[Congressional Record Volume 142, Number 117 (Friday, August 2, 1996)]
[Senate]
[Pages S9463-S9464]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                   HEALTH INSURANCE CONFERENCE REPORT

  Mr. KENNEDY. Mr. President, I am very hopeful, and I know the 
American people are, that we will move ahead this afternoon on the 
conference report dealing with the Kassebaum-Kennedy bill. As we know, 
it was a year ago today that we passed that bill out of the Human 
Resources Committee. It languished for close to 9 months on the Senate 
calendar before it was considered. Then it was considered. And it has 
been several more months before we were able to get resolution of the 
principal items which were at issue, the portability issue, the MSA 
issue and the other provisions in the legislation. And we saw a 
successful conclusion of those issues just some 2 days ago. All of us 
are very eager to get that measure down to the President of the United 
States.

  However, I must say, a number of us were very surprised to find that 
our staffs, around 10:30 or 11 o'clock the night before last, after a 
number of us were assured that there were only technical corrections in 
the legislation, discovered that a special provision had been included 
into the act at page 76. That special provision, which no one knew 
about, was a patent extension and special treatment for a drug called 
Lodine which people take for arthritis. And now that is in the health 
care legislation that we all want to get to the President of the United 
States as soon as we can. But, this afternoon we are faced with this 
special interest provision being put into the whole proposal.
  I just want to make it very clear that neither I nor do I understand 
any other Member of our side, and to the best of my knowledge on the 
other side, had any idea whatsoever that this special interest 
provision benefiting a single company had been included in the health 
care bill. It is a special interest provision for one particular 
company that has annual revenues from this one drug, Lodine, of some 
$275 million.
  The special interest provision gives that company 2 additional years 
of patent protection and other special benefits. As I understand it, in 
return, the company would have to pay $10 million each year for a total 
of $20 million to the Federal Government and pay the States so they do 
not have to pay for the increased costs due to the patent extension.
  So the question is, Who pays? Well, the answer to that is, everyone 
else in America will pay more for Lodine. Every senior and every 
American who uses this arthritis drug will pay more because this 
special provision says no one else can compete with this drug for 2 
more years. This provision eliminates competition and gives this 
company a monopoly, which means it can charge whatever it wants for its 
drug. Our seniors and everyone else will be paying the bill for this 
special interest provision.
  The question is, then, How much more? How much more money will people 
have to pay? We know that generic competitors historically undercut the 
price of drugs like Lodine by 30 to 50 percent. That means that when a 
patent expires, other companies can make and sell inexpensive generic 
versions of the drug to compete. This provision means that there can be 
no competition for 2 more years and that means Americans will pay 
between $80 to $130 million more each year for this sweetheart deal.
  Now, Mr. President, we all know that this sweetheart deal will cause 
all the other companies to come in here and ask for special favors 
also. This deal for one drug will open the floodgates and will cost 
consumers hundreds and hundreds of millions of dollars.
  Mr. President, the claim is made that we ought to go ahead with this 
special deal because their competitor has received an extension. That a 
competitor, called Daypro, got a deal stuck into the continuing 
resolution in April 1996, without any hearings, without any testimony, 
without any public review by the committees with jurisdictions, does 
not make this right. It is an old saying, but it is true: Two wrongs do 
not make a right. Because one snuck through, we cannot do it again and 
again and again.
  It will not stop with Lodine. There are 12 drugs in this class on the 
market. You do this for Lodine, and the other 10 will be here tomorrow. 
In fact, in the last 2 weeks alone, three or four of those other 
companies have already been in this building asking for special 
treatment like Lodine. It will not stop here. The special interests 
will be banging at the door.
  Mr. President, this is not really a new issue for some Members of the 
Senate because there was an effort to include a special deal for Lodine 
in June 1996, in the Defense authorization bill in the Senate as part 
of the Hatch-Specter GATT loophole closing legislation. But, then the 
lobbyists started lining up asking for special treatment for other 
drugs. They claimed that if Lodine gets special treatment, then they we 
would have to do it for others.

  Then there was the Bliley-Dingell letter to the Defense conferees 
saying, ``Take Lodine out''. And the House Judiciary also objected to 
Lodine, and the conferees took Lodine out of the Defense authorization 
bill.
  That didn't stop the Lodine special provision. The special deal for 
Lodine was put into the House agricultural appropriations bill in July. 
But, Senator Pryor and Senator Chafee drafted a letter dated July 26, 
1996 to Senator Cochran and Senator Bumpers saying there was no merit 
and no basis for a Lodine extension. They said there were no hearings 
or deliberations of any kind in either the House or the Senate to 
determine if there were any public purpose served by granting this 
special extension. They urged that it be taken out of the agricultural 
appropriations bill.
  At about the same time, the Senate health care conferees were 
appointed on July 25. And on July 30, the Republicans gave the 
Democrats a draft of this section of the health care bill. That draft 
was dated June 25, but it had no provision relating to the patent 
extension.
  Then, at about the same time, the agriculture appropriations 
conferees took the special provision for Lodine out of the bill. That, 
I believe, was also on July 30.
  Now, back to the health care bill. On July 31, there were extensive 
negotiations on both of the issues of portability and on the MSA 
issues.

