[Congressional Record Volume 141, Number 172 (Thursday, November 2, 1995)]
[Senate]
[Pages S16593-S16594]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                      GATT AND PRESCRIPTION DRUGS

  Mr. PRYOR. Mr. President, on three previous occasions I have come to 
the floor of the Senate to raise the issue that I wish to discuss 
today. Each time, I have laid out the facts of a particular problem--in 
fact, a loophole--which Congress created and which only Congress can 
fix.
  Left uncorrected, that problem will cost the American consumer and 
the American taxpayer several billion dollars and will unjustly enrich 
a few pharmaceutical companies enjoying undeserved and unintended 
special treatment under the GATT treaty.
  Over the next several days I intend to spend a few minutes to 
highlight a different and disturbing aspect of this GATT loophole. Let 
me give a brief overview, if I might, for those who may not be quite so 
familiar with the issue, despite the recent attention it has received 
in the media.
  There is a very simple way to describe this issue. It is like a 
person walking down the sidewalk and finding a wallet. After picking it 
up, he learns it contains $100 and the rightful owner's name. His 
question is, ``Do I keep the money or do I return it to its rightful 
owner?''
  In this case, this money clearly belongs to the American taxpayer and 
American consumer. But the drug companies are saying ``OK, you made a 
mistake. But we want the money and we are going to try to keep it. 
Don't confuse us with the facts.'' That is what this issue is about.
  I know that these companies have hired a swarm of lobbyists to come 
to Capitol Hill. I know today, in fact, that they are distorting the 
truth and they are deceiving the public. This issue is all about 
whether a handful of drug companies will be honest--whether they will 
give the figurative wallet back to its rightful owner, the American 
consumer and the American taxpayer.
  Any fair-minded person will tell you that these drug companies are on 
the wrong side of this issue. But with billions of dollars at stake, 
how do you think they have responded? With a multimillion-dollar 
lobbying campaign. They are trying to pocket this undeserved profit.
  It is difficult to believe the lengths they have gone to. They have 
distorted the facts. They are deceiving the public, and their 
unvarnished greed is on display for all to see.
  The only argument they can come up with is, ``Yes, we knew that a 
mistake was made. Yes, we haven't done a thing to deserve these 
billions of dollars. And yes, we know you are trying to correct this 
mistake. But, hey, this fell into our laps. We're going to do 
everything we possibly can to keep these dollars.''
  Mr. President, let me weave together the three pieces of this issue. 
It is pretty simple. I think they lead to a simple conclusion. We need 
to fix this problem, and we will let our colleagues judge for 
themselves as to whether they agree.
  The first piece is the loophole itself. When Congress voted on the 
GATT treaty, we did two things. First, we extended all patents from 17 
years to 20 years. Second, we stated in that treaty that a generic 
company in any industry--not just the drug industry--could market their 
products on the 17-year expiration date if they had already made a 
substantial investment and were willing to pay a royalty.
  Why did we do this? We did a favor to patent holders, but in doing 
so, moved the goalposts on generic companies of all kinds. So we 
thought this was a fair deal and a good balance of commercial 
interests. It made sense and it makes sense today. Everyone bought onto 
it--the automotive companies, the computer companies, the high-tech 
companies, and yes, the drug companies.
  Everyone said this is a fair way to solve this problem. We believed 
it to be fair. And we believed when we voted for the treaty that these 
provisions covered every person and every product, every company and 
every industry in the entire country. Everyone had to play by the same 
set of rules.
  Let me emphasize: everyone includes our U.S. Trade Representative, 
Mickey Kantor. He has attested time and again that this was the case. 
Letters from Ambassador Kantor to myself and my colleague, Senator 
Chafee, are part of the Record.
  But Mr. President, we were wrong. We made a mistake and accidentally 
left the prescription drug industry out of the picture. Today, they get 
the patent extension of 3 additional years. But the GATT loophole 
shields them from any generic competition whatsoever; in other words, a 
free ride for an additional 3 years with no competition--a monopoly, 
and exorbitant prices. The rest of us are playing by one set of rules 
while these few companies enjoy special treatment because of our 
mistake.
