[Congressional Record Volume 142, Number 97 (Thursday, June 27, 1996)]
[Senate]
[Pages S7113-S7126]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




        NATIONAL DEFENSE AUTHORIZATION ACT FOR FISCAL YEAR 1997

  The Senate continued with consideration of the bill.
  The PRESIDING OFFICER. The Senator from Arkansas is recognized.


                           Amendment No. 4365

  (Purpose: To provide equitable relief for the generic drug industry)

  Mr. PRYOR. Mr. President, I thank the Chair for recognizing me. For 
the benefit of our colleagues, Mr. President, let me state what has 
gone on today and what I think will go on for the next hour to hour and 
a half.
  Mr. President, first, I am going to be sending an amendment to the 
desk in the first degree. Immediately following that introduction, the 
Senator from Utah will offer his amendment in the second degree to my 
first-degree amendment. We will debate these issues and vote on the 
Hatch amendment some 45 minutes later. After that vote, it will be very 
possible that I will offer the same amendment as my amendment in the 
first degree, which we will debate for 45 minutes and then vote.
  I know this is somewhat of a Byzantine situation, Mr. President, but 
I have been attempting since December 7 to have an up-or-down vote in 
this Chamber on my amendment. It appears I am not going to get a clear 
up-or-down vote, but this is as near as possible.
  Mr. President, with that explanation, hoping our colleagues 
understand the nature of this issue and the procedure that we will be 
following, I send my amendment in the first degree to the desk and ask 
for its immediate consideration.
  The PRESIDING OFFICER. The clerk will report.
  The legislative clerk read as follows:

       The Senator from Arkansas [Mr. Pryor], for himself, Mr. 
     Chafee, Mr. Brown, Mr. Bryan, Mr. Dorgan, Mr. Leahy, and Mr. 
     Byrd, proposes an amendment numbered 4365.

  Mr. PRYOR. Mr. President, I ask unanimous consent that reading of the 
amendment be dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The amendment is as follows:
       At the end of subtitle F of title X add the following:

     SEC. 1072. EQUITABLE TREATMENT FOR THE GENERIC DRUG INDUSTRY.

       (a) Sense of the Senate.--It is the sense of the Senate 
     that the generic drug industry should be provided equitable 
     relief in the same manner as other industries are provided 
     with such relief under the patent transitional provisions of 
     section 154(c) of title

[[Page S7114]]

     35, United States Code, as amended by section 532 of the 
     Uruguay Round Agreements Act of 1994 (Public Law 103-465; 108 
     Stat. 4983).
       (b) Approval of Applications of Generic Drugs.--For 
     purposes of acceptance and consideration by the Secretary of 
     Health and Human Services of an application under subsections 
     (b), (c), and (j) of section 505, and subsections (b), (c), 
     and (n) of section 512, of the Federal Food, Drug, and 
     Cosmetic Act (21 U.S.C. 355 (b), (c), and (j), and 360b (b), 
     (c), and (n)), the expiration date of a patent that is the 
     subject of a certification under section 505(b)(2)(A) (ii), 
     (iii), or (iv), section 505(j)(2)(A)(vii) (II), (III), or 
     (IV), or section 512(n)(1)(H) (ii), (iii), or (iv) of such 
     Act, respectively, made in an application submitted prior to 
     June 8, 1995, or in an application submitted on or after that 
     date in which the applicant certifies that substantial 
     investment was made prior to June 8, 1995, shall be deemed to 
     be the date on which such patent would have expired under the 
     law in effect on the day preceding December 8, 1994.
       (c) Marketing Generic Drugs.--The remedies of section 
     271(e)(4) of title 35, United States Code, shall not apply to 
     acts--
       (1) that were commenced, or for which a substantial 
     investment was made, prior to June 8, 1995; and
       (2) that became infringing by reason of section 154(c)(1) 
     of such title, as amended by section 532 of the Uruguay Round 
     Agreements Act (Public Law 103-465; 108 Stat. 4983).
       (d) Equitable Remuneration.--For acts described in 
     subsection (c), equitable remuneration of the type described 
     in section 154(c)(3) of title 35, United States Code, as 
     amended by section 532 of the Uruguay Round Agreements Act 
     (Public Law 103-465; 108 Stat. 4983  shall be awarded to a 
     patentee only if there has been--
       (1) the commercial manufacture, use, offer to sell, or 
     sale, within the United States of an approved drug that is 
     the subject of an application described in subsection (b); or
       (2) the importation by the applicant into the United States 
     of an approved drug or of active ingredient used in an 
     approved drug that is the subject of an application described 
     in subsection (b).
       (e) Applicability.--The provisions of this section shall 
     govern--
       (1) the approval or the effective date of approval of 
     applications under section 505(b)(2), 505(j), 507, or 512(n), 
     of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 355 
     (b)(2) and (j), 357, and 360b(n)) submitted on or after the 
     date of enactment of this Act; and
       (2) the approval or effective date of approval of all 
     pending applications that have not received final approval as 
     of the date of enactment of this Act.

  Mr. PRYOR. Mr. President, it gives me great pleasure to announce I am 
submitting this amendment on behalf of myself and Senator Chafee, 
Senator Brown, Senator Byrd, Senator Dorgan, Senator Leahy, and Senator 
Bryan.
  With that, Mr. President, I see my friend from Utah is seeking 
recognition.
  The PRESIDING OFFICER. The Senator from Utah.

                Amendment No. 4366 to Amendment No. 4365

 (Purpose: To provide equitable relief for the generic drug industry, 
                        and for other purposes)

  Mr. HATCH. Mr. President, I send an amendment to the desk.
  The PRESIDING OFFICER. The clerk will report.
  The legislative clerk read as follows:

       The Senator from Utah [Mr. Hatch] proposes an amendment 
     numbered 4366 to amendment No. 4365.

  Mr. HATCH. Mr. President, I ask unanimous consent that reading of the 
amendment be dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The amendment is as follows:

       Strike all after the word ``Sec.'' and insert the 
     following:

     SEC. ____. PHARMACEUTICAL INDUSTRY SPECIAL EQUITY.

       (a) Short Title.--This section may be cited as the 
     ``Pharmaceutical Industry Special Equity Act of 1996''.
       (b) Approval of Generic Drugs.--
       (1) In general.--With respect to any patent, the term of 
     which is modified under section 154(c)(1) of title 35, United 
     States Code, as amended by the Uruguay Round Agreements Act 
     (Public Law 103-465; 108 Stat. 4983), the remedies of section 
     271(e)(4) of title 35, United States Code, shall not apply 
     if--
       (A) such patent is the subject of a certification described 
     under--
       (i) section 505 (b)(2)(A)(iv) or (j)(2)(A)(vii)(IV) of the 
     Federal Food, Drug, and Cosmetic Act (21 U.S.C. 355 
     (b)(2)(A)(iv) or (j)(2)(A)(vii)(IV)); or
       (ii) section 512(n)(1)(H)(iv) of such Act (21 U.S.C. 
     360b(n)(1)(H)(iv));
       (B) on or after the date of enactment of this section, such 
     a certification is made in an application that was filed 
     under section 505 or 512 of the Federal Food, Drug, and 
     Cosmetic Act and accepted for filing by the Food and Drug 
     Administration prior to June 8, 1995; and
       (C) a final order, from which no appeal is pending or may 
     be made, has been entered in an action brought under chapter 
     28 or 29 of title 35, United States Code--
       (i) finding that the person who submitted such 
     certification made a substantial investment of the type 
     described under section 154(c)(2) of title 35, United States 
     Code, as amended by the Uruguay Round Agreements Act; and
       (ii) establishing the amount of equitable remuneration of 
     the type described under section 154(c)(3) of title 35, 
     United States Code, as amended by the Uruguay Round 
     Agreements Act, that is required to be paid by the person who 
     submitted such certification to the patentee for the product 
     that is the subject of the certification.
       (2) Determination of substantial investment.--In 
     determining whether a substantial investment has been made in 
     accordance with this section, the court shall find that--
       (A) a complete application submitted under section 505 or 
     512 of the Federal Food, Drug, and Cosmetic Act was found by 
     the Secretary of Health and Human Services on or before June 
     8, 1995 to be sufficiently complete to permit substantive 
     review; and
       (B) the total sum of the investment made by the person 
     submitting such an application--
       (i) is specifically related to the research, development, 
     manufacture, sale, marketing, or other activities undertaken 
     in connection with, the product covered by such an 
     application; and
       (ii) does not solely consist of that person's expenditures 
     related to the development and submission of the information 
     contained in such an application.
       (3) Effective date of approval of application.--In no event 
     shall the Food and Drug Administration make the approval of 
     an application under sections 505 or 512 of the Federal Food, 
     Drug, and Cosmetic Act, which is subject to the provisions of 
     this section, effective prior to the entry of the order 
     described in paragraph (1)(C).
       (4) Applicability.--The provisions of this subsection shall 
     not apply to any patent the term of which, inclusive of any 
     restoration period provided under section 156 of title 35, 
     United States Code, would have expired on or after June 8, 
     1998, under the law in effect on the date before December 8, 
     1994.
       (c) Application of Certain Benefits and Term Extensions to 
     All Patents in Force on a Certain Date.--For the purposes of 
     this section and the provisions of title 35, United States 
     Code, all patents in force on June 8, 1995, including those 
     in force by reason of section 156 of title 35, United States 
     Code, are entitled to the full benefit of the Uruguay Round 
     Agreements Act of 1994 and any extension granted before such 
     date under section 156 of title 35, United States Code.
       (d) Extension of Patents Relating to Nonsteroidal Anti-
     Inflammatory Drugs.--
       (1) In general.--Notwithstanding section 154 of title 35, 
     United States Code, the term of patent shall be extended for 
     any patent which encompasses within its scope of composition 
     of matter known as a nonsteroidal anti-inflammatory drug if--
       (A) during the regulatory review of the drug by the Food 
     and Drug Administration the patentee--
       (i) filed a new drug application in 1982 under section 505 
     of the Federal Food, Drug and Cosmetic Act (21 U.S.C. 355); 
     and
       (ii) awaited approval by the Food and Drug Administration 
     for at least 96 months; and
       (B) such new drug application was approved in 1991.
       (2) Term.--The term of any patent described in paragraph 
     (1) shall be extended from its current expiration date for a 
     period of 2 years.
       (3) Notification.--No later than 90 days after the date of 
     enactment of this section, the patentee of any patent 
     described in paragraph (1) shall notify the Commissioner of 
     Patents and Trademarks of the number of any patent extended 
     under such paragraph. On receipt of such notice, the 
     Commissioner shall confirm such extension by placing a notice 
     thereof in the official file of such patent and publishing an 
     appropriate notice of such extension in the Official Gazette 
     of the Patent and Trademark Office.
       (e) Expedited Procedures for Civil Actions.--
       (1) Application.--(A) This subsection applies to any civil 
     action in a court of the United States brought to determine 
     the rights of the parties under this section, including any 
     determination made under subsection (b).
       (B) For purposes of this subsection the term ``civil 
     action'' refers to a civil action described under 
     subparagraph (A).
       (2) Superseding provisions.--Procedures adopted under this 
     subsection shall supersede any provision of title 28, United 
     States Code, the Federal Rules of Civil Procedure, or the 
     Federal Rules of Appellate Procedure to the extent of any 
     inconsistency.
       (3) Procedures in district court.--No later than 60 days 
     after the date of the enactment of this Act, each district 
     court of the United States shall adopt procedures to--
       (A) provide for priority in consideration of civil actions 
     on an expedited basis, including consideration of 
     determinations relating to substantial investment, equitable 
     remuneration, and equitable compensation;
       (B) provide that--
       (i) no later than 10 days after a party files an answer to 
     a complaint filed in a civil action the court shall order 
     that all discovery (including a hearing on any discovery 
     motions) shall be completed no later than 60 days after the 
     date on which the court enters the order; and