[[Page S9464]]

  The PRESIDING OFFICER. The Senator's time has expired.
  Mr. KENNEDY. Mr. President, could I ask for 5 more minutes?
  The PRESIDING OFFICER. Is there objection? Without objection, it is 
so ordered.
  Mr. KENNEDY. Then at 6:30 that night, July 31, after we worked out 
the portability and the MSA, I remember the call from Senator Kassebaum 
saying that we only had about 10 more minutes to sign. And so this 
Senator signed on the basis of the representations of what I knew was 
in the bill and the representations that were made by the various staff 
and other Members who were familiar with the language. There was never 
any mention of any special interest provision for Lodine.
  We had the press conference announcing the agreement around 8 p.m. 
that night.
  Then, around 10:30 that night, the Democratic staff go to legislative 
counsel and see the administrative simplification section, which they 
were being shown for the very first time. And there it was. Stuck in 
the administrative simplification section was this special provision 
for Lodine. This is the first time that anyone had seen this provision. 
Indeed, it was the first time anyone had even heard about it in 
connection with the health care bill.
  They thought they killed it in the Defense authorization. They 
thought they killed it in the agriculture appropriations bill. But, 
they didn't. No. It was snuck into the health care bill and no one knew 
it and the rest is history.
  It is interesting that over in the House on August 1, there was a 
Democratic effort to recommit the bill due to the special patent 
provision and also because of the nonparity for mental health.
  The vote to re-commit in the House was 224 to 198. I have heard from 
a number of my colleagues that if that motion had only dealt with the 
patent provision, it would have been rejected and returned to the 
conference.
  Now, Senator Lott's spokeswoman was quoted in today's CongressDaily. 
I know Senator Lott would want to clear up the alleged quote in 
Congress Daily because it said that this special provision was added 
with full knowledge of the conferees and was done for fairness. He was 
either misquoted or wrong on that, because it was not done with the 
knowledge of the conferees. If it were done with the knowledge of some 
of the conferees, then I hope they will come over here and explain it. 
Explain who knew about it. Explain who didn't know about it. Explain 
why this special provision was slipped into the health care bill 
without our knowledge.
  Now, it certainly was not done for fairness. It was slipped into the 
bill without telling anyone, because it is not fair, and it is not 
deserved. Now, Mr. President, I will not take the time now to go into 
all of the details, but I will draw the Senate's attention to the fact 
that we have been addressing these kinds of issues for the last 20, 25 
years. Because of the series of different requests during the 1970's 
and 1980's, the Senate and the Congress, in their wisdom, passed the 
Hatch-Waxman bill in 1984 to deal with issues of justice and fairness 
that perhaps arose under some circumstances due to the arbitrariness or 
termination of patent extensions. To avoid this very problem, that law 
was passed to treat all companies equally and fairly. That system has 
worked pretty well. As a matter of fact, Lodine itself has already gone 
through that process and it has already received a 2-year extension.
  But it still claimed that it was treated unfairly by the FDA. It 
still claimed that the FDA delayed its approval and was unfairly denied 
years of patent protection. But, as everyone knows, the claim that the 
FDA delayed approval has no merit. Everyone knows this, because this 
claim was thoroughly reviewed in 1992 and 1993. In fact, the GAO did a 
full review and published a detailed report in April of 1993. The 
conclusions were unambiguous and firm: any delay was the company's 
fault, not the FDA.
  I will conclude with this: In 1993, the GAO issued its report 
specifically about the Lodine patent. GAO concluded there was no basis 
for recommending a patent term extension. Lodine's approval was delayed 
because of the company's actions and for public health reasons. I have 
that GAO report right here. We will have a chance to get into it in 
greater detail, but for now let me tell you their fundamental 
conclusions:

       (1) it is a ``me-too'' drug which provided no significant 
     public health benefit or therapeutic breakthrough, which 
     would justify expedited review (such as AIDS or cancer 
     drugs);
       (2) concerns about Lodine's carcinogenicity were raised 
     both in Canada and the United States, which had to be 
     resolved before the drug could be approved;
       (3) FDA found that the Lodine submission was ``piecemeal, 
     voluminous, disorganized and based on flawed clinical 
     studies.''
       (4) the Lodine submission to FDA did not contain ``enough 
     data to prove efficacy until September 1989''--almost 7 years 
     after the submission was made to FDA.

  It goes on and on. Every single claim made by the company was 
investigated, reviewed and rejected on the merits. That is why this 
special interest provision keeps being slipped in under cover of 
darkness. It can't stand the light of day. There is no merit or basis 
for special treatment. Indeed, the facts show that this particular drug 
and this company was already treated fairly and appropriately. Under 
the rules that everyone else has to abide by, Lodine was treated right. 
It should have to play by the same rules as its competitors and 
everyone else.
  Mr. President, I had hoped this special interest provision would not 
be included. It is not the way to do business. It is a special interest 
provision that was added without the knowledge of the members of the 
conference. It is bad policy.

  Furthermore, it will result in the fact that millions of senior 
citizens will pay an unwarranted, unjustified additional amount for 
their prescription drugs because of one particular drug company which 
refused to follow the rules in terms of going through public hearings, 
public notice, and to give consumers a right to speak. It is absolutely 
wrong, Mr. President.
  I hope we will have an opportunity to address this more, then move 
very quickly to the final consideration of the very important health 
care bill which we have reached resolution on. I see no other reason, 
if that unjustified special provision was resolved, that we could not 
resolve the conference report in an hour, or even less, so that it 
could be on its way to the President of the United States.
  But, before we can do that, this special interest slipped into the 
health care bill will have to be examined. The American consumers 
deserve better than this type of shabby treatment.
  The PRESIDING OFFICER (Mr. Kyl). The Senator from Vermont.

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