised to learn recently that she 
     would have to wait much longer than expected to buy the less 
     expensive medicine. That's because the patent for Zantac, 
     slated to expire this December, had been extended until July 
     1997, preventing the release of a generic equivalent until 
     then.
       The retired Dade County school principal was even more 
     surprised to learn the convoluted reason for the delay, which 
     could cost her roughly $430 over the life of the extended 
     patent. In implementing the worldwide trade agreement known 
     as GATT, the U.S. Congress inadvertently exempted at least 13 
     brand-name drugs from generic competition for up to three 
     years.
       Among them: Zantac and the high blood-pressure medicine 
     Capoten, among the best-selling drugs in the world.
       The oversight may have been unintentional but, outraged 
     consumer groups say, its impact is enormous: Brand-name drug 
     companies, primarily Glaxo Wellcome Inc. and Bristol-Myers 
     Squibb Co., the makers of Zantac and Capoten, will reap 
     nearly a $2 billion windfall at the expense of the public.
       Last year, Glaxo sold $2.7 billion worth of Zantac and 
     Bristol-Myers $581 million of Capoten in the United States 
     alone. Together, they accounted for nearly 48 million 
     prescriptions.
       Paying most for the delayed availability of the generic 
     drugs, advocates say, will be the elderly, who consume a 
     third of the $64 billion worth of prescriptions sold 
     annually. Because Medicare does not cover the cost of 
     prescriptions, seniors such as Tannen often pay for them out 
     of their own pockets.
       ``It was an unintended mistake by Congress, but the public 
     will pay dearly for it,'' said Dixie Horning, executive 
     director of the Gray Panthers, a lobbying group for the 
     elderly. ``Not only are the people who can least afford it--
     senior citizens on fixed incomes--paying more for their drugs 
     than they ought to be, but taxpayers are too. The government, 
     and that means you, is a big buyer of these drugs.''
       A study conducted for the Generic Drug Equity Coalition, a 
     consortium of 26 consumer groups and generic-drug companies 
     urging Congress to correct its mistake, estimated the cost of 
     delaying the 13 generic substitutes of $1.9 billion. Sen. 
     David Pryor, D-Ark., the ranking minority member and former 
     chairman of the Senate's Special Committee on Aging, 
     introduced a bill to clarify Congress' intent earlier this 
     month. The bill would not alter the GATT treaty, nor require 
     ratification from other countries.
       Florida's U.S. senators, Republican Connie Mack and 
     Democrat Bob Graham, are not involved in the issue yet, but 
     their staffs said they will take a close look at the 
     legislation when they return from summer recess. In the 
     meantime, at least one generic-drug company is taking its 
     fight to enter the market to court.
       Should the bill pass, senior citizens and the federal 
     Medicaid program stand to gain some of the biggest savings, 
     said Don Muse, a former analyst for the Congressional Budget 
     Office and author of the coalition study. He projected 
     seniors would save $517 million; the Medicaid program, which 
     covers prescriptions, would save another $205 million, and 
     the Department of Veterans Affairs $21 million. Other big 
     savers would include insurance companies, whose medical plans 
     often require members to elect generic drugs.
       The estimated savings are very conservative, the coalition 
     says, because the study assumes the generic products would be 
     only 10 percent cheaper than their brand name equivalents. 
     However, generic drugs have historically debuted at a price 
     about one-fourth less than the brand, quickly falling to 75 
     percent of the brand cost.
       How the General Agreement on Tariffs and Trade wound up 
     hurting consumers such as Tannen while helping companies such 
     as Glaxo is as complicated as the 8,000-page treaty itself. 
     The trouble began when Congress changed U.S. patent law to 
     match the global standard set by GATT. The change extended 
     the life of U.S. patents from 17 years to 20 years, 
     benefiting current patent-holders by up to three years.
       But Congress recognized that the change would, as one 
     congressional staffer put it, ``move the goal posts back'' 
     for companies that anticipated a patent expiring and already 
     had a generic product in the pipeline. So Congress devised a 
     mechanism allowing those companies to enter the market on the 
     day the original patent would have expired. The compromise: 