[[Page S7115]]

       (ii) the court may grant a single extension of the 60-day 
     period referred to under clause (i) for an additional period 
     of no more than 30 days upon a showing of good cause;
       (C) require any dispositive motion in a civil action to be 
     filed no later than 30 days after completion of discovery;
       (D) require that--
       (i) if a dispositive motion is filed in a civil action, the 
     court shall rule on such a motion no later than 30 days after 
     the date on which the motion is filed;
       (ii) the court shall begin the trial of a civil action no 
     later than 60 days after the later of--

       (I) the date on which discovery is completed in accordance 
     with subparagraph (B); or
       (II) the last day of the 30-day period referred to under 
     clause (i), if a dispositive motion is filed;

       (E) require that if a person does not hold the patent which 
     is the subject of a civil action and is the prevailing party 
     in the civil action, the court shall order the nonprevailing 
     party to pay damages to the prevailing party;
       (F) the damages payable to such persons shall include--
       (i) the costs resulting from the delay caused by the civil 
     action; and
       (ii) lost profits from such delay; and
       (G) provide that the prevailing party in a civil action 
     shall be entitled to recover reasonable attorney's fees and 
     court costs.
       (4) Procedures in federal circuit court.--No later than 60 
     days after the date of the enactment of this Act, the United 
     States Court of Appeals for the Federal Circuit shall adopt 
     procedures to provide for expedited considerations of civil 
     actions brought under this Act.

  Mr. PRYOR. Mr. President, I will speak only for a very few moments 
and then I will yield time to my friend from Rhode Island, Senator 
Chafee, and those others who want to enter into this debate.
  I had lunch with my interns a few moments ago, Mr. President. One of 
the young men at the table said, ``What is all of this GATT-Glaxo 
debate all about?'' It is very hard to explain, and sometimes it is 
arcane. Mr. President, the bottom line was stated by our colleague from 
Illinois recently as eloquently as I know how to frame this debate. I 
quote Senator Paul Simon: ``This is a classic case of the public 
interest versus the special interest.'' This is indeed a classic case 
of the public interest versus the special interest.
  That is exactly what the issue is today on the floor. Let me 
anticipate, Mr. President, if I might, and I hope I am not being 
presumptuous, as to what is going to happen and what the arguments of 
the Senator from Utah might be.
  First, Mr. President, the Pryor-Brown-Chafee amendment closes a 
loophole that every expert in this field, from our Patent Office and 
the Food and Drug Administration to our U.S. Trade Representative, says 
should be closed.
  We are also seeking to have the prescription drug industry play by 
the very same rules as every other industry in our country.
  The third thing our amendment does, Mr. President, is guarantee that 
American consumers have access to affordable generic drugs as was 
intended by the GATT treaty. We are simply saying that affordable 
generic drugs should be able to come to the marketplace without the 
obstacles presented by Senator Hatch will not be allowed.
  The fourth thing we do, Mr. President, is not affect medical research 
in any way. It is not an issue, although we will debate that point 
later. Nor does our amendment affect intellectual property rights in 
any way. That has been absolutely nailed down in concrete. Since our 
amendment is consistent with the GATT agreement, that is a moot 
argument and is simply a scare tactic.
  Finally, Mr. President, our amendment guarantees that the financial 
windfall created by our mistake in the GATT agreement does not go to 
the drug companies. Instead, it goes to the consumers, it goes to the 
elderly, it goes to the veterans, and it goes to those who are 
vulnerable and in need of assistance in buying life-sustaining 
pharmaceuticals. Today, in the absence of our amendment, you will find 
that these companies are gaining a multibillion dollar windfall as a 
result of our error.
  Let me briefly state what the so-called Hatch substitute does. It 
codifies and puts our original mistake into law. It guarantees that the 
American consumer never gets the affordable, generic drugs intended 
under the GATT agreement.
  Here is the so-called Rube Goldberg chart, Mr. President, showing 
what the Hatch substitute actually does. This chart shows how the Hatch 
substitute guarantees that generic competition is locked out and leaves 
it up to the consumer to continue paying for the multibillion dollar 
windfall to a few drug companies as a result of a congressional 
mistake.
  Let me emphasize that affordable generic drugs will be something that 
will not be within the grasp of our American consumer should the Hatch 
provision prevail. The Hatch substitute guarantees Glaxo and a few 
other drug companies that they get the entire $2.5 billion windfall. It 
is an enormous Christmas gift, Mr. President, that we have no business 
doling out as a special favor to undeserving companies.
  Finally, Mr. President, the Hatch substitute would also grant a 2-
year patent extension for a drug called Lodine, manufactured in the 
State of Pennsylvania by Wyeth-Ayerst, a division of one of the major 
pharmaceutical companies in the country, American Home Products. This 
patent extension was added by the Judiciary Committee, Mr. President.
  In addition, the Hatch substitute creates the Christmas tree of other 
gifts like additional patent protection to brand name companies like 
Zeneca and Merck. These provisions were, once again, added by the 
Judiciary Committee. Mr. President, this is what I think is going to be 
occurring during the next several minutes. I am wondering now if my 
colleague from Utah would like to respond, or if my colleague from 
Rhode Island would like

  Mr. CHAFEE addressed the Chair.
  The PRESIDING OFFICER. The Senator from Rhode Island.
  Mr. CHAFEE. Mr. President, first of all, I want to congratulate 
Senator Pryor, the Senator from Arkansas, for his tenacity in 
connection with this really outrageous situation that exists as a 
result of a mistake that was made and the failure of the Congress to 
correct that mistake. Senator Pryor, recognizing the cost that this is 
incurring upon the U.S. Government, our State governments, and upon our 
citizens--especially our citizens--has, with tremendous tenacity, tried 
to correct it. I think Senator Pryor deserves all of our thanks for 
this.
  Now, what are we doing here? What we are trying to do today, Mr. 
President, is to correct an inadvertent error made in the 1994 GATT, 
General Agreement on Tariffs and Trade, that we passed. This error, as 
I say, is costing consumers and our Government, not just thousands of 
dollars, but millions of extra dollars, and is giving an unintended 
windfall to the drug companies. It is well past time for the Senate to 
act. I do hope that the Pryor amendment will be adopted.
  Now, what is this amendment that we are working on this afternoon? It 
is very simple. As I say, it corrects an inadvertent error. It is a 
mistake that was made that kept qualified generic drugs from going to 
market. What is a generic? It is something anybody can manufacture. It 
keeps these generic drug manufacturers from going to market, as they 
plan to do when the patent expired on these drugs, particularly those 
that are manufactured, in certain instances, by Glaxo. Now, the result 
has been that a handful of brand name drug companies have received a 
staggering--and, as I say, this is not thousands, this is really 
billions--$4.3 billion windfall at the expense of consumers, and 
neither the Congress nor U.S. trade officials, nor even the companies 
themselves, expected this to occur.
  Now, the cost to consumers, as I mentioned, is enormous. The drugs 
covered by the windfall are widely prescribed. They are used for 
everyday ailments that affect millions of Americans, particularly the 
elderly. Keeping the generic version of these drugs off the shelf for 
up to three additional years means that Americans--especially older 
Americans--are paying far more than was ever intended for these 
medications.
  Not only are consumers paying for this error, but so are the 
governments--State governments and the Federal Government--in the form 
of higher reimbursement for prescription drugs. The military, likewise, 
is paying, because the military, as we all know, pays not only for 
drugs for the active duty personnel, but for retirees, as well.

[[Page S7116]]

  Now, we in Congress made a mistake. We all recognize that, and we 
ought to fix it. In this case, the solution is obvious: Enact the 
conforming amendment presented by Senators Pryor, Brown, myself, and 
others, who have been working likewise.
  Enacting the conforming amendment has a positive side effect, an 
important one for our States. Back in December, we had a vote on this, 
and because of parliamentary maneuvering, we were told repeatedly that 
it was important to have a hearing on this. Ultimately, we lost by one 
vote. This was going to go to a hearing. Since that vote last December, 
what has happened? Well, finally a hearing took place, 3 months later, 
at the end of February. What did we find out at the hearing? Well, we 
found out exactly what we have been saying all along. There were no new 
discoveries at this hearing. The USTR, U.S. Trade Representative, at 
the time GATT was enacted, Mr. Kantor, testified: ``We did not intend 
for this to happen, and we support the correction of this oversight 
through the appropriate amendment to the Food, Drug and Cosmetic Act, 
and the Patent Act.''
  That is what Mickey Kantor, our U.S. Trade Representative, said.
  Three months went by, and then two more months went by, a markup 
being continuously postponed. We finally saw our bill be marked up in 
the committee. What the result was, was a bill that did not correct the 
loophole at all. Senator Pryor has touched on that already. I thought 
it was very interesting. This is, as he showed on his chart--and 
perhaps the Senator could go back to that original chart that shows 
this Rube Goldberg setup--how the generic drug companies could 
straighten out the situation. Well, it is ridiculous. I must say, I 
praise the ingenuity of those who worked out this intricate process.
  So the situation has become ludicrous. Unfortunately, it has been 
more than a year since the FDA first ruled that it did not have the 
power to permit these generics to go to market. A year ago, we found 
out there was a problem. Instead of fixing it right away, we have been 
stymied time and time again by procedural motions and talk of hearings. 
We all know the time is running out.
  So, Mr. President, I want to conclude by reading a couple of quotes 
from newspapers who have commented on this.
  This is what the New York Times had to say:

       Congress finds it hard to remedy the simplest mistakes when 
     powerful corporate interests are at stake.

  The Washington Post said:

       It is 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.

  We made an error and ought to correct it.
  The Des Moines Register said:

       Unless the Senate gives the issue another look, hundreds of 
     Iowans suffering from ulcers and heartburn will each have to 
     fork over about $1,600 more than necessary for their 
     prescriptions over the next 18 months.

  The NBC Nightly News said:

       This is one area where Congress could help save millions of 
     taxpayers dollars now.

