[Congressional Record Volume 142, Number 137 (Saturday, September 28, 1996)]
[Senate]
[Pages S11720-S11723]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

       By Mr. SPECTER (for himself, Mr. Johnston, Mr. Heflin and 
     Mr. Santorum):

  S. 2154. A bill to provide equitable treatment for pharmaceutical 
patents on certain pipeline drugs in order to encourage continued 
development of new drugs, and for other purposes; to the Committee on 
the Judiciary.


                 THE PHARMACEUTICAL EQUITY ACT OF 1996

  Mr. SPECTER. Mr. President, Pennsylvania is proud to host some of the 
world's most innovative pharmaceutical, biotechnology, medical device 
and health care product companies. The United States, of course, is the 
world's leader. These companies are developing the new medicines and 
new products that are extending and improving life for people around 
the world.
  Current law often unnecessarily slows the introduction of new 
technologies and new medicines and increases costs to producers, and 
therefore, ultimately, to consumers. I have consulted with consumer and 
other patient advocacy representatives, as well as pharmaceutical 
manufacturers and the biotechnology industry, in an effort to gather 
sufficiently diverse and constructive suggestions for meaningfully 
addressing this problem.
  While this is certainly an issue critical to Pennsylvania's economic 
future, it is most of all a critical issue for our citizens who suffer 
from costly and debilitating conditions for which no adequate drug 
therapies exist today, including Alzheimer's, AIDS, heart disease, 
cancer, et cetera. We cannot, and should not, keep these patients 
waiting any longer than absolutely necessary.
  We have a very basic problem in America about research expenditures 
for drugs that benefit sick people. These drugs benefit everybody, 
particularly the elderly and the young. We need medical research. We 
need these

[[Page S11721]]

wonder drugs to be produced. It is a matter of fairness as to how we 
are going to compensate those who produce them. If we are to have these 
drugs for consumers, we will have to be able to pay for them. If we are 
to have the kind of research, productivity, and the great miraculous 
advances in medical science, we are simply going to have to ensure a 
reasonable rate of return on the patent period.
  The purpose of the legislation I am introducing today, the 
Pharmaceutical Equity Act of 1996, is to provide a one-time adjustment 
to the patent terms of certain drugs that received unfair treatment as 
a result of the Drug Price Competition and Patent Term Restoration Act 
of 1984 (the Hatch-Waxman Act). Where applicable, these drugs would 
receive a 2-year extension of their patent terms. My legislation is 
intended to provide regulatory relief on a principled basis, as opposed 
to a piecemeal effort to address these concerns.
  Under the Hatch-Waxman Act, Congress provided patent term extensions 
to restore part of the patent lives of drugs that were lost due to 
approval time lags at the FDA. The Hatch-Waxman Act provides up to 5-
year extensions for most drugs. However, the statute also limited the 
patent term extension to 2 years for any drugs that had already begun 
clinical trials before September 24, 1984, and for which a patent had 
already been issued. Drugs falling into this category are often 
referred to as the pipeline drugs because they were in the regulatory 
pipeline at the FDA upon enactment of the Hatch-Waxman Act.
  In making the distinction between pipeline drugs and other drugs in 
1984, Congress believed that pipeline drugs would receive FDA approval 
shortly after 1984 and would not require lengthy patent term 
extensions. Although FDA approval times improved generally, for several 
drugs the delays were inordinantly long, in some cases involving over 
10 years of FDA review time. As a result, these drugs lost critical 
portions of their patent terms. Therefore, the limited 2-year Hatch-
Waxman patent extension for these drugs simply does not adequately 
compensate these companies for the lengthy regulatory delays incurred, 
particularly when other similarly situated companies with non-pipeline 
drugs could receive patent extensions as long as 5 years for such 
delays.
  The Pharmaceutical Equity Act covers any pipeline drug patent where 
the New Drug Application [NDA] for the drug was reviewed by the FDA for 
more than 5 years and where the total review time at the FDA, which 
includes the clinical trials for investigational new drugs [IND], 
exceeded 10 years. This limited extension period would thus only apply 
in those egregious cases where FDA approval times far exceeded average 
approval delays for other drugs. Even if granted, the additional patent 
extension would also still be less than the maximum 5-year extension 
allowable for post-pipeline drugs suffering FDA delays.