     The generic company would pay the brand-name company a 
     royalty until the extended patent expired.
       Everything was fine until the generic-drug companies 
     realized that Congress overlooked the very law that launched 
     their industry in 1984. The law plainly states that a generic 
     drug cannot come to market before the brand's patent expires. 
     Hamstrung by the conflict, the Food and Drug Administration 
     forbade generic-drug companies from selling their products 
     until the extended patents expire.
       As a rsult, the prescription drug industry is the only 
     industry in the nation that will benefit from longer patent 
     terms but be exempted from generic competition during the 
     compromise period.
       The ruling felt like a kick in the teeth to Patrick 
     McEnany, president of Royce Laboratories Inc., a small but 
     rapidly growing generic drug company in Miami that nearly 
     doubled its sales last year to $6.6 million.
       Soon after McEnany joined Royce in 1991, the company set 
     out to develop a generic form for Capoten, which was supposed 
     to lose its patent on Aug. 8. Spending more than $1 million 
     to develop a bio-equivalent, Royce hoped to put the first 
     Capoten substitute on the shelf, a key to capturing the 
     generic market.
       ``In this business, timing is everything,'' said Robert 
     Band, Royce's chief financial officer. ``Once the shelf space 
     is taken up, it's hard to wrestile it away.''
       The FDA ruling, however, extended Capoten's patent for six 
     months, keeping Royce and five other companies from competing 
     with Bristol-Myers until February.
       The company counted on attracting an enviable share of the 
     nearly 15 million Capoten prescriptions sold annually during 
     the next six months. Instead it was left with the prospect of 
     having even more generic competitors come February.
       Not content to let that happen, Royce picked a fight with 
     Bristol-Myers in U.S. District Court in Miami, winning the 
     first round nine days ago when a judge ruled that the FDA was 
     free to approve Royce's Capoten product.
       Bristol-Myers appealed, and the FDA said it would not act 
     on the court action until that appeal was exhausted.
       ``When we enbarked on this product, we relied on a set of 
     rules and the rules changed--not in the middle of the game, 
     but at the end of the game,'' McEnany said. ``It is an 
     injustice to us and to the consumer.''
       Royce is not alone. Novopharm USA Inc., an Illinois-based 
     pharmaceutical company, has millions of dollars worth of its 
     generic form of Capoten sitting in inventory. Worse, 
     Novopharm has a $38-million plant under construction in North 
     Carolina, company president Bill Gunter said. It was where 
     Novopharm planned to begin manufacturing its generic 
     alternative for Zantac this December.
       ``Now we're scrambling to figure out what we can do to 
     justify that huge, white building,'' Gunter said. ``It's not 
     a simple thing.''
       Royce and Novopharm are members of the coalition pushing 
     Congress to correct its oversight. They aren't, however, 
     getting much sympathy from brand-name manufacturers, who 
     argue that it is the generic competitors reaping the 
     windfall. After all, generic manufacturers capitalize on the 
     millions of dollars brand-name companies spend on research 
     and development, coming to market without doing the same 
     science.
       Bristol-Myers spokesman Bob Laverty points out that, since 
     Capoten was first approved in 1981 to combat high blood 
     pressure, the company has discovered three other life-saving 
     uses for the drug. In his view, Bristol-Myers has more than 
     earned its patent extension.
       ``We don't feel this is a windfall because the company has 
     continued to invest in this product over the years,'' Laverty 
     said. ``We've continued to pour research dollars into the 
     product and it has helped consumers tremendously.''
       Glaxo paints the GATT flap as a trade issue, not a consumer 
     issue. Company spokeswoman Nancy Pekarek warns that if 
     Congress amends the GATT law to appease the genertic drug 
     industry, it will send a message to other countries that 
     they, too, can tinker with their patent laws to protect a 
     favored industry.
       ``The law is clear and it should be followed,'' Pekarek 
     said ``Generic companies already have a shortcut and for that 
     shortcut they promised to honor the patent expiration date. 
     Yes, the rules changed, but everybody has to abide by the 
     rules.''
                                                                    ____