  So, Mr. President, it is my hope that we will prove to our 
constituents that there is not business as usual around here, that we 
can and we will correct a mistake that was made and do the right thing 
and fix this loophole now.
  I urge my colleagues to vote against the Hatch amendment and for the 
Pryor-Chafee amendment, the only bill that will close the loophole. I 
thank the Chair.
  Mr. SPECTER addressed the Chair.
  The PRESIDING OFFICER. The Senator from Pennsylvania is recognized.
  Mr. SPECTER. Mr. President, I believe that the problems presented in 
the pending amendment could be solved if the parties would get together 
and agree to a procedure which would provide for prompt judicial 
determination as to what is a substantial investment.
  I agree with my distinguished colleague from Rhode Island that this 
matter ought to be cured and acted upon, because the more time that 
passes, the greater the potential damages on one side or another, 
depending upon whether there has been a substantial investment. That is 
the issue which is outstanding, and it is my view that the generic 
manufacturer should be compelled to show that it has complied with the 
provisions of law and that it has, in fact, made a substantial 
investment before it can enter the marketplace.
  With all due respect, I do not believe that this is a matter for 
editorial comment, or for generalization. Instead, it requires a hard 
look at the facts and a careful analysis of the law. What we are 
dealing with here is public policy to encourage pharmaceutical 
companies to make very substantial investments to produce 
pharmaceutical products. The other public policy consideration is to 
make available generic products for the benefit of many parties, once 
the patent has had a reasonable life term.
  Those who benefit from generics are many. They are the senior 
citizens. They are the veterans. They are the Government. Many 
interested parties ought to have access to generic products.
  The critical key issue is whether the generic company has made a 
substantial investment or not, and it is my view that that has to be 
judicially determined.
  We had a very extended discussion on the Record back on June 20, just 
8 days ago. It is summarized really as follows: I offered a procedure, 
first in the Judiciary Committee and now incorporated into the 
amendment offered by the Senator from Utah, which would provide for 
expedited proceedings which could be completed within 70 days.
  What is really happening when the Senator from Arkansas is offering 
this amendment is that nothing is going to happen for a lot longer than 
70 days. This matter has been pending for months. If the parties had 
agreed to expedited judicial proceedings, which the Hatch amendment is 
prepared to accept, if Senator Pryor would accept that, we could have a 
determination of any generic company which had made a substantial 
investment within a relatively short period of time. That generic 
company could then begin to market its product.
  I do not believe this matter ought to be left undefined. I think 
really we ought to have a definition of what is a ``substantial 
investment.'' We hear a great deal of talk about the undesirability of 
judicial legislation; that we ought to have Congress act on these 
matters.
  My staff and I made a very concerted and extended effort to try to 
define ``substantial investment'' and ``equitable remuneration,'' 
sitting down with parties on both sides at some substantial length.
  I continue to believe that, if the parties really wanted to resolve 
this and have a determination as to which generics had made a 
``substantial investment'' so that those generic products would be made 
available to the public at large, that could be done instead of this 
extended debate.
  But in the absence of that kind of an agreement, it seems to me that 
what is fair is to have the generic with its burden of proof of showing 
that a substantial investment had been made. And, with the additions I 
have made to the pending amendment offered by the Senator from Utah, we 
would have those proceedings concluded within a few short months. If 
the Senator from Arkansas was willing to adopt that kind of a 
procedure, he could have set the judicial mechanism in place long ago 
so that we could have had a determination of this matter.
  Mr. President, I reserve the remainder of my time.
  Mr. PRYOR. Mr. President, I thought that Senator Hatch would be 
speaking now. I think he has stepped out of the Chamber. Therefore, I 
will make a few remarks in response to my friend from Pennsylvania.
  First, we are not changing the GATT language. We are keeping the GATT 
language as it relates to the term ``substantial investment.'' This is 
simply what we are trying to do with the Pryor-Brown-Chafee substitute 
amendment at this time. We are trying to basically reinforce what we 
already have built into the GATT treaty, adopt that language, and apply 
to the drug companies the exact same rules and definitional standards 
that we apply to every other industry in our country and in our world 
today who are signatories to the GATT.
  I want to make a couple of more points. The Senator from Pennsylvania 
has mentioned that we needed 70 days

[[Page S7117]]

in order to resolve all of this. What the Senator from Pennsylvania 
must be aware of, and what the Senator from Arkansas is aware of, is 
that every day that goes by these companies are getting, in my opinion, 
egregious windfalls totaling $5 million extra every day that we 
estimate could be used to purchase cheaper or less expensive generic 
drugs.
  What this is about, Mr. President, really is about a few 
drug companies. For example, here is Zantac. If we had a generic 
substitute today for Zantac, we would be paying about 40 percent or 50 
percent less than we are paying with the brand name Zantac today in our 
drugstores.

  Mr. President, this is an absurd situation. It is time for us to 
correct this. We hope that the Senate will avail itself of this 
opportunity.
  Mr. President, inadvertently a few moments ago when I sent the 
amendment to the desk I did not mention our original cosponsor from 
Vermont, Senator Leahy.
  I ask unanimous consent that his name be added as an original 
cosponsor.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. SPECTER. Mr. President, how much time do I have remaining?
  The PRESIDING OFFICER. Five minutes.
  Mr. SPECTER. Mr. President, I inadvertently referred to a judicial 
time line of 70 days. I really meant 7 months.
  My point is this. This controversy first arose on May 25, 1995. Had 
we had in effect a procedure, which I am suggesting, for a maximum 7-
month determination regarding companies that the Senator from Arkansas 
refers to, we could have had a judicial determination made on or about 
January 1, 1996. It could have already been made.
  This legislation is really not the best way to solve the problem. 
There is a question as to what will happen in conference on this 
Department of Defense authorization bill, and whether the amendment 
will be adopted in the first place. There is also a question of whether 
the President will veto this Department of Defense authorization bill 
because it has substantially more spending than he is prepared to 
accept. But, if the parties agree to a procedure where there was 
expedited judicial determination as to what is a substantial 
investment, we could have generic products on the market within 7 
months.
  If my colleague from Arkansas would engage in a brief discussion--it 
has to be brief because I do not have too much time left--what would 
the problem be with the generic companies that the Senator from 
Arkansas refers to to accept the procedure where there would be a court 
determination made within 7 months as to whether they had made a 
substantial investment. Then, if the court finds in their favor, they 
could sell the generic drug plus recover full damages for the period 
from the time that they could not sell the generic drug until the time 
the court determined there was substantial investment and they could 
sell the generic drug?
  Mr. PRYOR. Are we on the Senator's time?
  Mr. SPECTER. We are.
  Mr. PRYOR. I ask that the time be allocated to the Senator, if I 
might respectfully say so.
  I have a letter from Donna Shalala, the Secretary of HHS, and I quote 
from the letter that has been distributed throughout the Senate this 
afternoon.
  Secretary Shalala says:

       It will be nearly impossible to meet the substantial 
     investment requirement under the Hatch substitute.

  She concludes saying:

       It would be virtually impossible for a manufacturer to 
     obtain FDA approval for a generic drug product during this 
     transition period.

  Mr. SPECTER. If the Senator from Arkansas will also focus, in the 
very limited time, just on the issue of substantial investment. What 
Secretary Shalala had to say, with all due respect, is totally 
irrelevant. I have a very crisp question. If your generic company has 
to have a determination of substantial investment within 7 months, 
would that not be a lot better than this elongated, uncertain 
legislative process?
  Mr. PRYOR. Mr. President, I simply respond by saying the generic 
companies cannot get the market because they cannot meet the 
requirements and the obstacles set forth in the Hatch substitute. It is 
that simple.
  Mr. SPECTER. Mr. President, I want to reclaim my time. I want to 
conclude my argument in the very brief time that I have left.
  With all due respect for my very distinguished colleague from 
Arkansas--and I do agree with Senator Chafee in complimenting Senator 
Pryor for his tenacity here--this is a matter which requires a 
determination of what is a substantial investment. This matter has been 
pending now for more than a year--since May 25, 1995. If the parties 
really wanted to resolve this, we could come to terms on expedited 
judicial proceedings which Senator Hatch is prepared to accept. That 
would take, of course, a maximum of 7 months. Then the generic company 
would have a determination of substantial investment, and they would be 
in the field. In addition, they would be entitled to collect their 
damages in the interim.
  I believe, as a matter of fairness, that we ought to get the judicial 
determinations as promptly as possible. But we also need to have fair 
protection for the substantial investments made by the pharmaceutical 
pioneer companies. This expedited procedure would ensure justice for 
all parties, and I submit that we ought to proceed forward with it.

  I yield the floor.
  Mr. PRYOR. Mr. President, I will respond by saying that this 
expedited procedure and the substantial investment, is basically what 
the GATT Treaty calls for and lays out the rules for every other 
industry in the world today with the exception of the pharmaceutical 
industry.
  We left out, by mistake, a conforming amendment that would guarantee 
the application of the GATT Treaty to brand name drug companies and as 
a result a few companies are protected against any generic competition.
  Now, who pays the bill for that? Who pays the ante? Well, we know who 
pays. The consumer pays--the elderly pay, the veterans pay, the 
Medicaid Program pays, the government pays. But across the board these 
windfall profit dollars are going to the major drug companies, and we 
are asking today for the Senate to support less expensive drugs. We are 
begging today for competition in the pharmaceutical marketplace.
  Just recently--and I ask that this item be placed in the Record at 
the appropriate place--Glaxo cut the cost of Zantac to the German 
people by 30 percent. The concern they were responding to was that a 
generic was about to become available and be a competitor to Zantac in 
that country--a 30-percent decrease in the cost of that drug. I wish 
they would give us the same cost decrease in this country.
  But what the Senator from Pennsylvania is talking about--simply wait 
another 7 months for these drugs to be available in generic form--is 
another $1 billion in consumer losses and another $1 billion windfall 
profits for three companies in this country.
  Mr. President, I do not think the Senate supports extension of this 
type of benefit to a few drug companies.
  I see my friend from Utah. I would like to ask how much time I have 
remaining, please.
  The PRESIDING OFFICER. The Senator has 1 minute 20 seconds.
  Mr. PRYOR. Mr. President, I will reserve the remainder of my time.
  Mr. HATCH addressed the Chair.
  The PRESIDING OFFICER. The Senator from Utah.
  Mr. HATCH. Mr. President, I would feel much more confident in the 
distinguished Senator from Arkansas's comments if he were willing to 
turn back all of the GATT blessings that Arkansas received. I have a 
list here which gives some of the examples of extensions made under 
GATT and the number of days.
  Here are 25 Arkansas companies which received extensions, one of 
which had its patent extended as by 713 days, another by 667 days, 
another by 665. The Jacuzzi Brothers had a patent extended by 218 days.
  None of their competitors has come to us and complained that they are 
being cheated.
  I might ask why we aren't suggesting that all those companies give 
back the extensions they received? Because there were winners and 
losers in the GATT. Unfortunately, the distinguished Senator from 
Arkansas does

[[Page S7118]]

not happen to agree with some of the winners.
  Mr. President, what you have heard this afternoon from our colleague, 
Senator Pryor, admittedly is a compelling populist argument that will 
have a great deal of surface appeal to some people.
  Who among us would not want to lower the price of drugs used by the 
elderly?
  Who would not want to correct a mistake?
  Who would not want to level the playing field to promote fairness 
between two very important segments of a very important industry?
  Unfortunately, none of these arguments are accurate. All of them are 
built on a foundation of sand.
  With one strong wave of reality this dream castle will come crashing 
down and we will be left with the truth of the matter.
  The truth is that:
  There is no loophole;
  There is no technical error; and
  And there is no need for the over-reaching Pryor/Brown/Chafee 
amendment.