  This legislation is not intended to grant an extension to scores of 
drug patents. Rather, it will only apply in limited circumstances where 
FDA delays were inordinate long.
  One of the fundamental powers assigned to Congress under article I, 
section 8 of the Constitution, is the power to promote the progress of 
science by securing for limited times to inventors the exclusive right 
to their discoveries. This is a power which carries with it a 
tremendous obligation.
  In the pharmaceutical arena, for example, this obligation includes 
the need to ensure that our laws encourage the development of life-
saving and life-enhancing new drugs and technologies. My legislation 
fulfills this obligation by providing equitable treatment for 
pharmaceutical innovators, including the appropriate degree of market 
incentives for new innovation.
  Unless we have an equitable system of patent protection, including a 
mechanism for remedying delays by the FDA which deprive patent holders 
of their full patent terms, we will undermine the very incentives the 
law intends to give to research and development companies that 
undertake the enormously expensive and risky process of searching for 
the wonder cures of tomorrow.
  There should be no misunderstanding about the source of drug 
innovation. The vast majority of new drugs are discovered and developed 
by private for-profit research-based pharmaceutical companies. 
Incredibly, 90 percent of FDA-approved drugs that consumers use for 
every type of disease, from cholera to cancer, were first synthesized 
by private industry.
  A recent survey by the Pharmaceutical Research & Manufacturer's 
Association [PhRMA] shows that research-based pharmaceutical companies 
are in the process of developing 215 drugs for over 20 different types 
of cancer. There is also an enormous research and development effort 
aimed at combating AIDS and AIDS-related conditions, with more than 110 
products at various stages of development. Many more medicines for a 
wide range of diseases and human afflictions are also being developed, 
including 132 drugs for major diseases of aging, 118 for neurological 
disorders, 107 for heart disease and strokes, and 64 for mental 
illness. The list for other major medical ailments is virtually 
endless.
  Such innovation does not come cheaply. A recent study by the Boston 
Consulting Group found that pharmaceutical companies expend 
approximately $500 million and 15 years bringing a new drug to market. 
These innovative drug research companies will spend nearly $16 billion 
in research and development costs this year. That is more than the 
entire government budget for biomedical research, and represents an 
increase of 9.6 percent over 1995 levels. These pharmaceutical 
companies spend an average of almost 20 percent of their income from 
sales on research.
  Part of this research and development expense is due to the 
complexity of the diseases being fought--for every 6,000 new drugs that 
are researched and developed, only a single drug emerges as an approved 
new product. A large portion of the expense, however, is also due to 
the sheer volume and duration of FDA approval requirements for safety 
and efficacy. New drug applications by pharmaceutical innovators 
typically require hundreds of thousands of pages of information and 
years of clinical trials to complete. The time required to complete the 
clinical trials for new drugs has ballooned from an average of 2.5 
years in the 1960's to nearly 6 years in the 1990's.
  The high cost of drug development and the limited numbers of drugs 
that receive approval and actually are available to the public combine 
to create a system where the few successful drugs must pay for all the 
research and development expended on those drugs that did not succeed. 
More significant from a consumer standpoint, however, these successful 
drugs provide profits and incentives which support the research and 
development of the new cures for the diseases of tomorrow.