                     [From USA Today, Aug. 8, 1995]

                     GATT Delayed New Generic Drugs

                           (By Anita Manning)

       The world trade agreement GATT extended patents on a dozen 
     drugs--including popular blood pressure and ulcer 
     medications--delaying generic manufacturing and costing 
     consumers millions of dollars, consumer advocates say.
       The patents were to expire today on Capoten and Capozide 
     and on Zantac in December, but the General Agreement on 
     Tariffs and Trade extends them into 1996 and 1997.
       Patents had run 17 years; GATT extended it to 20 years.
       ``GATT created a windfall for drug companies,'' says Jim 
     Firman of the National Council on the Aging.
       In 1994, nearly 15 million prescriptions were written for 
     blood pressure medicine Capoten/Capozide, at $56.29 each 
     wholesale, and more than 33.4 million for the ulcer drug 
     Zantac, at $81.47, says the Generic Drug Equity Coalition.
       Steve Berchem, of the trade group Pharmaceutical Research 
     and Manufacturers of 

[[Page S 15430]]
     America, says patents are the industry's ``lifeblood.'' ``Patents help 
     companies generate revenue to do further research.''
                                                                    ____


               [From the Los Angeles Times, June 8, 1995]

                Ruling Shortens Branded Drugs' Monopoly

       Nearly 100 brand-name drugs lost their chance at an extra 
     few years' monopoly in the market Wednesday under a ruling by 
     the U.S. Patent and Trade Office.
       At issue is whether the drugs could get two patent 
     extensions, one from a 1984 law and another under a global 
     trade agreement provision that takes effect today.
       The General Agreement on Tariffs and Trade extends patent 
     protection to 20 years from the date drug makers file for a 
     patent. Until now, those patents have had a 17-year life from 
     the time they were granted. Current patent holders will get 
     whichever expiration date is later.
       A 1984 law has already offered brand-name drugs up to an 
     extra five years' patent life to help offset the time it 
     takes those medicines to get Food and Drug Administration 
     approval for sale.
       Makers of brand-name drugs said they were entitled to both 
     extensions, and in March the patent office tentatively 
     agreed. The proposal theoretically could have given some 
     drugs patent protection for a total of 25 years, although the 
     Pharmaceutical Research and Manufacturers Assn. insisted that 
     was highly unlikely.
       But the patent office reversed itself Wednesday, ruling 
     that companies that took the 1984 extension can't also get 
     one from GATT. The ruling affects 94 brand-name drugs and 
     means that the longest a medicine will be able to monopolize 
     the market because of the extension is slightly under 22 
     years.
       ``American consumers should get a price break on many drugs 
     as a result of the patent office's reversal'' because it 
     opens the market to quicker generic competition, said Sen. 
     David Pryor (D-Ark.).
       The brand-name industry was disappointed by the ruling.
       ``Their March tentative ruling was the correct one from a 
     legal standpoint,'' said Neil Mulcahy, an attorney for the 
     pharmaceutical association.
       Another 15 drugs, including the billion-dollar ulcer drug, 
     Zantac, will get the GATT extension.
       But Pryor renewed his pledge to fight those drugs' market 
     exclusivity. GATT had included a provision saying cheaper 
     generic versions of these drugs could proceed to the market 
     on the brand name's original expiration date if they paid the 
     competitor compensation. But the FDA last month said prior 
     law invalidated that provision, meaning GATT will postpone 
     generic competition for these 15 drugs.
                                                                    ____



                                Generic Drug Equity Coalition,

                               Washington, DC, September 20, 1995.
     Hon. William Roth,
     Chairman, Committee on Finance, 219 Senate Dirksen Office 
         Building, Washington, DC.
       Dear Chairman Roth: As you prepare for action on the 
     reconciliation bill, the Generic Drug Equity Coalition urges 
     you to include language to correct an oversight in the GATT 
     Treaty implementing legislation as it affects the 
     availability of generic drugs.
       The Congressional Budget Office has determined that, for 
     budget scoring purposes, Medicaid will save $150 million over 
     five years, if the correction is included in the 
     reconciliation bill.
       The GATT treaty extends patents on U.S. products from 17 to 
     20 years. It also includes transition rules for generic 
     products that were ready to go to market based on the old 17-
     year patent term. When Congress approved the treaty, however, 
     it failed to change U.S. law to allow the Food and Drug 
     Administration (FDA) to certify generic drugs for marketing 
     during the transition period.
       Correcting this oversight will save American consumers 
     almost $2 billion, including $150 million for Medicaid.
       Thank you.
           Sincerely,
     James Firman, Ed.D.
                                                                    ____