  That is part 1, Mr. President, and that is the loophole. Part 2 is 
the windfall.
  Mr. President, may I ask if there is additional time?
  The PRESIDING OFFICER. The Senator's time has expired.
  Mr. PRYOR. Mr. President, I ask unanimous consent--I see no other 
Senator seeking recognition--that my time may be extended for 5 
additional minutes.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. PRYOR. Mr. President, part 2 is the windfall itself.
  Remember: The drug industry is the only industry which enjoys special 
protection because of this GATT loophole. 

[[Page S 16594]]

 As a result of that special protection, the American consumer is going 
to pay more for a handful of bestsellilng drugs--in fact, as much as $2 
billion to $6 billion more.
  If we take Zantac, an ulcer drug as well as the world's best-selling 
drug, for example, a consumer is going to have to pay twice as much for 
Zantac.
  If we take Capoten for hypertension, for example, we are going to be 
paying from 40 to 45 percent more for the next 2 or 3 years for Capoten 
than we would if we corrected this mistake.
  Here, for example, is a bottle of Zantac made by Glaxo Welcome. 
Typically, you can go to the retail pharmacy and spend $180 for a 2-
month supply of Zantac. If we simply correct the GATT loophole, we 
would have a generic drug out there within weeks, and the consumer 
could be buying this same bottle of Zantac for no more than $90.
  Mr. President, that is outrageous. We should be embarrassed. We 
should be embarrassed if we do not correct this horrendous mistake. 
There is no conceivable reason why we should allow this loophole to 
remain uncorrected.
  Do you want a second opinion? Ask Mickey Kantor, the U.S. Trade 
Representative, as well as the Patent and Trademark Office or the Food 
and Drug Administration. Ask the people who know. All of them agree 
that this provision should be fixed and that this loophole should be 
closed.
  The GATT negotiators, Mr. President, the people who personally 
negotiated the treaty itself and who represented this country in those 
complex negotiations, say without question that a mistake was made.
  Even the drug companies which benefit from our mistake and currently 
enjoy this undeserved profit admit it was all a mistake. In fact, one 
of their spokesmen, upon reading our legislative error--and realizing 
they had gained a multibillion dollar windfall--said, ``Eureka.''
  Mr. President, Congress is faced with a choice: Do the right thing, 
fix the legislative error and save the taxpayers and the consumers 
money, or cave in to the lobbying and to the deception of several 
pharmaceutical companies.
  Mr. President, that brings us to the third and the last part of the 
equation; that is, the solution. What is the solution?
  Closing this loophole is very simple. It will not change our patents. 
It will not violate the sanctity of our patent law. It will not alter 
our trade policy nor the GATT treaty. It simply applies GATT to those 
free-riding drug companies the same way it applies to every other 
company and every other product in America.
  This amendment would save consumers as much as $6 billion. The 
Government would save hundreds of billions of dollars. People are 
talking about slashing Medicare and Medicaid, and here are billions of 
dollars that we could save if we would just fix a simple mistake.
  Let me add that this is not a partisan issue. It never has been. I 
hope it will not be. It is about fixing a mistake, saving taxpayer 
money, and basically doing the right thing.
  I know for a fact that many of my colleagues, Republican and Democrat 
alike, support our amendment. I also know that some of my colleagues 
have come to me in the last 2 or 3 weeks especially, and have said, 
``Gosh, we want to vote with you. But we have a Glaxo factory, or we 
have a Glaxo office, or we have a Glaxo facility in our State, and we 
do not know if we can be with you or not.''
  Mr. President, I hope that they will look at the overall picture. 
There is only one possible reason to oppose this solution. You have to 
honestly believe that these companies deserve a multibillion-dollar 
windfall. I do not. You have to ignore the fact that this was a 
mistake. That is the truth. And you have to believe that the consumers 
should pay more for those drugs because a legislative drafting error is 
a sound basis for public policy.