  Apart from the immeasurable benefits people around the world enjoy 
from improved health and the new cures made possible by pharmaceutical 
innovation, we must also realize that the pharmaceutical producers 
themselves provide great economic benefits to communities across the 
United States. One of these benefits is through high-paying, quality 
jobs.
  Recent data indicate that pharmaceutical companies employ over 33,000 
people in my State of Pennsylvania. Nationally, these companies provide 
over 150,000 jobs. A large portion of these jobs are scientific jobs in 
research and development, exactly the types of jobs we are trying to 
create to maintain American competitiveness in a global marketplace.
  Another economic benefit is through expanded exports. In 1994, the 
U.S. exported $7.565 billion in pharmaceutical products around the 
world.
  Use of proper drug treatments can also save consumers and the 
government millions if not billions of dollars every year. Experts have 
calculated that pharmaceutical products are often far more cost-
effective at treating disease than alternative treatments such as 
surgery or hospitalization. Several examples illustrate just how much 
money families can save through drug therapy in particular 
circumstances.
  Cancer patients whose immune systems are weakened by chemotherapy 
have been helped by a drug containing a colony stimulating factor. The 
treatment saves $30,000 per patient in hospitalization costs for bone 
marrow transplants.
  For heart disease, a New England Journal of Medicine study showed 
that

[[Page S11722]]

patients on ACE inhibitor drugs for heart failure avoided nearly $9,000 
per patient in hospitalization costs over a 3-year period. Nationwide, 
the potential savings from these drug treatments are up to $2 billion 
per year. More importantly, however, the drug also reduced patient 
deaths by over 15 percent.
  Drug therapy for schizophrenia, according to a 1990 study, has 
enabled many patients to receive treatment in nonhospital settings. 
Although annual drug costs for such treatment are approximately $4,500, 
the savings are tremendous when compared with annual costs of over 
$73,000 for treatment in state mental hospitals.
  Post-surgical recuperation is another area where the use of immuno-
suppressive drugs has improved the effectiveness of treatment and 
reduced costs. In organ transplants, for example, success rates were 
dramatically higher with the use of these drugs. One drug was found to 
reduce average hospital stays by as much as 10 days, and also reduced 
re-hospitalizations after surgery.
  In the case of ulcers, the advent of antacids and other products have 
led to a decline in surgeries from 97,000 in 1977 to 19,000 in 1987. 
The annual cost of drug therapy for each patient amounted to $900, 
versus approximately $28,000 for surgery. In the aggregate, use of 
these antacids and other products reduced medical costs by 
approximately $224 million per year.
  The evidence is irrefutable about the tremendous benefit our society 
enjoys, from the physiological to the financial, from pharmaceutical 
innovation. Without a strong and fair patent system which provides the 
necessary incentives to continue this innovation, we will lose these 
benefits. The Pharmaceutical Equity Act, with its narrowly-targeted fix 
of an unanticipated problem, will take an important step toward 
restoring the equity and incentives to ensure that we enjoy those 
benefits for many years to come.
  Mr. President, to reiterate, this legislation would provide fairness 
to pharmaceutical companies which research and develop lifesaving and 
health-improving pharmaceutical products. I am offering this 
legislation, and I do so at the very end of the legislative session.
  The point of this legislation is to deal with the problem which 
arises when the Food and Drug Administration [FDA] delays approval on 
patented pharmaceutical products for sometimes as long as 17 years, 11 
years, very lengthy periods of time. As I said earlier, these delays 
affect not only the companies which produce these drugs, but they also 
affect the consumers--people suffering from heart ailments, 
schizophrenia, ulcers, AIDS, Alzheimer's disease--the whole panoply of 
ailments that are affected when these products are not brought to 
market.
  It takes $500 million and 15 years to bring a new drug to market, and 
out of every 6,000 drugs subjected to research and development, only 
one new product is produced. In 1996 alone, some $16 billion will be 
spent in private investments by the pharmaceutical industry.
  I speak as a U.S. Senator, because it is a national issue. I also 
speak as a Pennsylvania Senator, where we have so many companies in my 
State which are involved in developing and producing new pharmaceutical 
products.
  Quite a number of Senators have expressed an interest in cosponsoring 
this legislation, but we have not had a chance to work through all the 
details. I wanted to put it in the Record at this time so it may be 
considered on all sides, by consumer groups, by the pharmaceutical 
industry and by my colleagues. I do so in the wake of a contentious 
issue which was raised on a product called Lodine, manufactured by my 
constituent, American Home Products, in a place I visited recently in 
the Philadelphia suburbs.
  The extension was added for Lodine in a way that was not known to the 
managers of the recent health reform bill and was stricken on the floor 
of the Senate. Some had contended that it was done secretly. I said at 
that time that I was not a party to that and would not be a party to 
that and, in fact, had raised this issue in a public way in the 
Agriculture appropriations conference report. What should be done is 
this issue should be tackled in a principled way by considering, not 
simply one product, but by considering the industry as a whole. This 
legislation seeks to advance and extend the patent time for some 2 
years, not 5 years, which is present under other circumstances by 
Hatch-Waxman, but for a more limited period of only 2 years.
  This is a matter of enormous importance to consumers. My record of 
protecting consumer interests is second to none in the U.S. Congress. 
In looking out for the protection and encouragement of pharmaceutical 
advances, I have the consumers at the top of the list. That is what the 
advances are for--for people to extend lives and to save lives. If we 
are to have these products, we are going to have to have a return on 
the enormous capital investment. When market approval on a patented 
drug is delayed for as long as 17 years, 11 years, other protracted 
periods of time, these products simply cannot be produced.
  Mr. President, I ask unanimous consent that the full text of my bill 
be printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 2154