  Let me give you the facts.
  It should be no secret to anyone in this body that GATT extended the 
terms of patents. The GATT Treaty--a very important treaty that took 
decades to get--was debated extensively in open session. It was 
negotiated for a period of years, extending through three Presidential 
Administrations. It was one of the most talked-about pieces of 
legislation we have considered.
  As a consequence of the GATT, the terms of about 1 million patents 
were extended. I just mentioned 25 of those were in Arkansas. They came 
from virtually every type of industry in the United States, including 
pioneer pharmaceutical patents.
  From this debate, you would think that only pharmaceutical patents 
were extended, but that is far from true.
  In truth, only about 100 pharmaceutical patents were extended--100 
out of 1 million--100 patents out of 1 million.
  Today you will hear the argument that this issue is a simple case of 
Congress making an oversight in a piece of complex legislation. Again, 
that is not correct.
  In fact, the Food and Drug Administration has said as much. In black 
and white.
  Last May, the FDA's Deputy Commissioner for Policy said:

       (T)his apparently is not an example of Congress having 
     overlooked a statutory provision it might have changed had it 
     been aware of its existence . . .

  So, it is clear that both the executive and legislative branches 
acknowledge this was not an oversight, even though we hear that over 
and over again.
  But, if the FDA statement were not enough of an argument for you, 
consider that the courts have also reviewed this issue and have 
concurred that there is no evidence that this was an oversight.
  The Court of Appeals for the Federal Circuit noted last November in 
the Royce case that it could not find any definitive evidence on the 
question of intent.
  The court said:

       The parties have not pointed to, and we have not 
     discovered, any legislative history on the intent of 
     Congress, at the time of passage of the URAA, regarding the 
     interplay between the URAA and the Hatch-Waxman Act.
  By the way, I coauthored the Hatch-Waxman Act, and I do understand 
it.
  When Senator Pryor's glitzy, diversionary charts are put aside, it 
seems to me that my opponents must concede that they have no hard 
evidence that this is simply a case of legislative mistake. It is not. 
And by the way, those charts, as much as they are curly-cued to death 
are misleading. Every generic patentee must go through the process on 
that chart, under the URAA. It is not just a process set up for generic 
drugs.
  Do not let their attempts at a revisionist history fool you. As the 
Federal circuit correctly noted, the true test of legislative history 
is what was stated when the bill passed, not what some are trying to 
say now, after the fact.
  You will also hear today that the Congress should adopt the Pryor 
amendment so that generic drug manufacturers have the same protections 
afforded to every other generic product manufacturer under the 
transition rules.
  This is the so-called level-the-playing-field argument.
  The truth of the matter is that there are no reported cases of any 
generic manufacturer, including those 25 in Arkansas, for any other 
industry reaching--or for that matter even seeking to reach--the 
marketplace through these transition rules.
  It is important for all involved in this debate to understand that 
under these transition rules, generic drugs have not been treated 
differently than any other generic products.
  Not one individual in this body can point to any other industry 
except generic drugs which has used, or even attempted to use the 
transition rules. In other words, out of the 1 million patents 
extended, not one other industry, or for that matter not one person 
from one other industry, has attempted to use the transition rules.
  The playing field is level.
  In fact, the generic drug industry is actually trying to tilt the 
playing field in its favor.
  It may surprise some in this body to see what the generic drug 
industry has been arguing in court.
  Let me just read to you for a few moments from a transcript of the 
oral argument at the Federal circuit last October in the Royce case:

       Milton Bass, a lawyer for the generic drug industry, said:

       I suggest to this court that this statute in one respect is 
     written expressly for generic drugs and in the other respect 
     primarily for generic drugs.

  Judge Bryson:

       You think the URAA was written expressly for generic drugs?

  Mr. Bass:

       Absolutely, and I'll tell you why . . . I can't think of a 
     single act that was not infringing before June 8 that became 
     infringing after June 8 except for the generic drug industry. 
     . .
       With other patents, a company is limited in what they can 
     spend their money for to invest before the patent expires. 
     Because if they use the patent, that's an act of 
     infringement.

  So we have the generic drug industry lawyer actually arguing that the 
transition rule was specifically intended for just this one industry.
  That hardly sounds like a level playing field argument to me. That 
sounds to me like an argument for special treatment.
  And this apparently was not just one of those statements that 
inadvertently slip out during the pressure of the moment in oral 
argument.
  The same argument was repeated by the generic company's lawyer in his 
petition for writ of certiorari to the Supreme Court.
  The generic drug company attorney stated to the Supreme Court:

       The most obvious intended beneficiary of the statutory 
     licensing system was the generic drug industry . . . In fact, 
     since the adoption of TRIPS and the URAA no industry other 
     than the generic drug industry has emerged as being 
     potentially affected by the equitable remuneration system.
  So there you have it: plain evidence that contrary to what our 
colleague will allege, the generic drug industry wants to tilt the 
playing field toward itself.
  Frankly, the Pryor amendment is nothing more than an attempt to see 
that one industry, the generic drug industry, gains a special, 
widespread, wholesale benefit that no other type of generic 
manufacturer will ever likely get under the transition rules.
  And why is this so harmful?
  As much as we all sympathize with the goal of getting lower priced 
generic drugs to the American consumer--particularly our elderly living 
on fixed incomes, we must not act in a fashion that undermines the 
incentives to invest in biomedical research.
  We want both new breakthrough therapies and cheap generic 
equivalents.
  The issue is how best to satisfy both ends.
  Over the years I have enjoyed working with Dr. C. Everett Koop, 
former Surgeon General of the United States. I stood behind Dr. Koop 
when many in this body were anxious to prevent him from becoming 
Surgeon General. Time has proven that Dr. Koop is one of the world's 
leading public health authorities.
  I respect and value his opinion. I believe that the American people 
know that Dr. Koop is a man of integrity and speaks his mind. Dr. Koop 
wrote me a

[[Page S7119]]

letter last week which shows just how important it is to retain 
incentives for biomedical research. He said:

       Because of my long-standing concerns about the effect on 
     biomedical research of weakened patent protection, I have 
     been following the efforts in the Senate to roll back the 
     advances in intellectual property protection established by 
     the GATT amendment.
       The right to claim ideas as property allows innovators in 
     any discipline to invest time and money to bring those ideas 
     to fruition. This is especially true in the pharmaceutical 
     industry, where each new medicine requires an average 
     investment of 12 years and $350-500 million. Stronger patent 
     protection bolsters the incentives for these high-risk 
     investments, and thus represents a significant leap forward 
     in our effort to preserve and improve the nation's health. It 
     is for this reason that I submitted testimony to the 
     Judiciary Committee opposing legislation to roll back the 
     GATT intellectual property protections for pharmaceuticals.

  I think that Dr. Koop is focusing attention on the right issue when 
he points out the importance that strong intellectual property laws 
have on biomedical research.
  Frankly, a strong case can be made by those who argue that it is 
unnecessary to make any changes in our current statutory framework. But 
in the spirit of compromise the Judiciary Committee passed on a 10-7 
bipartisan vote compromise legislation on this issue, to which Senator 
Specter is referring.
  The Judiciary compromise is the text of the amendment I offer today, 
with small-but-important modification suggested by Senator Specter last 
week which will ensure that the process envisioned in the Judiciary 
bill is a speedy one.
  The Judiciary compromise is a responsible, reasonable alternative. It 
allows generic drug products to reach the marketplace before the 
expiration of the GATT-extended patents.
  The difference between my approach and that of Senator Pryor is that 
the Judiciary bill protects intellectual property by precluding the 
generic's entry into the marketplace until a court has decided that a 
substantial investment has been made. As with the Pryor approach, the 
manufacturer must demonstrate that it has made a substantial 
investment.
  Mr. President, I reserve the remainder of my time.
  Mr. PRYOR. Mr. President, did the Senator from Utah conclude his 
statement?
  The PRESIDING OFFICER. He reserved the remainder of his time.
  Mr. PRYOR. Mr. President, as I have only a few moments, let me point 
out that the Hatch substitute was born out of a proposal by PhRMA. 
PhRMA is the group that represents the major brandname drug companies. 
Every element, according to a memo of April 30, 1996, of a draft PhRMA 
proposal which, as they wrote to their members, ``benefits members of 
PhRMA'' wound up in the so-called Hatch substitute. That, Mr. 
President, is what they are interested in. They are not interested in 
benefiting the consumer, they are interested in benefiting their own--
regardless of what happens to consumers and taxpayers. This is why we 
should really call this proposal the PhRMA-Glaxo substitute. I hate to 
call it the Hatch substitute because I have such respect for my friend 
from Utah. Certainly he would not want to have his name associated with 
what he knows is an enormous boon to special interests.
  Finally, the Hatch substitute has become a Christmas tree, literally 
a Christmas tree, of patent extensions and special favors for a variety 
of drug companies like Wyeth-Ayerst, Merck and Zeneca. Once again, I 
will quote our friend, Paul Simon from Illinois. Senator Simon, who we 
will miss greatly in this body, said: ``This is a classic case of the 
public interest versus the special interest.''
  Mr. President, that is precisely what this vote we are about to take 
is all about.
  I yield the floor.
  Mr. HATCH. Mr. President, how much time remains?
  The PRESIDING OFFICER. The Senator has 5 minutes.
  Mr. HATCH. I have heard the arguments of the distinguished Senator 
from Arkansas over and over.
  I know he is sincere.
  I know he means well.
  But his arguments fixate on one or two companies.
  If you were to look at this in the context of all of the companies, 
the thousands of companies, that benefited from the GATT Treaty, it 
reduces his arguments to nothing.
  If you look at the companies from Arkansas that benefited from the 
GATT Treaty, you have to ask why they should receive a benefit that 
others did not? It is because they had to draw the line somewhere. The 
simple truth is that there were some who won and some who did not.
  The thrust of my colleague's argument is that consumers are spending 
exorbitant amounts of money for Zantac because one company, Glaxo, has 
had its patent expanded under the GATT Treaty.
  It does not matter if Glaxo or any other company benefited under this 
treaty.
  The important thing is that treaty be preserved. It took decades to 
bring this treaty about. It is a treaty with important intellectual 
property provisions, provisions important for the whole world.
  We have taken decades to get other nations to sign on to this treaty, 
many of which did not want to. Some of them would like nothing better 
than to undermine this treaty.
  If the United States, pursuant to the Pryor amendment, were to adopt 
this language and undermine this treaty, right off the bat, I think it 
would send the wrong message to all the nations which would like an 
excuse to undermine the treaty anyway.
  If we uphold the treaty, then, it seems to me in the long run we will 
save trillions of dollars for the consumers, compared to the relatively 
few millions the Senator is complaining about.
  In the short run, consumers are going to pay more for some products 
under the treaty, because thousands of patents for all sorts of 
products and technologies were extended.
  Let us just be honest about it. There is a lot riding here.
  The overall goal of keeping the URAA intact outweighs the concerns of 
any one of us that one company or another may benefit somewhat from 
this. The fact of the matter is, there are a number of companies that 
benefit from this.