         Citizen Action, Consumer Federation of America, Consumers 
           Union,
                                               September 26, 1995.
     Hon. William V. Roth, Jr.,
     Chairman, Committee on Finance, 219 Senate Dirksen Office 
         Building, Washington, DC.
       Dear Senator Roth: We urge you to include provisions in the 
     budget reconciliation bill that would close the current 
     loophole in FDA law that is delaying American consumers' 
     access to low-cost generic drugs. The Congressional Budget 
     Office (CBO) has estimated that by closing this loophole, you 
     would save the Medicaid system $150 million over the next 
     five years, while consumers would save up to $2 billion.
       The General Agreement on Tariffs and Trade (GATT), passed 
     by Congress in 1994, requires the United States to switch 
     from its present system of 17-year patents to 20-year 
     patents. Congress tried to balance the detrimental impact of 
     this provision on competitors by including a clause 
     permitting companies to introduce competing products at the 
     17-year patent expiration point if the company made 
     significant prior investments and if it paid a royalty to the 
     patent holder. When asked to interpret this clause in the 
     light of the 1984 generic drug law, the FDA found that a 
     loophole exists in the GATT that precludes the agency from 
     certifying generic versions of drugs for marketing until the 
     GATT-extended patents expire.
       The extension of patents from 17 to 20 years to currently 
     marketed prescription drugs delays the introduction of low-
     cost generic drugs into the marketplace. Generic drugs 
     typically enter the market at a much lower cost than the 
     patented brand, and the brand-name drugs which would benefit 
     from this extended patent are among the top-selling drugs 
     used. The result of the FDA's ruling could potentially cost 
     American consumers billions of dollars. The detrimental 
     effects of this patent extension go beyond the individual 
     health care consumer. Taxpayers will be forced to absorb the 
     additional costs for more expensive drugs under the Medicaid 
     program.
       The FDA's interpretation of the GATT transition rules does 
     not appear to reflect the intent of Congress when it approved 
     the GATT, nor does it reflect the views of Ambassador Michael 
     Kantor, the U.S. Trade Representative who negotiated the 
     agreement. Mr. Kantor recently wrote to Congress that the 
     transition rule was ``intended by its drafters to be 
     generally applicable and to permit generic pharmaceutical 
     producers to market their products where they had made 
     substantial investments in anticipation of the expiration 
     of the unextended patent terms.'' The unintended effects 
     of the patent extension include diminished market 
     competition, an undeserved windfall to pre-GATT patent 
     holders, and further inflated costs to millions of 
     Americans.
       At a time of federal, state and local budget-cutting, 
     health care savings are more important than ever for American 
     consumers. Therefore, we strongly urge you to use the budget 
     reconciliation process to redress this unintended, and 
     potentially costly, effect of the GATT.
           Sincerely,
     Mern Horan,
                                   Consumer Federation of America.
     Gene Kimmelman,
                                                  Consumers Union.
     Cathy Hurwit,
     Citizen Action.
                                                                    ____

                                              The National Council


                                           on the Aging, Inc.,

                               Washington, DC, September 26, 1995.
     Hon. Robert Dole,
     U.S. Senate, 141 Hart Senate Office Building, Washington, DC.
       Dear Senator Dole: As you prepare for action on the 
     Medicaid reconciliation bill this week, the National Council 
     On the Aging urges you to support language to correct an 
     oversight in the GATT Treaty implementing legislation as it 
     affects the availability of generic drugs. This language will 
     be introduced by Senator Chafee.
       The GATT treaty extends patents on U.S. products from 17 to 
     20 years. It also includes transition rules for generic 
     products that were ready to go to market based on the old 17-
     year patent term. When Congress approved the treaty, however, 
     it failed to change U.S. law to allow the Food and Drug 
     Administration (FDA) to certify generic drugs for marketing 
     during the transition period.
       The Congressional Budget Office has determined that this 
     correction will result in $150 million in Medicaid savings 
     over five years. The correction will save American consumers 
     almost $2 billion.
       Lowering the cost of prescription drugs is particularly 
     important for older consumers. Older Americans spend more 
     than any other group on prescriptions. Over one third of the 
     $64 billion spent on prescription drugs come from seniors. 
     This correction will result in over $500 million in savings 
     to older Americans.
       We strongly urge you to support the Chafee language in the 
     reconciliation bill allowing consumers faster access to many 
     generic drugs and creating savings for the U.S. budget and 
     for older Americans. Thank you.
           Sincerely,
                                              James Firman, Ed.D.,
     Pesident.
                                                                    ____



                              National Women's Health Network,

                               Washington, DC, September 26, 1995.
     Hon. William V. Roth, Jr.,
     Chairman, Committee on Finance, Dirksen Senate Office 
         Building, Washington, DC.
       Dear Senator Roth: I am writing on behalf of the National 
     Women's Health Network to urge you to close the generic drug 
     loophole in the GATT during the budget reconciliation 
     process. The NWHN is the only national public interest 
     membership organization devoted solely to women and health.
       The availability of low-cost generic drugs saves American 
     consumers billions of dollars every year. Under a recent 
     ruling by the FDA, the patent terms of over a dozen brand 
     name drugs will be extended, costing consumers and taxpayers 
     billions of dollars over the next few years. With the costs 
     of health care continuing to skyrocket while the numbers of 
     uninsured keep going up, consumers cannot afford to pay 
     unnecessarily high prices for medicine. Closing this loophole 
     will save the Medicaid system $150 million over the next five 
     years while it saves consumers close to $2 billion.
       Women live longer than men, use more health care services 
     than men, and pay more for drugs out of their pockets than do 
     men. If important generic drugs are delayed, women will 
     suffer most.