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Pharmaceutical Equity Act of 
     1996''.

     SEC. 2. EXTENSION OF PATENTS RELATING TO CERTAIN PIPELINE 
                   DRUGS.

       (a) In General.--The term of any patent in force on 
     September 24, 1984, and on the effective date of this Act, 
     that claims a drug product, a method of using a drug product, 
     or a method of manufacturing a drug product, shall be 
     extended pursuant to subsection (b) from the expiration date 
     determined pursuant to section 154 of title 35, United States 
     Code, if:
       (1) an exemption described in section 156(g)(1)(B)(i) or 
     section 156(g)(4)(B)(i) of title 35, United States Code, 
     became effective for the drug product before September 24, 
     1984;
       (2) the regulatory review period set forth in section 
     156(g)(1)(B) or section 156(g)(4)(B) of title 35, United 
     States Code, for the drug product, exceeded 120 months; and
       (3) the regulatory review period described in section 
     156(g)(1)(B)(ii) or section 156(g)(4)(B)(ii) of title 35, 
     United States Code, for the drug product, exceeded 60 months.
       (b) Term.--The term of any patent described in subsection 
     (a) shall be extended by a period of two years.
       (c) Infringement.--During any extension granted pursuant to 
     subsection (b), the rights in the patent so extended shall be 
     determined in accordance with section 156(b) of title 35, 
     United States Code.
       (d) Definition.--For the purpose of the Act, the term 
     ``drug product'' shall be defined in accordance with section 
     156(f)(2) of title 35, United States Code.
       (e) Notification.--No later than 90 days after the date of 
     enactment of this Act, the patentee of a patent extended 
     pursuant to subsection (b) shall notify the Commissioner of 
     Patents and Trademarks of the number of any patent extended 
     pursuant to subsection (b). On receipt of this notice, the 
     Commissioner shall confirm the patent extension by placing a 
     notice thereof in the official file of the patent, and 
     publishing an appropriate notice of this extension in the 
     Official Gazette of the Patent and Trademark Office.
       By Mr. LEAHY (for himself, Mr. McConnell and Mr. Harkin):

  S. 2155. A bill to authorize the Secretary of Agriculture to transfer 
funds to the farmers' market nutrition program, and for other purposes; 
to the Committee on Agriculture, Nutrition, and Forestry.