  It is also important to note that, under the Hatch-Waxman Act, the 
generic industry gets something that no other industry gets. They can 
infringe the pharmaceutical pioneer companies' patents like no other 
industry can. We included that provision in the best interests of 
bringing pioneer drugs off patent into the marketplace as quickly as we 
could.
  I am proud of that Waxman-Hatch Act. I worked my guts out to have it 
come to fruition.
  It was negotiated, every word of it, right in my office.
  It saved consumers billions and billions of dollars.
  If we turn around now, just because, as the Senator argues, one or 
two or even eight out of a million companies may have benefited, we 
will undermine the very GATT Treaty that we fought so hard to get. That 
will be a mistake.
  This is not some insignificant battle between two good people here in 
the U.S. Senate. This is a very, very important set of legal 
principles, legislative principles, treaty principles, and intellectual 
property principles.
  Frankly, the arguments are not as the distinguished Senator would 
portray.
  At this point I would like insert in the record some examples of 
patents which were extended in Arkansas. I would also like to insert a 
statement by former Senator and Trade Representative Brock, who rebuts 
the arguments that former Ambassador, now Secretary Kantor says. And, 
finally, I would like to insert the letter from Dr. C. Everett Koop, 
former Surgeon General of the United States. I ask unanimous consent to 
have those printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

Examples of Arkansas Patentees Granted Extensions Under GATT and Number 
                                of Days

       Abilities Unlimited, 640.
       AGL Corporation, 324.
       Arthur W. Reed Machine Co., 660.
       BC Pausch, Inc., 471.
       BEI Electronics, Inc., 535.
       BEI Electronics, Inc., 240.
       BEI Electronics, Inc., 419.
       BEI Electronics, Inc., 466.
       Carroll Herring, 713.
       Citation Manufacturing Co., Inc., 454.

[[Page S7120]]

       Cordell Tackle, Inc., 296.
       Darrell Boyd, Kathy Sue Boyd, Mark Stodola, James Hall, 
     Stuart Vess, J. Russell Reinmiller, 667.
       Domination Incorporated, 663.
       DuraCraft Boats, Inc., 403.
       Gator Products, Inc., 527.
       Hustler Corporation, 189.
       Jacuzzi Bros., 218.
       Klipsch and Associates, Inc., 481.
       Malvern Minerals Company, 410.
       Norman Manufacturing Co., Inc., 611.
       Roland Clardy Rogers, Ray Green Rogers, 541.
       Shakespeare of Arkansas, Inc., 437.
       Shakespeare of Arkansas, Inc., 552.
       Sprayrite Manufactoring Company, 465.
       SunPower Systems Corp., 688.
                                                                    ____



                                            Brock Group, Ltd.,

                               Washington, DC, September 20, 1995.
     Senator William V. Roth, Jr.,
     Hart Senate Office Building,
     Washington, DC.
       Dear Senator Roth: When I first proposed international 
     agreements to extend intellectual property protection 
     worldwide under the GATT, no one believed it could be done. 
     Yet it was the crowning achievement of the recently 
     successful Uruguay Round--thanks almost solely to the 
     persistent and active support of the U.S. business community 
     and U.S. governmental leaders.
       Now I hear that some pending proposals could imperil the 
     implementation of that agreement. I refer specifically to 
     legislation recently introduced by David Pryor, called the 
     Consumer Access to Prescription Drugs Act (S. 1191). S. 1191 
     creates special rules so that the generic pharmaceutical 
     manufacturers can take advantage of preferential treatment 
     under the Drug Price Competition and Patent Term Restoration 
     Act of 1984 (``Hatch/Waxman Act'') without adhering to the 20 
     year patent term negotiated during the GATT Uruguay Round 
     negotiations.
       Proponents suggest that this legislation is only a 
     ``technical'' correction to the Uruguay Round Agreements Act 
     (URAA) and neither weakens patent protection under URAA nor 
     diminishes the United States' ability to fight for stronger 
     international patent protection. I disagree! This issue is 
     far too important to risk on the basis of hoped-for ``good 
     intentions'' in nations which have never favored intellectual 
     property protection.
       Countries around the world are still in the process of 
     implementing the Uruguay Round Agreement. A number have 
     withheld their own action to wait and see what we do. We all 
     know those whose prior actions have cost American inventors 
     and entrepreneurs billions. They will see this retreat on our 
     part as a ready excuse to implement their own minimalist 
     versions on intellectual property protection. It will be 
     difficult, if not impossible for the United States to force 
     other nations to adhere to the TRIPS agreement if we set this 
     unfortunate precedent.
       In sum, in exchange for the hope of short term savings, the 
     Pryor proposal could cost all U.S. firms and workers the 
     enormous long term gains we worked so hard to achieve in the 
     Uruguay Round. That is penny wise and pound foolish. The 
     United States must continue to be a leader on full 
     implementation of every aspect of the agreement on 
     intellectual property in both substance and in form.
       One final additional point. Domestically, this legislation 
     would upset the delicate balance provided for in the Hatch/
     Waxman Act, which already grants generic pharmaceutical firms 
     special treatment in the area of patents not available to 
     other industries. S. 1191 would further the bias against 
     pioneer pharmaceutical firms.
       Please give careful consideration to the negative impact 
     this legislation would have. I would be delighted to give you 
     additional specifics if it would be helpful.
           Sincerely,
     William E. Brock.
                                                                    ____

                                      Bethesda, MD, June 20, 1996.
     Hon. Orrin G. Hatch,
     Chairman, Judiciary Committee, U.S. Senate,
     Washington, DC.
       Dear Mr. Chairman: Because of my long-standing concerns 
     about the effect on biomedical research of weakened patent 
     protection, I have been following the efforts in the Senate 
     to roll back the advances in intellectual property protection 
     established by the GATT agreement.
       The right to claim ideas as property allows innovators in 
     any discipline to invest time and money to bring those ideas 
     to fruition. This is especially true in the pharmaceutical 
     industry, where each new medicine requires an average 
     investment of 12 years and $350-500 million. Stronger patent 
     protection bolsters the incentives for these high-risk 
     investments, and thus represents a significant leap forward 
     in our effort to preserve and improve the nation's health. It 
     is for this reason that I submitted testimony to the 
     Judiciary Committee opposing legislation to roll back the 
     GATT intellectual property protections for pharmaceuticals.
       While I am still concerned about the impact that any change 
     in our intellectual property protections could have on the 
     incentives for medical R&D, the bill reported by the 
     Judiciary Committee on May 2 is a significant improvement 
     over the other proposals on this issue. I commend you and 
     your colleagues for finding a way to accommodate the varied 
     political interests that have been actively involved in this 
     debate.
       By allowing for the issues of ``substantial investment'' 
     and ``equitable remuneration'' to be resolved before generic 
     medicine comes on the market, the proposal mirrors the system 
     that has worked well since it was instituted by the Hatch-
     Waxman Act. It also adheres with the requirements of the GATT 
     legislation itself, which requires a court to determine these 
     issues.
       Most importantly, by requiring a court to establish 
     ``equitable remuneration,'' the Judiciary Committee's 
     proposal establishes a procedure for the value of 
     intellectual property to be recognized. This is crucial if we 
     are to sustain the research that will answer patient needs 
     now and in the future. It is absolutely essential if we as a 
     society genuinely care about the nation's long-term health.
       Ideally, no change would be made in the relevant laws 
     establishing stronger patent protections. But given the 
     political reality, you have done a good job of developing a 
     compromise that maintains some reasonable protection for the 
     intellectual property concepts that have made the U.S. a 
     leader in medical innovation.
           Sincerely yours,
                                     C. Everett Koop, M.D., Sc.D.,
                                       Surgeon General, 1981-1989.

  Mr. HATCH. With regard to my amendment, which is the text of the 
Judiciary Committee bill, the court would consider expenses related to 
the generic drug application and other activities, such as plant 
construction and equipment purchases, made specifically in connection 
with particular generic drugs.
  Our compromise would prevent applicants from gaming the system by 
precluding approval of applications submitted for products that come 
off-patent beyond 1998.
  Also, at the suggestion of Senator Biden, we have included language 
that would make clear that pioneer drug patents could receive both the 
restoration extension afforded by the Hatch-Waxman Act and any 
additional time received under the URAA.
  This is only fair, because these extensions derive from separate 
statutory sources.
  Mr. President, I have worked long and hard on this issue and have 
endeavored to find a reasonable middle ground which will accommodate 
the interest of all my colleagues. The Judiciary bill is a good 
compromise, and I urge my colleagues to support the amendment.
  Mr. HELMS. Mr. President, there are a number of red herrings flying 
across the Senate in an effort to politicize this issue and scare 
senior citizens and others. But the bottom line of this issue is 
whether we will support the search for new medicines or undermine it.
  Let me quote from an article that was written by Dr. C. Everett Koop 
and published in the March 28, 1996, issue of The Washington Times:

       Generic drugs play an important role in helping lower the 
     cost of medicines. But it is the pharmaceutical research 
     industry that discovers and develops those medicines in the 
     first place, investing billions of dollars in research and 
     development that can span decades without any guarantee of 
     success--an investment made possible by our system of patent 
     protection.
       Congress should stand firm in its decision to provide 
     greater protection for American innovators. This protection 
     is a leap forward in our ongoing battle to preserve our long-
     term national health.

  Speaking of our long-term national health, a company that Senator 
Pryor frequently criticizes, was recently awarded the highest honor 
that can be bestowed on a company by the American Diabetes Association.
  On June 6, Glaxo Wellcome, Inc., which is headquartered in North 
Carolina, was awarded membership into the Banting Circle. According to 
the announcement, the award recognizes Glaxon Wellcome's effort to cure 
diabetes.
  Dr. Bob Bell, vice president of research at Glaxo Wellcome, explained 
that ``If we can find that gene or combination of genes that causes 
diabetes, and link them to specific functions of their proteins, then 
we can use this insight to develop better treatments.''
  Approximately, 15 million people suffer from type II diabetes. How 
much longer does the Senator from Arkansas think they should have to 
wait for a better treatment or even a cure for their disease?
  Ms. MOSELEY-BRAUN. Mr. President, I would like to take this 
opportunity to express my support for the Hatch substitute amendment. 
The Senate voted in December to require the Judiciary Committee to hold 
hearings on the General Agreement on Tariffs and Trade [GATT] patent 
extension provisions. As promised, the hearings were held, and a May 2 
markup resulted in a vote in favor of a bipartisan compromise proposal.

[[Page S7121]]

  The Hatch amendment, which represents this bipartisan Judiciary 
Committee compromise, would allow the Food and Drug Administration to 
approve a generic drug marketing prior to expiration of the GATT patent 
extension if the manufacturer complies with the GATT implementation law 
and the 1984 Hatch-Waxman law. This special exemption from patent laws 
is permitted by no other sector.
  The Pryor amendment on the other hand, would modify the current GATT 
as it applies to patent protections for pharmaceutical products. This 
amendment, which was voted down in the Finance Committee, has been 
portrayed as a technical correction to the GATT agreement. It is not. 
This amendment opens up an international agreement on trade to resolve 
a domestic intraindustry dispute. It is short-sighted, 
counterproductive, and will impede the availability of life-saving 
drugs and therapies for all of us.
  This is not an argument about whether the American people should 
generally have access to generic drugs. I firmly believe that all 
persons who are sick should have access to affordable and comprehensive 
health care services. My views on the GATT patent extension issue are 
in no way inconsistent with my support for health reform. In fact, I 
believe present attempts to undo and reopen GATT could have an adverse 
impact on the development of state of the art medicines and treatments, 
which in turn deny all of us the benefit of advances in medical 
science.