[[Page S 15431]]

       The generic drug loophole gives pharmaceutical companies a 
     windfall and hurts American health care consumers. This could 
     not have been what Congress intended when it passed the GATT 
     implementing legislation. Congress should fix the law so that 
     drug companies are not given special treatment while 
     consumers are left holding the bag. I urge you to make this 
     fix in the budget reconciliation bill.
           Sincerely,
                                                  Cynthia Pearson,
     Executive Director.
                                                                    ____

                                               American College of


                                               Nurse-Midwives,

                               Washington, DC, September 25, 1995.
     Hon. William V. Roth, Jr.,
     Chairman, Committee on Finance, Dirksen Senate Office 
         Building, Washington, DC.
       Dear Senator Roth: The American College of Nurse Midwives 
     urges you to support the Chafee generic drug amendment to the 
     Medicaid reconciliation bill.
       If adopted, the Chafee amendment will result in $150 
     million in Medicaid savings according to the Congressional 
     Budget Office.
       The amendment will correct an oversight in the GATT 
     implementing legislation that is delaying the availability of 
     generic substitutes for a dozen popular medications, 
     including the widely prescribed anti-ulcer medication Zantac. 
     United States Trade Representative Mickey Kantor has 
     indicated that this was not the intent of the drafters of the 
     GATT implementing legislation.
       Left uncorrected, the GATT delay will cost consumers almost 
     $2 billion overall and create an unintended windfall for 
     major pharmaceutical companies.
       Please vote to save American taxpayers $150 million by 
     supporting the Chafee amendment.
       Thank you.
           Sincerely,
                                                    Karen Fennell,
     Senior Policy Analyst.
                                                                    ____

                                            National Black Women's


                                               Health Project,

                               Washington, DC, September 26, 1995.
     Hon. William V. Roth, Jr.,
      Chairman, Committee on Finance, Dirksen Senate Office 
         Building, Washington, DC.
       Dear Chairman Roth: The National Black Women's Health 
     Project (NBWHP), a national self-help and health advocacy 
     organization, would urge you to include a provision in the 
     budget reconciliation bill to close the generic drug loophole 
     in the General Agreement on Tariffs and Trade (GATT). By 
     closing this loophole, you would help to insure that low-
     income women and their families have access to safe, 
     affordable prescription and over-the-counter medication.
       GATT extends patent terms for U.S. products from 17 years 
     to a worldwide term of 20 years. Because many manufacturers 
     had already invested millions of dollars in competing 
     products in anticipation of patent expiration under the 
     original 17-year limit, Congress adopted rules that allow 
     those companies to introduce generic alternatives on the date 
     a 17-year patent would expire, provided they pay reasonable 
     royalties to the patent holder.
       Through an error of omission, though, the pharmaceutical 
     industry wasn't included in these transition rules. As a 
     result, makers of lower-cost generic drugs are prohibited 
     from bringing their result to the market until the full 20-
     year term of patent protection incorporated in the GATT 
     treaty is expired. This loophole will extend the patent terms 
     on more than a dozen drugs--including big-sellers Zantac and 
     Capoten--with a combined $5 billion share of the market.
       As an organization dedicated to ensuring the health needs 
     of low-income women, who are disproportionately Black, we 
     believe that access to low-cost generic drugs is crucial. 
     Low-income women and children are more likely to be uninsured 
     and therefore the least likely to afford the high costs of 
     brand name drugs. In addition, low-income families often have 
     limited resources and are forced to delay treatment because 
     of high drug costs. Increasing access to generic drugs will 
     help to improve the quality of health care received by many 
     low-income families.
       By closing the generic drug loophole, health care consumers 
     would save approximately $2 billion. Congress would save $150 
     million in Medicaid costs over the next five years. We urge 
     you to vote in favor of consumers by removing the loophole 
     afforded the pharmaceutical industry in the budget 
     reconciliation bill.
           Sincerely,
     Kim Youngblood.
                                                                    ____