           THE FARMERS' MARKET NUTRITION PROGRAM ACT OF 1996

  Mr. LEAHY. Mr. President, I am very happy to join with Senator 
McConnell, who is chairman of the Nutrition Subcommittee of the Senate 
Agriculture Committee, in introducing this bill to permit the Secretary 
of Agriculture to transfer up to $2 million of additional funding to 
the WIC Farmers' Market Program upon consultation with the 
Appropriations Committees of the other body and of the Senate.

  This program was funded up to $6.75 million in this year's 
appropriations bill. We greatly appreciate that the appropriations 
committees were able to provide that funding.
  We are advised by the Department of Agriculture that because of the 
way the language is technically worded that USDA cannot reprogram 
additional funds into that WIC Farmers' Market Program. As it turns out 
some states need additional funding as my colleague Senator McConnell 
points out in his floor statement and that a few States need funding to 
set up a WIC Farmers' Market Program.
  We recognize that we will need the support of all Senators to pass 
this bill at this stage. This bill does not mandate the spending of 
additional funds,

[[Page S11723]]

it simply permits USDA to transfer up to $2 million to this program if 
the Secretary determines that such transfer is a good idea. We assume 
they will fully consult with the appropriate members of the 
Appropriations Committees to assure that this is done in a manner that 
is satisfactory to them.
  It is important to us that this consultation take place.
  The WIC Farmers' Market Program provides vouchers to low-income 
families who are on the WIC program. They can use the vouchers to buy 
fresh fruits and vegetables or other farm products at farmers' markets. 
The authorizing law, passed without objection in the Senate, mandates 
that States contribute a significant share of the cost of the program. 
It thus leverages Federal money with State and local funding to provide 
farm products to children and their parents on the WIC program.
  This program has been an incentive in my home State of Vermont for 
farmers to work together and set up additional farmers' markets. This 
has been good for local communities, for the farmers selling their 
products and for families on the WIC program.
  Mr. President, I ask unanimous consent that the text of the bill be 
printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 2155

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. AUTHORITY TO TRANSFER FUNDS TO FARMERS' MARKET 
                   NUTRITION PROGRAM.

       For fiscal year 1997, the Secretary of Agriculture may 
     transfer after consultation with the appropriations 
     committees of the House of Representatives and the Senate, 
     from any funds available to the Secretary, up to $2,000,000 
     to the farmers' market nutrition program under section 17(m) 
     of the Child Nutrition Act of 1966 (42 U.S.C. 1786(m)). 
     Amounts authorized to be transferred under the preceding 
     sentence shall be in addition to any amounts authorized to be 
     made available to the program under title IV of the 
     Agriculture, Rural Development, Food and Drug Administration, 
     and Related Agencies Appropriations Act, 1997 (110 Stat. 
     1590).

