[Congressional Record Volume 141, Number 206 (Thursday, December 21, 1995)]
[Extensions of Remarks]
[Pages E2435-E2436]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




              CONGRESS' MULTIBILLION DOLLAR DRAFTING ERROR

                                 ______


                            HON. BOB FRANKS

                             of new jersey

                    in the house of representatives

                      Thursday, December 21, 1995

  Mr. FRANKS of New Jersey. Mr. Speaker, earlier this month the 
following editorial appeared in the Washington Post regarding the 

[[Page E2436]]
windfall a few branded drug companies are receiving because of a 
drafting error in the Uruguay Round Agreements Act of 1994, which is 
the bill that implemented the GATT trade treaty.
  Conservative estimates indicate that correcting this oversight will 
save the health care system $2.5 billion, with $281 million of that 
amount saved by the Federal Government and State governments in 
Medicaid payments. Unfortunately, the Senate recently defeated by one 
vote an effort led by Senators Chafee, Brown, and Pryor that would have 
corrected this glaring mistake.
  Opponents of the Senate amendment want to delay resolution of this 
issue by holding hearings. However, every day that passes is another 
day consumers are being denied access to lower-cost generic drugs 
because of Congress' multibillion dollar drafting error.
   Mr. Speaker, my home State of New Jersey is known as the medicine 
chest of the country. I have long been a supporter of our domestic drug 
industry, whose products have alleviated so much pain and suffering. 
Unfortunately, some members of the press and some special interest 
groups continue to overlook the tremendous amount of good the drug 
industry does, and instead, are only interested in beating up the 
industry with tired cliches about greed and avarice. This controversy, 
which started due to the lack of a technical conforming amendment, 
plays right into the hands of the industry's critics. The House needs 
to fix this drafting error soon before long-term damage is done to the 
reputation of these fine companies, and more importantly, so that the 
millions of Americans who rely on generic drugs can continue to 
purchase them at affordable prices.

                [From the Washington Post, Dec. 4, 1995]

                          The Zantac Windfall

       All for lack of a technical conforming clause in a trade 
     bill, full patent protection for a drug called Zantac will 
     run 19 months beyond its original expiration date. Zantac, 
     used to treat ulcers, is the world's most widely prescribed 
     drug, and its sales in this country run to more than $2 
     billion a year. The patent extension postpones the date at 
     which generic products can begin to compete with it and pull 
     the price down. That provides a great windfall to Zantac's 
     maker, Glaxo Wellcome Inc.
       It's a case study in legislation and high-powered lobbying. 
     When Congress enacted the big Uruguay Round trade bill a year 
     ago, it changed the terms of American patents to a new 
     worldwide standard. The effect was to lengthen existing 
     patents, usually by a year or two. But Congress had heard 
     from companies that were counting on the expiration of 
     competitors' patents. It responded by writing into the trade 
     bill a transitional provision. Any company that had already 
     invested in facilities to manufacture a knock-off, it said, 
     could pay a royalty to the patent-holder and go into 
     production on the patent's original expiration date.
       But Congress neglected to add a clause amending a crucial 
     paragraph in the drug laws. The result is that the 
     transitional clause now applies to every industry but drugs. 
     That set off a huge lobbying and public relations war with 
     the generic manufacturers enlisting the support of consumers' 
     organizations and Glaxo Wellcome invoking the sacred 
     inviolability of an American patent.
       Mickey Kantor, the president's trade representative, who 
     managed the trade bill for the administration, says that the 
     omission was an error, pure and simple. But it has created a 
     rich benefit for one company in particular. A small band of 
     senators led by David Pryor (D-Ark.) has been trying to right 
     this by enacting the missing clause, but so far it hasn't got 
     far. Glaxo Wellcome and the other defenders of drug patents 
     are winning. Other drugs are also involved, incidentally, 
     although Zantac is by far the most important in financial 
     terms.
       Drug prices are a particularly sensitive area of health 
     economics because Medicare does not, in most cases, cover 
     drugs. The money spent on Zantac is only a small fraction of 
     the $80 billion a year that Americans spend on all 
     prescription drugs. Especially for the elderly, the cost of 
     drugs can be a terrifying burden. That makes it doubly 
     difficult to understand why the Senate refuses to do anything 
     about a windfall that, as far as the administration is 
     concerned, is based on nothing more than an error of 
     omission.

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