  This argument in support of changing the GATT patent extension for 
pharmaceutical products seems to rest primarily on the potential cost 
savings to consumers of accelerating the availability of a generic 
version of one anti-ulcer drug. Such an argument totally ignores the 
fact that the anti-ulcer marketplace is highly competitive with a wide 
range of choices, including generics, for patients and physicians. 
There are new medicines available and coming to the market that can 
cure peptic ulcer disease. The senior citizen on a fixed income will 
save far more from the availability of medicines that eradicate the 
cause of his/her ulcer after a few weeks of therapy than from a less 
expensive version of a medicine taken daily.
  On average, it takes 12 years and $360 million to bring a new drug to 
market. Research-based pharmaceutical firms spend nearly $18 billion 
annually on research and development. This emphasis on R&D has produced 
treatments not only for common conditions and ailments but also for 
life threatening diseases. The United States invests more than any 
other nation on research. I have received numerous letters from patient 
groups that are very concerned that modifications to GATT will 
adversely impact research and development particularly on orphan 
diseases for which it is not feasible to develop generic equivalents. 
We must continue to increase our investment if we are to discover cures 
and effective treatments for diseases that continue to plague millions 
of Americans like AIDS, Alzheimer, Parkinson's Disease, and cancer.
  Increased patent protection ensures that research and development 
will continue in, not only the medical field but also in all areas of 
innovation. This country leads the world in research and innovation, it 
contributes to the public good both here and abroad and every American 
benefits from our leadership. Changes to the GATT agreement that seek 
to repeal patent extensions for only one class of innovations are, in 
my opinion, shortsighted. Such changes will decrease private sector 
revenues for research and development, compromise U.S. leadership on 
intellectual property, and adversely impact the competitiveness of U.S. 
companies in relation to their foreign counterparts. They do nothing to 
provide greater access to affordable health care for consumers.
  I have given careful consideration to all of these issues. I am 
convinced that the measures included in the GATT and the Hatch 
amendment will continue to increase the ability of U.S. industries to 
compete while also allowing low-cost generic equivalents to reach the 
market. It is for these reasons that I support the Hatch amendment and 
oppose the Pryor amendment.
  Mr. COATS. Mr. President, this is an enormously complicated issue 
with very board implications. I understand that the Judiciary Committee 
has held hearings on the issue and that as a result, voted 10 to 7 to 
report out a bipartisan compromise. The compromise reached would allow 
the FDA to approve a generic drug for marketing prior to expiration of 
the GATT patent extension, but only after a generic drug manufacturer 
demonstrated in court that they had made a substantial investment 
before June 8, 1995.
  This requirement is contained in both the GATT implementing law and 
the generic drug approval process in the 1984 Hatch-Waxman law and 
applies to all generic manufacturers. The investment of a generic drug 
manufacturer would have to be more than merely the filing of an 
abbreviated new drug application [ANDA] for regulatory approval with 
the FDA, although the costs of an ANDA could be included.
  There have been a lot of questions raised concerning how this 
transition would work and why, for example, certain industries have 
been singled out and required to meet special criteria before they can 
bring their product to the market. In reality, under both current law 
and the Judiciary Committee compromise, a generic company in any 
industry must go to court to prove substantial investment, in order to 
bring its product to market. There is a prevalent misconception that no 
other industry has to go to court to prove substantial investment. This 
is simply not true.
  Others have asked why the Committee bill fails to permit expenses 
related to filing of an abbreviated new drug application [ANDA] to be 
counted toward the determination of a substantial investment. The 
expenses related to the filing on an ANDA are unique to the generic 
pharmaceutical industry. These activities would constitute patent 
infringement for any other industry. The intent of the GATT transition 
provisions is to allow those companies which had made capital 
expenditures--like building or expanding a plant, to market their 
imitator product during the patent extension period. A generic 
pharmaceutical company should only benefit from the same type of 
expenses available to all industries.
  Finally, the opponents of the Judiciary Committee compromise argue 
that the Judiciary bill treats generic pharmaceutical companies 
unfairly. This could not be farther from the truth. In fact, the Hatch 
compromise offers the generic pharmaceutical industry special 
protections not available to any other industry. The Judiciary bill 
would permit a generic pharmaceutical company to collect damages from 
the innovator company if litigation between the innovator and generic 
companies caused an unwarranted delay an imitator drug to the market. 
No other industry is afforded a similar benefit.
  Mr. President, it seems to me that the compromise reached by the 
Judiciary Committee is both thorough and fair. It answers the questions 
that have been raised and does so in a very well thought out manner. 
This is a difficult issue and I appreciate the enormity involved in 
reaching an agreement. While I would have preferred using the normal 
Committee route to bring this legislation to the floor, I intend to 
support it.
  Mr. KENNEDY. Mr. President, I want the Senate to overwhelmingly 
support the Pryor-Brown-Chafee amendment, which is the text of the 
Prescription Drug Equity Act. It is difficult to understand why it has 
taken over 6 months for this bill to return to the floor for a vote. 
The legislation proposed by Senator Pryor, Senator Brown, and Senator 
Chafee achieves the result clearly intended by the GATT treaty, and 
gives patients access to expensive drugs they should have had before 
now. Senate delay has cost American consumers, many living on meager 
incomes, millions of dollars. We owe it to them to close the Glaxo 
loophole today.
  GATT was intended to give longer patent terms to all patent holders. 
But, those drafting the legislation to implement GATT recognized that 
longer patent terms would be an injustice for firms in many different 
industries who had been acting in good faith and preparing to market 
products based on the patent expiration date under prior law.
  The GATT implementing law dealt with this problem through a fair 
compromise, by permitting such firms to begin marketing their products 
on the

[[Page S7122]]

pre-GATT expiration date, if they had made a ``substantial investment'' 
or commenced product activity before June 8, 1995. The firm must, 
however, pay the patent holder a fair price.
  Unfortunately, a mistake was made. Laws affecting all other 
industries were modified to reflect the compromise, but not the 
pharmaceutical industries. By an accidental oversight, Congress failed 
to amend the relevant FDA law. As a result, generic drug companies that 
had planned in good faith to market products in reliance on the old law 
have been prevented from taking their products to market as planned. 
The result is an unintended windfall worth vast sums to a handful of 
brand-name pharmaceutical manufacturers. One company in particular--
Glaxo-Wellcome--has benefited immensely from this windfall. To date, 
out of a total windfall of an estimated $700 million; Glaxo-Wellcome 
alone has received $550 million.
  What has happened since discovery of the loophole is a lesson in 
greed. First, Glaxo and the other brandname manufacturers began an 
intense lobbying campaign to prevent this inadvertent mistake from 
being corrected. They claimed that correcting it would undercut 
pharmaceutical research and development. But the windfall was 
completely unexpected. Correcting the mistake will not deprive 
pharmaceutical companies of any funds budgeted for research and 
development. In fact, corporate profits, not research and development, 
will be the prime beneficiary of the windfall.
  Brand-name manufacturers also claimed that the correction would 
undermine the GATT Treaty and weaken the United States in world trade. 
That's nonsense. Every other industry in America is living successfully 
and trading successfully under the GATT compromise, and so can Glaxo-
Wellcome and other firms that are reaping these windfall profits.
  Once it became clear that the Senate would take action, brand-name 
manufacturers helped shape the so-called Hatch ``compromise,'' which is 
no compromise at all. Secretary of HHS Shalala has said that the Hatch 
bill would be ineffective in giving generic drugs the same benefits 
available to other industries under GATT. The Hatch proposal will lead 
to years of litigation. It is a one-sided deal that benefits Glaxo and 
other brand-name drug companies at the expense of the American 
consumer. The Senate is awash in crocodile tears and campaign 
contributions. This scandal has to end.
  The Pryor-Chafee-Brown proposal corrects the error and achieves 
fairness for generic drug companies and consumers. The generic drug 
companies relied upon the law and made substantial investments to bring 
their products to market in good faith reliance on the prior law. They 
should not be penalized because Congress made a mistake.
  Consumers should not pay more for pharmaceuticals as they are now 
doing because of this mistake. Let's not force American consumers to 
absorb the cost of Congress's mistake any longer. The Senate should 
stop this price-gouging, support the Pryor amendment, and close the 
Glaxo loophole.
  Mr. PELL. I would like to clarify my understanding of some language 
contained in section 2(B) of the section of the pending amendment 
entitled Determination of Substantial Investment.
  It is my understanding that this section of the legislation is meant 
to simply set a standard for a determination of ``substantial 
investment'' by a generic drug company at a level higher than the 
simple completion of paperwork and testing necessary for filing of an 
application submitted under section 505 or 512 of the Federal Food, 
Drug, and Cosmetic Act, the so-called ANDA, to the FDA. Is that so?
  Mr. HATCH. That is correct.
  Mr. PELL. In that regard then, is it correct to say that under the 
language of the amendment, when a company includes information in its 
ANDA which pertains to the capital investments it has made in bringing 
a product to the market, such as the building of plants, buildings, or 
equipment or investments in developing manufacturing processes or 
personnel, that that information can be fully used in court proceedings 
to prove its claim of substantial investment.
  Mr. HATCH. That is correct. Evidence of plant construction, 
equipment, and the like are exactly the type of qualifying activities 
that the Judiciary bill contemplates.
  Mr. PELL. To be perfectly clear then, under the amendment, generic 
drug companies will be able to use all of the information contained in 
their ANDA, in addition to any other evidence they wish, to assist in 
proving their claim of ``substantial investment'' in court.
  Mr. HATCH. That is correct.
  Mr. PELL. I thank the Senator for that clarification.
  Mr. BRYAN. Mr. President, last week I joined my colleagues Senators 
Pryor, Chafee, and Brown in supporting and debating this loophole 
closing important amendment. I am glad that today we will get a vote on 
this issue.
  As I said last week, what we are talking about is money--big money--
hundreds of millions of dollars--even billions of dollars.
  When that kind of money is on the table, all kinds of special 
interests come forward and seek to protect themselves.
  The fact is that the prescription drug industry, through inadvertence 
and omission, has been given separate treatment--separate, distinct, 
special treatment--that no other industry or product in America 
receives.
  Our amendment to correct this inadvertence has the endorsement of the 
U.S. Trade Representative, the Patent Office, and the FDA plugs this 
loophole.
  Since last December, as these windfall profits have continued to 
accumulate, seniors across this country have continued to pay more than 
they should for certain prescription drugs.
  The loophole is still open today. We face the same issue--each and 
every day. American consumers are paying millions of dollars more than 
they ought to.
  So let me suggest, as I view my responsibilities as a Member of this 
Chamber, it is highly appropriate that we seek to correct this inequity 
and to provide the relief to which American consumers are entitled--and 
to do so immediately.
  When the loophole closing amendment came to the Senate floor last 
fall, a critical vote was taken--and by a margin of only 1 vote--48 to 
49--the Senate defeated this important amendment.
  A compromise was reached after that vote. The Judiciary Committee 
would review the GATT Treaty problem, and report back to the Senate 
with its recommendation. This was to be a good faith effort to analyze 
the issue.
  It is fair to ask what the outcome of this review was?
  The Judiciary Committee did report out a substitute bill to our GATT 
amendment--albeit 5 months after our amendment was voted upon.
  This substitute is called the Pharmaceutical Industry Special Equity 
Act of 1996. It has a somewhat ironic ring to it.
  Who does it benefit?
  It benefits the prescription drug industry in a very special way that 
is inequitable to American consumers, and particularly those on fixed 
incomes.
  What we really are being asked to support today is a bill that 
CODIFIES--in my view codifies--the very GATT Treaty mistake our 
amendment is trying to correct. A bill that continues the GATT treaty 
loophole for such drug manufacturers as Glaxco-Wellcome, Inc. and its 
ulcer-heartburn drug, Zantac--the world's best selling drug, which 
costs twice as much as it should because of the loophole.
  More than 100 drugs are being protected from generic drug competition 
because of this loophole. These include the hypertension drug, Capoten, 
which costs 40 percent more due to the loophole--the cholesterol 
lowering drug Mevacor, the ulcer drug Prilosec, and the anti-fungal 
agent drug Diflucan.
  A bill that ensures that seniors across this Nation will pay more 
than they should for prescriptions drugs they need and that are 
essential to their health.
  A bill that ensures American taxpayers will pay more than they should 
to provide prescription drugs for those essential programs offered by 
the Department of Defense, the Department of Veterans Administration 
and other agencies of the Federal Government which purchase 
prescription drugs on behalf of the clientele they serve.
  A bill that creates tremendous legal barriers--in my view, 
insurmountable barriers--to the generic drug manufacturing industry to 
ensure that these