  Mr. McCONNELL. Mr. President, today along with my colleague Senator 
Leahy, we are introducing legislation that will permit the Secretary of 
Agriculture authority to transfer funds to the WIC Farmers' Market 
Nutrition Program.
  The WIC Farmers' Market Nutrition Program [FMNP] has become a very 
successful program in assisting low-income families, farmers, and local 
economies.
  A total of 28 States and three Indian tribal organizations now 
participate in the FMNP. Because of the limitation on funding, several 
States, including Kentucky, have been restricted in the size of the 
program that they can offer. Several States would like the opportunity 
to expand this program based on their experience and feedback from 
farmers that participate.
  For a State to have a FMNP requires the filing of an application in 
the fall with USDA, a commitment that the State will match 30 percent 
of the total Federal funds with either cash or in-kind services and 
support.
  The benefits of FMNP are significant. WIC participants enhance the 
nutrition in their diet from of fresh fruits and vegetables. In fiscal 
year 1995 the FMNP served nearly 1 million low-income mothers and 
children participating in the WIC program. As a result of the FMNP: 71 
percent of the WIC participants ate more fresh fruits and vegetables; 
40 percent tried fruits and vegetables they had never eaten before; 48 
percent spent cash and/or food stamps in addition to their FNMP 
coupons; 66 percent plan to continue shopping at farmers markets and; 
72 percent plan to eat more fresh fruits and vegetables year round.
  Farmers' incomes will increase because of the new market for their 
products. A survey of participants in 1995 revealed that: 84 percent of 
farmers increased their sales; 23 percent increased their fruit and 
vegetable production; 36 percent grew additional types of fruits and 
vegetables and; 37 percent said they would increase their production in 
1996.
  The Kentucky Farm Bureau has initiated a new program to boost sales 
of Kentucky farm products involving 25 roadside farm markets. Studies 
confirm that consumers prefer to buy locally-grown produce.
  This is another example of organizations and State agencies working 
together to provide a service to consumers, it introduces fresh fruit 
and vegetables that are locally grown, and it enhances farmer income.
  Mr. President, this is a good bill that benefits everyone and I hope 
we are able to pass this important legislation before we adjourn.
  Mr. HARKIN. Mr. President, this legislation providing transfer 
authority to the Secretary of Agriculture is designed to help address 
the wide gap that exists between the need within the WIC Farmers' 
Market Nutrition Program and the level of resources that we have been 
able to appropriate for it. I welcome this opportunity to join as an 
original cosponsor of this bill.
  The WIC Farmers' Market Nutrition Program has been an immensely 
popular and successful initiative, benefiting both farmers and WIC 
recipients. In fiscal 1995, nearly 1 million low-income mothers and 
children received benefits allowing them to purchase fresh, nutritious 
unprepared foods at 1,143 qualifying farmers' markets that were 
supplied by over 8,000 farmers. Currently, 27 States, including my 
State of Iowa, along with the District of Columbia and three American 
Indian tribal organizations, participate in the WIC Farmers' Market 
Nutrition Program. To take part, States must agree to provide at least 
30 percent of the total cost of the program through State, local, or 
private funds.
  The nutritional benefits of the WIC Farmers' Market Nutrition Program 
are excellent. The 1995 survey showed that among WIC participants 
receiving farmers' market benefits, 71 percent ate more fresh fruits 
and vegetables, 40 percent tried fruits and vegetables they had never 
eaten before, 48 percent spent cash or food stamps in addition to their 
WIC farmers' Market coupons or checks, 66 percent planned to continue 
shopping at farmers' markets, and 72 percent planned to eat more fresh 
fruits and vegetables year round.
  The benefits to farmers are also substantial. Over $9 million was 
earned in 1995 by the more than 8,000 participating farmers. The 1995 
survey also showed that 84 percent of participating farmers increased 
their sales, 23 percent increased their fruit and vegetable production, 
36 percent grew additional types of fruits and vegetables, and 37 
percent planned to increase their production in 1996.
  In my State of Iowa the WIC Farmers' Market Nutrition Program has 
been very popular and successful. There is a great deal of interest in 
expanding the number of WIC recipients and farmers' markets that may 
take part, but the limited available Federal funding has prevented 
expansion. This situation also exists in the other States now in the 
program. Of any additional Federal funding provided for the Farmers' 
Market Nutrition Program, 75 percent would go to States that currently 
participate in it, with 25 percent to be used for adding new States.
  Unfortunately, the lack of needed Federal funding has prevented a 
number of States from joining the WIC Farmers' Market Nutrition 
Program. Thirteen other States, along with other American Indian tribal 
organizations, have expressed interest in offering the program.
  This legislation would allow, but not require, the Secretary of 
Agriculture to transfer funds within the Department of Agriculture 
budget to provide up to $2 million in additional funding for the WIC 
Farmers' Market Nutrition Program, where it could be put to very good 
use in expanding the number of WIC recipients, farmers, and farmers' 
markets participating in this outstanding program.
  I urge my colleagues to support this important bill.
                                 ______