                                    National Committee to Preserve


                                 Social Security and Medicare,

                               Washington, DC, September 27, 1995.
     Hon. Larry Pressler,
     Committee on Finance, U.S. Senate, Russell Senate Office 
         Building, Washington, DC.
       Dear Senator Pressler: The National Committee to Preserve 
     Social Security and Medicare urges you to support language to 
     correct an oversight in the GATT Treaty implementing 
     legislation that affects the availability of generic drugs. 
     This language will be sponsored by Senators Chafee and Pryor 
     as an amendment to the Medicaid reconciliation legislation 
     this week. The Congressional Budget Office (CBO) has 
     determined that this correction will result in $150 million 
     in Medicaid savings over five years, and some $2 billion in 
     savings to all consumers.
       The GATT treaty extends patents on U.S. products from 17 to 
     20 years. It also includes transition rules for generic 
     products that were ready to go to market based on the old 17-
     year patent term. When Congress approved the treaty, however, 
     it failed to change U.S. law to allow the Food and Drug 
     Administration (FDA) to certify generic drugs for marketing 
     during the transition period.
       In addition to savings for consumers of all ages, lowering 
     the cost of prescription drugs is particularly important for 
     older Americans. Older persons consume about one-third of the 
     $64 billion spent on prescription drugs in the United States.
       On behalf of the nearly six million members and supporters 
     of the National Committee to Preserve Social Security and 
     Medicare, we urge you to support the Chafee/Pryor amendment 
     to the reconciliation bill.
           Sincerely,
                                                Martha A. McSteen,
     President.
                                                                    ____



                                               Public Citizen,

                               Washington, DC, September 25, 1995.
     Hon. William V. Roth, Jr.,
     Chairman, Committee on Finance, Dirksen Senate Office 
         Building, Washington, DC.
       Dear Senator Roth: Public Citizen, a national consumer 
     advocacy organization with over 120,000 members, urges you to 
     support efforts to fix the generic drug loophole in the 
     General Agreement on Tariffs and Trade with an amendment to 
     the budget reconciliation bill. This amendment will save the 
     Medicaid system $150 million over the next five years. 
     Consumers will save as much as $2 billion.
       For nearly 25 years, Public Citizen and its Health Research 
     Group have been at the forefront of efforts to ensure that 
     safe, effective and affordable drugs are available to 
     American consumers. We were part of the citizens' coalition 
     that supported the Waxman-Hatch Act of 1984 to help consumers 
     save billions of dollars by making more low-cost generic 
     drugs available to the public.
       Because of the recently-enacted GATT, which calls for 
     longer durations for monopoly drug patents worldwide, 
     consumers will be forced to pay billions of dollars more 
     instead of less. We urge Congress to restore the law to its 
     original intent so that drug firms do not receive a windfall 
     at the expense of health care consumers.
       In this time of massive government budget-cutting and 
     soaring medical costs, health care savings are critically 
     important to the American public. The availability of low-
     cost generic drugs is one way the marketplace can help bring 
     down the high cost of health care. By extending the duration 
     of monopoly patents on more than a dozen drugs, the GATT will 
     add billions of dollars to consumers' medical costs at a time 
     when they can least afford it.
       We urge you to support efforts to protect consumers' health 
     and taxpayers' pocketbooks by fixing the generic drug 
     loophole in the budget reconciliation bill.
           Sincerely,

                                            Michael Calabrese,

                                               Executive Director,
     Congress Watch.
                                                                    ____

         U.S. Public Interest Research Group, National Association 
           of State PIRGs,
                               Washington, DC, September 25, 1995.
     Hon. William V. Roth, Jr.,
     Chairman, Committee on Finance, Dirksen Senate Office 
         Building, Washington, DC.
       Dear Senator Roth: I am writing on behalf of the U.S. 
     Public Interest Research Group to urge you to fix the generic 
     drug loophole in the General Agreement on Tariffs and Trade 
     as part of the budget reconciliation bill. U.S. PIRG is the 
     national lobbying office for state Public Interest Research 
     Groups. PIRGs are non-profit, nonpartisan consumer and 
     environmental advocacy groups with members around the 
     country.
       Because of a loophole in the GATT that is being eagerly 
     exploited by profiteering drug companies, American consumers 
     face unnecessary higher costs for prescription drugs at the 
     same time as overall health care costs are skyrocketing. 
     Hundreds of millions of taxpayer dollars and billions of 
     consumer dollars are at stake in this critical fight; the 
     health of millions of Americans absolutely depends on 
     affordable access to low-cost generic drugs.
       I urge you to restore the original intent of the GATT's 
     implementing language by closing the generic drug loophole in 
     the budget reconciliation bill. Now is the time to stop 
     rapacious drug companies from misusing GATT to gouge the sick 
     and elderly.
           Sincerely,
                                               Edmund Mierzwinski,
     Consumer Program Director, U.S. PIRG.
                                                                    ____