[[Page S7123]]

manufacturers cannot bring to the marketplace lower priced prescription 
drugs.
  A bill that ensures the prescription drug manufacturers keep their 
$2.3 billion windfall, plus a bill that extends special patent 
extensions for two brand name drug companies--Zeneca and Wyeth Ayerst 
Laboratories which received a 2-year patent extension for Lodine, its 
anti-inflammatory medicine.
  So what has occurred here?
  In my view, we have a situation worse than before.
  Not only do some prescription drug companies retain their windfall 
profits--they are protected from nearly any possibility that any 
generic manufacturer will be able to compete against them during the 
extended patent term.
  Generic drug manufacturers will be required to prove a substantial 
investment before being allowed to compete against any brand name drug. 
The key change, however, is that this substantial investment 
requirement is being defined differently to ensure that generic 
manufacturers cannot--as a practical matter--compete against any brand-
name drug benefiting from the extended patent period under the GATT 
Treaty.
  Under the substitute bill, substantial investment is defined much 
differently. In addition, generic manufacturers are required to make a 
determination of equitable remuneration to the brand name manufacturer 
before any generic drug to be manufactured.
  You do not have to be a rocket scientist to recognize those who are 
enjoying these windfall profits are not going to be eager to agree as 
to what equitable remuneration may be. In effect, we create a lawyers' 
field day to debate what is, in fact, equitable remuneration.
  The effect of the change is, first, it will be virtually impossible 
for any generic manufacturer to meet the new substantial investment 
standard.
  Second, it will mean generic manufacturers will be tied up in court 
proving substantial investment and what is equitable remuneration 
before they can bring any generic drug to be marketed.
  Two obstacles, two hurdles, two barriers that, as a practical matter, 
are going to be virtually insurmountable.
  Who is being forgotten? Who gets hurt by this change?
  Those Americans particularly that are on a fixed income. That is 
primarily our senior community. They have been paying and will continue 
to pay more than they should--for lack of a prescription drug 
alternative.
  I am puzzled as to why anyone believes it is equitable to force 
seniors--many on very limited incomes--to pay more for a drug than they 
should so prescription drug manufacturers can continue to reap the 
windfall profits that this loophole has created.
  I must say I am astonished by the provisions of this Pharmaceutical 
Industry Special Equity Act--a misnomer if there ever was one. Its a 
special interest provision.
  My colleagues who talk the virtues of competition in the marketplace 
surely must find this substitute bill to be a bit beyond the pale.
  I remind my colleagues that there is no reason to allow a limited 
number of prescription drug companies an unintended windfall profit to 
the detriment of all Americans who depend upon prescription drugs in 
order to sustain their health.
  Seniors, veterans, and the most vulnerable in our country cannot 
fight the brand name pharmaceutical industry on their own. They deserve 
and need our protection from an industry that is trying to ``codify'' a 
mistake to ensure their windfall profit margin.
  I hope my colleagues can see both this loophole for the mistake it 
is--and this substitute bill for the even larger mistake it is.
  We have the ability to end this inequity now. The vote you cast today 
is very clear. You vote for the pharmaceutical industry windfall, or 
you vote for seniors and all consumers who need fair drug prices. 
Please join me in stopping this travesty by supporting this amendment.
  Mr. BYRD. Mr. President, Senator Pryor has offered an amendment, of 
which I am a cosponsor, that would correct an unintended loophole 
created in the legislation implementing the General Agreement on 
Tariffs and Trade [GATT]. It is estimated that the loophole will 
ultimately result in a windfall profit of approximately $2.5 billion to 
certain drug companies. Congress must take the responsible course of 
action and correct its mistake by passing the Pryor amendment.
  Time is running out to correct this matter. Each day of inaction 
results in increased costs to consumers. In addition, to those who 
argue that this is not the appropriate vehicle, this amendment will 
result in savings to the Department of Defense [DOD] via the cost of 
prescription drugs purchased through DOD health programs.
  How did this loophole come about? When Congress enacted the Uruguay 
Round Agreements Act [URAA], the legislation implementing GATT, which I 
opposed, it extended all patent terms from 17 years from date of 
approval to 20 years from the filing date. In addition, the legislation 
allowed generic companies to market their products as of the 17-year 
expiration date if they had made a substantial investment and would pay 
a royalty to the patent holder. The carefully constructed transition 
rules were meant to apply to all industries. However, because 
conforming language to the Federal Food, Drug, and Cosmetic Act was 
inadvertently omitted, this provision does not apply to the generic 
pharmaceutical industry. The result is that the drug industry is the 
only industry that is shielded from generic competition under GATT 
during the extended patent term.
  The U.S. negotiators indicated that it was not their intent to 
exclude the pharmaceutical industry from this provision, and that the 
omission of the conforming language was an oversight. According to 
former-U.S. Trade Representative Mickey Kantor in a letter to Senator 
Chafee,

       This provision [the transition rules] 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.

  This oversight means consumers are paying more for their drugs than 
would otherwise have been the case. If generic drug companies cannot 
bring their versions of drugs to market under the transition rules, 
consumers will be forced to continue to pay more for their 
prescriptions. As I stated previously, nationwide, it is estimated the 
total cost to consumers may be $2.5 billion. It has already cost 
consumers a great deal. The loophole is taking money out of the pockets 
of consumers and adding additional costs to public health care programs 
that are currently putting a strain on Federal and State budgets. We 
should not delay passing this legislation any longer.

   Senior citizens are especially impacted by this Congressional 
oversight. Although seniors comprise 12 percent of the population, they 
use one third of all prescription drugs. At the same time, seniors live 
on fixed incomes and oftentimes experience difficulty in affording 
their prescriptions. It is outrageous that Congress would worsen the 
situation of seniors, and others who depend on prescription drugs, by 
failing to enact legislation to correct this Congressional oversight.
  Mr. President, this situation can easily be remedied by adopting the 
Pryor amendment. I urge my colleagues to support the Pryor amendment 
and to oppose the substitute bill reported by the Judiciary Committee. 
The Judiciary Committee version does not fix the loophole. It will not 
ease the burden this unintentional oversight by the Congress has placed 
on the elderly, veterans, consumers, and taxpayers. The Secretary of 
Health and Human Services, in a letter to Senator Pryor on the effect 
of the Judiciary Committee bill, states,

       In brief, despite the bill's declared intent to eliminate 
     the unequal treatment of generic drugs created by the URAA, 
     S. 1277 as ordered reported would be ineffective in affording 
     generic drugs the same transitional period benefits given to 
     other technologies, leaving the generic drug industry for all 
     practical purposes at the same disadvantage as under current 
     law.

  The Judiciary Committee bill would result in lengthy litigation 
keeping generic drugs off the market and the costs of certain 
prescription drugs high for consumers. Whereas other industries may go 
to market first and then have the questions regarding substantial 
investment and equitable remuneration decided by the courts, the

[[Page S7124]]

substitute would require these issues to be determined before a generic 
drug could be marketed. In addition, although the legislation 
implementing GATT does not define substantial investment, the 
substitute includes a definition of substantial investment that is 
extremely onerous. The bottom line is that the substitute will not 
remedy the situation and consumers will be left to pay the price as 
they are now because of Congress' failure to adopt the Pryor amendment 
when it was brought up last December. Let us not squander this 
additional opportunity Senator Pryor has given the Senate to do the 
right thing. I urge my colleagues to pass the Pryor amendment.
  Mr. KEMPTHORNE. Mr. President, the issue of pharmaceutical patents 
under the General Agreement on Tariffs and Trade [GATT] has been under 
review by this body for some time. Well respected individuals--from the 
Senate, from the Administration, and from the private sector--weighed 
in on both sides of the issue. Last December, I joined my Senate 
colleagues in voting to send this matter to the Judiciary Committee for 
hearings because I felt many questions remained unanswered about how 
certain patents were treated under the GATT. With no clear legislative 
history to follow, I believed--and still believe--it was important for 
Congress to carefully review the issue and get to the heart of the 
matter.
  I am pleased to note that my distinguished colleague from Utah, 
Senator Hatch, followed through on his commitment to hold hearings on 
pharmaceutical patents and the GATT, just as I knew he would. With his 
long history on addressing issues of concern to the generic drug 
industry, I had no question that he would do all he could to get to the 
bottom of this issue. The subsequent hearings were sorely needed so 
that the Senate could adequately consider the ramifications of the 
various courses of action proposed on this matter. Taking some time to 
adequately review an issue leads to better legislation and better 
results for Americans. This is a serious matter, and deserved serious 
and thoughtful review.
  Since those hearings concluded I have carefully reviewed the record 
on this complex issue. Based on this information, I have concluded that 
the question at hand is indeed the result of a drafting oversight in 
the GATT implementing language, and, as a result, I will support the 
amendment offered by my colleague from Arkansas, Senator Pryor.
  I believe very valid concerns were raised when this amendment was 
first introduced. Because of this, it is not an easy task to choose 
between amendments offered by my two distinguished colleagues. In this 
case, however, I feel the right decision is the one which restores 
fairness to this matter. The generic drug manufacturers moved ahead 
with their plans on the good faith effort that they would be treated 
the same as other industries with similar circumstances. They believed, 
in good faith, that under the GATT they would be able to proceed to 
market, with some new limitations, on the same timetable which existed 
prior to Senate passage of the GATT implementing legislation. Only the 
Pryor amendment allows us to bring about what I believe is the fairest 
possible solution.
  This is the primary reason why I cannot support the amendment being 
offered by the Senator from Utah. I understand and respect his concerns 
on this issue. I, however, am concerned about whether under his 
amendment, the generic pharmaceuticals will be able to get to market in 
a timely fashion. While the Senator's amendment offers some relief to 
the generic drug makers if they are unnecessarily prevented from going 
to market, I do not believe it truly restores fairness. It also does 
not offer any protection to the consumers who will be saddled with 
higher drug prices during the interim.
  Another issue which must be addressed is that of medical research. I 
have heard the concern expressed that if the Pryor amendment becomes 
law future research into new and improved pharmaceuticals will not 
occur or will be significantly reduced. I simply do not believe this is 
true. Even if the Pryor amendment is adopted, the research-based 
pharmaceutical manufacturers will benefit more than if the GATT had not 
been approved. The claim that only the granting of an exclusive patent 
extension will guarantee future advancements in pharmaceutical research 
is an argument I do not accept.
  The Pryor-Brown-Chafee amendment will get certain generic medications 
into the hands of the people within the time frame all parties 
reasonably expected prior to the passage of the GATT implementing 
legislation, saving consumers and the Government millions of dollars in 
the process. For this reason, I believe the amendment is the correct 
course of action for the Senate to follow.
  Mr. HATCH. Mr. President, how much time do I have left?
  The PRESIDING OFFICER. The Senator's time has expired.
  Mr. HATCH. I yield the floor.
  Mr. THURMOND addressed the Chair.
  The PRESIDING OFFICER. The Senator from South Carolina.
  Mr. THURMOND. Mr. President, I ask unanimous consent for 4 minutes to 
make final remarks on this amendment.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. THURMOND. Mr. President, I rise as a cosponsor and in support of 
the second degree amendment offered by Senator Hatch. The underlying 
Pryor first degree amendment concerns the complex interrelationship 
among the GATT Treaty, the Federal Food, Drug and Cosmetic Act, and the 
Patent Code.
  We considered this very issue last December on the Senate floor when 
Senator Pryor attempted to have this matter attached to the bill to ban 
partial-birth abortions. The Senate voted at that time to have the 
Judiciary Committee--that is the Committee with proper jurisdiction--to 
consider this important issue. The Judiciary Committee held a 
comprehensive hearing on this matter on February 27 of this year and 
Senator Pryor testified at that time.
   Mr. President, following the hearing in the Judiciary Committee, of 
which I am a member, the committee amended a proposal similar to 
Senator Pryor's amendment with a bipartisan compromise. The Judiciary 
Committee approved the compromise. This bill will be available for 
Senate floor consideration in due course. It would be most appropriate 
to consider Senator Pryor's amendment at that time. The Department of 
Defense authorization bill is not the proper vehicle on which to debate 
the Pryor amendment. Unfortunately, we are now having to debate this 
contentious intellectual property issue and I am compelled to support 
the second degree amendment offered by the chairman of the Judiciary 
Committee, Senator Hatch.
  The second-degree amendment reflects the bipartisan compromise agreed 
upon by the Judiciary Committee. Senator Hatch has spoken on the 
practical effect of this amendment which he drafted with others when 
this matter was before his Committee.
   Mr. President, as I noted earlier, this is a very difficult and 
complex issue which addresses how certain transition rules contained in 
the Uruguay Round Agreements Act apply to the pioneer pharmaceutical 
patents which have been extended by the act. The overall approach to 
this issue is to find an appropriate balance to encourage research and 
development of breakthrough innovator drugs while making low cost 
generic equivalents available to the public. The Judiciary Committee 
approved one approach which many believe reaches the goal of 
encouraging research and development but also expediting their generic 
equivalents to the marketplace.
  It would be my preference to debate the Pryor amendment when the full 
Senate turns to consideration of the bill recently approved by the 
Judiciary Committee. That would seem to me to be the appropriate time 
to consider the Pryor amendment. Yet, here we are on the Defense bill 
debating the Pryor amendment in a compressed manner that does not avail 
itself to full discussion. I urge my colleagues to support the second-
degree amendment which is essentially the compromise language already 
approved by the Judiciary Committee.
  Mr. President, I yield the floor.
  The PRESIDING OFFICER (Mr. Abraham). The question is on agreeing to 
the amendment of the Senator from Utah, amendment No. 4366.
  Mr. HATCH. I ask for the yeas and nays.