  Is that what we believe, Mr. President? I do not believe that is the 
case in the U.S. Senate.
  I have summarized the three pieces of this issue: the loophole, the 
windfall, and the solution. But there is a dark side to this issue, a 
shadow cast by a few companies who will enjoy this multibillion-dollar 
windfall. They have pulled out the stops. They have hired every 
lobbyist, law firm, and consultant inside and outside the beltway. 
Their motto is, ``Don't confuse me with the facts, because on this one 
there's just too much money at stake.''
  This is how a newspaper headline read just last week: ``Money Greases 
Massive Effort to Protect Glaxo Windfall.''
  Mr. President, Glaxo is the name of the company with the most at 
stake. They have hired the lawyers, they have hired the lobbyists, and 
they are here right this minute. They make the No. 1 drug in the world, 
Zantac. Last year, they sold $2.2 billion worth of Zantac. Every day 
Glaxo sells $6 million worth of this particular drug. That means the 
windfall for this single company is absolutely enormous.
  The amount of money Glaxo has at stake is $3.6 billion.
  That doesn't include the $300 million for Squibb and the more than 
$100 extra million for Searle.
  Mr. President, finally, does our proposed amendment violate the 
sanctity of patent rights? Of course, it does not.
  Here is a letter of September 25, 1995, directed to our friend on the 
other side of the aisle, from Rhode Island, Senator John Chafee. It was 
signed by Mickey Kantor, our U.S. Trade Representative. It says there 
is no way that it would violate the sanctity of patent rights. Why is 
this a question at all? Because, with all of the simple facts against 
them, Glaxo and its cohorts have had to create an issue out of thin air 
to lobby with.
  Does our amendment curtail research dollars? Certainly not. In the 
case of Zantac, all of the research on this particular drug was 
completed 20 years ago. Glaxo has had a 17-year monopoly to collect a 
fair and deserved return. And does anybody believe Glaxo will commit 
this money to research? The fact is, the industry still spends more on 
advertising than it does on research. And when was the last time 
someone invested money they don't deserve? Look under Glaxo's mattress 
and look at their campaign donations: that's where this money is going.
   In fact, a lot of the underlying research on these products was done 
at taxpayer expense, not Glaxo's. We fund the National Institutes of 
Health. We give the industry generous research and development tax 
write-offs. We protect them in Puerto Rico from paying income taxes by 
section 936 of the Tax Code. And they still charge the American 
consumer far more than they charge the overseas consumer.
   And now we are about to allow Glaxo and other companies an 
additional 3 years' worth of illegitimate monopoly. Remember, we are 
talking about $6 million a day of competition-free cash on one, single 
product. Is that what we are all about in the United States Senate? 
Handing out $3.6 billion in consumers' hardearned money as an 
unjustified bonus?
  The great Notre Dame football coach, Lou Holtz, formerly coached the 
Arkansas Razorbacks. Coach Holtz was known for many things, but one 
thing that is indelible in my mind is his ``do-right'' rule. Coach 
Holtz had a rule that if something was not covered in the rule book or 
if it was a close question or what have you, he would just say, ``Let's 
use the do-right rule.''
  Mr. President, I think now is the time for the Senate to adopt a do-
right rule--to protect the taxpayer and to protect the consumer from an 
unjustified, undeserved windfall for a few pharmaceutical companies.
  On a few occasions in the near future, I will be discussing this GATT 
loophole again. I hope that my colleagues in this body will help us 
correct this absolutely unthinkable situation. I trust they will join 
me in correcting this loophole in the GATT treaty.
  I thank the Chair. I yield the floor.
  I see no others seeking recognition. I suggest the absence of a 
quorum.
  The PRESIDING OFFICER (Mr. Gorton). The clerk will call the roll.
  The assistant legislative clerk proceeded to call the roll.
  Mr. GRASSLEY. Mr. President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.

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