                            United Seniors Health Cooperative,

                               Washington, DC, September 26, 1995.
     Hon. William Roth,
     Chairman, Committee on Finance, Senate Dirksen Office 
         Building, Washington, DC.
       Dear Chairman Roth: The United Seniors Health Cooperative 
     urges you to support language to correct an oversight in the 
     GATT Treaty implementing legislation as it affects the 
     availability of generic drugs. This language will be 
     introduced by Senator Chafee as part of action on the 
     Medicaid reconciliation bill this week. The Congressional 
     Budget Office has determined that this correction will result 
     in $150 million in Medicaid savings over five years.
       The GATT treaty extends patents on U.S. products from 17 to 
     20 years. It also includes 

[[Page S 15432]]

     transition rules for generic products that were ready to go 
     to market based on the old 17-year patent term. When Congress 
     approved the treaty, however, it failed to change U.S. law to 
     allow the Food and Drug Administration (FDA) to certify 
     generic drugs for marketing during the transition period.
       Lowering the cost of prescription drugs is particularly 
     important for older consumers. Older Americans spend more 
     than any other group on prescriptions. Over one third of the 
     $64 billion spent on prescription drugs come from seniors. 
     This correction will result in $2 billion in savings to all 
     consumers and over $500 million in savings to older 
     Americans.
       We strongly urge you to support the Chafee language in the 
     reconciliation bill allowing consumers faster access to many 
     generic drugs and creating savings for the U.S. budget and 
     for older Americans. Thank you.
           Sincerely,
     Esther Peterson,
       Vice Chair.
     Edmund H. Worthy, Jr.,
       President and CEO.
                                                                    ____



                                United Homeowners Association,

                                 Washington, DC, October 18, 1995.
     Senator David Pryor,
     U.S. Senate, Senate Office Building, Washington, DC.
       Dear Senator Pryor: During Senate consideration of the 
     reconciliation bill, Senators Chafee and Pryor will offer an 
     amendment which will save Medicaid $150 million and consumers 
     about $2 billion. The savings can be realized if a prior 
     oversight by Congress is corrected. The oversight by Congress 
     occurred when the General Agreement on Tariffs and Trade 
     (GATT) implementing legislation was adopted,
       GATT extends U.S. patents from 17 to 20 years. It also 
     includes ``grandfather'' rules for generic products, 
     including drugs, that were ready to go to market based on 
     pre-GATT patent expiration dates. Congress, however, failed 
     to change the law to allow the Food and Drug Administration 
     to apply to grandfather rules to generic drugs.
       As a result, consumers will spend almost $2 billion more 
     for a dozen popular medications, such as Capoten and Zantac, 
     for which 63 million prescriptions were written in 1994.
       Senators Chafee and Pryor will offer an amendment to the 
     reconciliation bill to close the GATT loophole.
       Congress can save consumers almost $2 billion, including 
     $150 million in Medicaid savings (according to the CBO), by 
     allowing the FDA to apply the grandfather rules to generic 
     drugs.
       Such a change would, according to U.S. Trade Representative 
     Mickey Kantor, be wholly consistent with the intent of the 
     drafters of the GATT Treaty.
       The United Homeowners Association urges you to support the 
     Chafee/Pryor amendment to the reconciliation bill.
       Thank you.
           Sincerely,
                                                     Jordan Clark,
     President.
                                                                    ____

                                            National Coalition for


                                            Homeless Veterans,

                               Washington, DC, September 27, 1995.
     Hon. William Roth,
     Senate Finance Committee, Senate Dirksen Office Building, 
         Washington, DC.
       Dear Senator Roth: On behalf of the more than 200 
     community-based non-profit programs around the country who 
     provide services for homeless veterans, I am writing to urge 
     you to support the Chafee generic drug amendment to the 
     Medicaid reconciliation bill. The amendment will correct an 
     oversight in the GATT treaty implementing legislation thereby 
     saving consumers $2 billion, including $21 million in direct 
     savings for the Department of Veterans Affairs which could be 
     better used to provide support for local programs who assist 
     needy veterans--instead of being spent on high cost 
     pharmaceuticals.
       The Food and Drug Administration has determined that it 
     cannot certify generic versions of popular drugs such as 
     Capoten and Zantac for marketing until the GATT-extended 
     patents expire, thereby delaying the availability of lower 
     priced generics. We do not believe that this is what Congress 
     intended when it approved the GATT treaty in 1994. Specific 
     transition rules were included in GATT implementing 
     legislation to allow generic products to be marketed based on 
     pre-GATT patent expiration dates. Congress, however, 
     inadvertently failed to include conforming amendments to the 
     Federal Food, Drug and Cosmetics Act to allow the FDA to 
     certify the generic drugs for marketing.
       It is essential to bring generic drugs to the marketplace 
     as soon as possible to meet the medical needs of veterans and 
     to help the Veterans Health Administration save money. 
     Secretary of Veterans Affairs Jesse Brown estimates that 
     failure to pass this amendment could cost the VA's health 
     budget a significant amount of money. In these times of 
     continuing budget cuts, it is vital that the VA be able to 
     target its limited resources where the need is the greatest.
       We urge you to support the Chaffee amendment which will 
     allow the FDA to use pre-GATT patent expiration dates to 
     determine when generic drugs can be certified for marketing 
     and made available to the Department of Veterans Affairs in a 
     manner consistent with the GATT transition rules.
           Sincerely,
                                              Richard Fitzpatrick,
     Executive Director.
                                                                    ____