[[Page S7125]]

  The PRESIDING OFFICER. Is there a sufficient second?
  There is a sufficient second.
  The yeas and nays were ordered.
  The PRESIDING OFFICER. The question is on agreeing to amendment No. 
4366 of the Senator from Utah. The yeas and nays have been ordered. The 
clerk will call the roll.
  Mr. SIMPSON (when his name was called). Present.
  Mr. NICKLES. I announce that the Senator from Oregon [Mr. Hatfield] 
is necessarily absent.
  The PRESIDING OFFICER. Are there any other Senators in the Chamber 
desiring to vote?
  The result was announced--yeas 53, nays 45, as follows:

                      [Rollcall Vote No. 179 Leg.]

                                YEAS--53

     Abraham
     Ashcroft
     Bennett
     Biden
     Bond
     Burns
     Campbell
     Coats
     Cochran
     Coverdell
     D'Amato
     DeWine
     Dodd
     Domenici
     Faircloth
     Frahm
     Frist
     Gorton
     Gramm
     Grams
     Grassley
     Gregg
     Harkin
     Hatch
     Heflin
     Helms
     Hollings
     Hutchison
     Inhofe
     Johnston
     Kassebaum
     Kyl
     Lautenberg
     Lieberman
     Lott
     Mack
     McConnell
     Mikulski
     Moseley-Braun
     Murkowski
     Nickles
     Nunn
     Pell
     Rockefeller
     Roth
     Santorum
     Shelby
     Specter
     Stevens
     Thomas
     Thompson
     Thurmond
     Warner

                                NAYS--45

     Akaka
     Baucus
     Bingaman
     Boxer
     Bradley
     Breaux
     Brown
     Bryan
     Bumpers
     Byrd
     Chafee
     Cohen
     Conrad
     Craig
     Daschle
     Dorgan
     Exon
     Feingold
     Feinstein
     Ford
     Glenn
     Graham
     Inouye
     Jeffords
     Kempthorne
     Kennedy
     Kerrey
     Kerry
     Kohl
     Leahy
     Levin
     Lugar
     McCain
     Moynihan
     Murray
     Pressler
     Pryor
     Reid
     Robb
     Sarbanes
     Simon
     Smith
     Snowe
     Wellstone
     Wyden

                        ANSWERED ``PRESENT''--1

       
     Simpson
       

                             NOT VOTING--1

       
     Hatfield
       
  The amendment (No. 4366) was agreed to.
  Mr. THURMOND. Mr. President, I move to reconsider the vote.
  Mr. HATCH. Mr. President, I move to lay it on the table.
  The motion to lay on the table was agreed to.
  The PRESIDING OFFICER. Under the previous order, the Senator from 
Arkansas is to be recognized.
  Mr. PRYOR. Mr. President, earlier today the Senate agreed to a 
unanimous-consent request agreement whereby at this point I would be 
recognized to offer the Pryor-Chafee-Brown amendment. This last vote, 
of course, was an up or down vote on the amendment offered by the 
Senator from Utah.
  Mr. President, I think the Senate has spoken. I am sorry the Senate 
spoke in this manner, as we lost some key Senators who had supported 
our position before. But that is the prerogative of each Senator.
  Mr. President, I see no real reason to put the Senate through this 
vote again because I think there would probably be no changes. 
Therefore, I congratulate the Senator from Utah in his real win today. 
I thought we were within about one or two votes difference, but 
evidently that was not the case. I do feel, Mr. President, and I would 
like to say that I think, ultimately, this correction needs to be made 
in the GATT treaty. I feel very, very strongly about this.
  If there is another way to frame this issue, or another way on 
another day to have a debate on this matter so that we can have more 
competition in the drug market, then I am going to, once again, rise on 
this floor and try to present that case to my colleagues.
  Once again, I congratulate the Senator from Utah. I think I know when 
I am defeated. I think today we were defeated. I am very sorry for the 
outcome. But the Senate, Mr. President, has spoken, and I bow to the 
will of this great body.
  Mr. HATCH. Mr. President, I want to compliment my colleague. I have 
been debating with our fellow Senators here for 20 years, and I have to 
say that no one has worked me over with greater regularity, or in a 
nicer way and with greater decency, than my dear friend from Arkansas. 
I do not think anybody in this body is going to miss him any more than 
I.
  This has been a very difficult debate. The Senator from Arkansas is 
very sincere. He believes in what he is doing. He made arguments that I 
know he believed. I want everybody to know that I am very sincere, too.
  I really believe in this GATT treaty.
  My Committee has jurisdiction over patent, copyright, and trademark 
issues and I have worked with these issues during my whole Senate 
career.
  I believe this is a tremendously important issue.
  Although my colleague and I differ here today--and I feel badly that 
my colleague feels badly--I know that nobody could have put up a more 
noble or hard fight than he did. I hope that this is now resolved.
  There are two good sides to this issue.
  Senator Pryor is trying to help consumers. I am trying to help 
consumers. We have people on the outside trying to malign both of us, 
and both of us are trying to do our jobs in the Senate. We just happen 
to disagree on how it should be done.
  I respect my colleague from Arkansas.
  I also want to pay particular tribute to the distinguished Senator 
from Pennsylvania, Senator Specter, who has worked long and hard to try 
and make the agreement that came out of the Judiciary Committee one 
that would function and work.
  I pay tribute to my distinguished ranking Democrat leader on the 
Judiciary Committee, Senator Biden, who, I think, made a real 
difference on this matter with the suggestions he made.
  Last but not least, Senator Heflin played a significant role in this, 
as has Senator Thurmond, and others.
  I will not take any more time of the Senate. I want everybody to know 
that I appreciate those who voted with us, and I respect those who 
voted against us--especially my dear friend from Arkansas.
  Mr. PRYOR. Mr. President, if I might respond by thanking the Senator 
for his very kind and generous words. I am deeply grateful for that. I 
have enjoyed a splendid relationship with Senator Hatch through this 
fight and other issues. He has always been a gentleman in every 
respect. He is a very eloquent adversary, I might say.
  Mr. President, I also want to say a special word of thanks to the 
Senator from Rhode Island, Senator Chafee, who has been our ally in 
this fight, not only in the Senate Committee on Finance, but on the 
floor of the Senate. He and his staff have been unfailing in their 
support. We are very grateful for the opportunity to work with him and 
by his side. Also, I thank the Senator from Colorado, Senator Brown, 
and the other cosponsors of this particular amendment.
  Once again, Mr. President, I see no need to put the Senate through 
this vote again. I guess I will ask the leadership if they would like 
to attempt to vitiate the unanimous-consent agreement.
  Mr. President, I yield the floor.


                 Vote on Amendment No. 4365, As Amended

  The PRESIDING OFFICER. The question now is on agreeing to amendment 
No. 4365 by the Senator from Arkansas, as amended by the Senator from 
Utah.
  The amendment (No. 4365), as amended, was agreed to.
  Mr. HELMS. Mr. President, I move to reconsider the vote, and I move 
to lay that motion on the table.
  The motion to lay on the table was agreed to.
  Mr. BYRD. Mr. President, if no other Senator seeks recognition, I 
have a brief statement I will make. But I will be glad to yield the 
floor if another Senator wishes to proceed with an amendment.
  Has the Pastore rule run its course for the day?
  The PRESIDING OFFICER. We are calculating. The Pastore rule expired 
at 12:30.
  Mr. BYRD. I thank the Chair.
  Mr. President, I will yield the floor to the distinguished Senator 
from Georgia with the understanding that I do not lose my right to the 
floor.


                           Amendment No. 4367

     (Purpose: To require the President to submit a report on NATO 
                       enlargement to Congress.)

  Mr. NUNN. Mr. President, I send an amendment to the desk and ask for 
its immediate consideration.
  The PRESIDING OFFICER. The clerk will report.

[[Page S7126]]

  The assistant legislative clerk read as follows:

       The Senator from Georgia [Mr. Nunn], for himself, Mrs. 
     Hutchison, Mr. Bradley, Mrs. Kassebaum, and Mr. Cohen, 
     proposes an amendment numbered 4367.

  Mr. NUNN. Mr. President, I ask unanimous consent that reading of the 
amendment be dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  (The text of the amendment is printed in today's Record under 
``Amendments Submitted.'')
  Mr. NUNN. I thank the Senator from West Virginia.
  I yield the floor.

                          ____________________