                                                Paraquad Inc.,

                                St. Louis, MO, September 22, 1995.
     Memo to: Members of the Senate Finance Committee.
     Re: Medicaid Bill.
       I write on behalf of members of the Paraquad community--
     many of whom are users of prescription medication--to urge 
     you to support the Chafee amendment.
       Senator Chafee is proposing a change to U.S. drug 
     legislation that would accelerate the development of generic 
     drugs that now are kept off the market by the GATT agreement.
       We believe Congress never intended for the GATT to block 
     generic drugs from being made available quickly to American 
     consumers.
       Accordingly, the Chafee amendment merely restores the 
     original intent of Congress.
       For example, a generic substitute for the popular anti-
     ulcer drug ``Zantac'' won't be available to American 
     consumers until July 1997--despite the fact that it 
     originally was to be available in December of this year.
       Senator Chafee is asking the Finance Committee to make the 
     necessary change as part of the pending Medicaid savings 
     bill. That is because the American taxpayer will have to pay 
     an additional $150 million for Zantac and other drugs for 
     Medicaid recipients that would be required if the generic 
     substitutes were available.
       Many members of the Paraquad community are persons of 
     limited income. Many depend on Medicaid. With cost pressures 
     rising, we join with responsible elected officials like 
     Senator Chafee in urging that where cost savings may be 
     realized at no less of quality, the should be.
       Please vote ``Yea'' for the Chafee amendment.
       Thank you.
           Sincerely,
                                                    Max Starkloff,
     President, Paraquad Inc.
                                                                    ____



                               Consumer Project on Technology,

                               Washington, DC, September 27, 1995.
     Hon. William Roth,
     Finance Committee, U.S. Senate, Washington, DC.
       Dear Senator Roth: I am writing to express the Consumer 
     Project on Technology's support for the Chafee generic drug 
     amendment to the Medicaid reconciliation bill. This amendment 
     seeks to correct an error by the previous Congress, which 
     extended the patent terms for several widely used drugs. As 
     you know, investment incentives are forward looking, and 
     actions which award post hoc monopolies on pharmaceutical 
     drugs which are already on the market are economically 
     inefficient. This retroactive extension of monopoly marketing 
     rights is costing American consumers billions of dollars, and 
     should be immediately corrected.
       The U.S. Congress and the Clinton Administration have 
     already given the pharmaceutical industry extremely favorable 
     treatment in a wide range of areas, such as the complete lack 
     of price controls on drugs, favorable tax treatment, billions 
     of dollars in direct research subsidies from the National 
     Institutes of Health (NIH) and other federal agencies, and 
     the recent decision by NIH to abandon the reasonable pricing 
     clause for drugs invented by government scientists. We hope 
     that on this issue Congress will demonstrate concern for the 
     problems faced by consumers in obtaining health care.
           Sincerely,
                                                    James P. Love,
                         Director, Consumer Project on Technology.

  Mr. PRYOR. Mr. President, I yield the floor.
  Mr. DORGAN addressed the Chair.
  The PRESIDING OFFICER. The Senator from North Dakota.
  Mr. DORGAN. Mr. President, my understanding is that we are proceeding 
under a 1-hour morning business allotment?
  The PRESIDING OFFICER. We are in morning business.
  Mr. DORGAN. Is there an hour reserved under my name or the minority 
leader?
  The PRESIDING OFFICER. There is time under the minority leader, 1 
hour.
  Mr. DORGAN. Mr. President, with the consent of the minority leader, 
let me yield myself as much time as I may consume under that 1 hour.
  The PRESIDING OFFICER. Without objection, it is so ordered.

                          ____________________