[Congressional Record Volume 144, Number 150 (Tuesday, October 20, 1998)]
[Senate]
[Pages S12688-S12693]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                NOMINATION OF DR. JANE HENNEY TO THE FDA

  Mr. NICKLES. Mr. President, I wish to speak on the nomination of Dr. 
Jane Henney to be Commissioner of FDA.
  Mr. President, the nomination of the FDA commissioner is one of the 
most important nominations the Senate has considered this year. The FDA 
regulates products comprising twenty-five cents of every dollar spent 
by consumers in this country. It deals with literally life and death 
issues on a daily basis. Given the significant impact the FDA has on 
the life of every American, it is important that the Senate exercise 
caution to ensure the next Commissioner is qualified and capable of 
leading the Agency.
  I have let Dr. Henney know, and I let Secretary Shalala know, that I 
had some concern with FDA as it has been administered for the last few 
years. The FDA should be a non-partisan science based Agency which 
focuses solely on its mission to ensure the safety of food and to 
expeditiously review drugs and medical devices which are intended to 
save and extend lives. And for this reason I felt I needed personal 
assurance from Dr. Henney that under

[[Page S12689]]

her leadership the FDA would focus on its Congressionally mandated 
mission.
  FDA is supposed to be an agency that works to improve our health, 
that works to make sure that drugs and other medical devices are safe 
and effective. What we have found, under Dr. Kessler's regime, 
particularly during the Clinton administration, was that the FDA was 
involved in a lot of political activity. Under the leadership of David 
Kessler, the Agency too often became a tool of the Administration to 
push its liberal political agenda. One area where this was particularly 
offensive was the FDA's attempt to regulate tobacco.
  Let me give an example of where I believe they exceeded their 
authority. In my State, just recently--I tell my colleagues, this is 
going to happen in every State--an FDA talking paper announced that 
``FDA Partners With Oklahoma To Protect Children From Tobacco.''

       The Food and Drug Administration has contracted with the 
     Oklahoma State Dept. of Health to enforce the FDA's new 
     regulation that prohibits retailers from selling cigarettes 
     and smokeless tobacco to children under 18.

  I will go on:

       Under the contract, the State of Oklahoma will receive 
     [$312,000] to conduct approximately 4,500 unannounced retail 
     compliance checks over the next 12 months.

  It goes on:

       The FDA will seek a fine of $250 for the second violation, 
     $1,500 for the third [violation], $5,000 for the fourth, and 
     $10,000 for the fifth.

  So, if a convenience store doesn't comply and they don't check IDs--
and they have to check IDs up to age 27. In Oklahoma, it is legal to 
smoke when you are 18--but if a youngster, who is maybe 19, working in 
a convenience store, doesn't check somebody's identification who might 
be 26 or 27 years old, they can be fined up to $10,000. Somebody might 
say, ``Where is this idea originating? It is legal for them to smoke, 
but if they don't check IDs of somebody up to age 27 they can be fined 
$10,000?''
  This is implementing FDA's regulation. FDA's regulation, in my 
opinion, is unconstitutional. They don't have the authority to write 
the law.
  The Constitution says in article I, section 1:

       All legislative Powers herein granted shall be vested in a 
     Congress of the United States, which shall consist of a 
     Senate and House of Representatives.

  Where did this regulation come from? It came from FDA, and it came 
from the FDA Administrator, working with the Clinton administration, to 
basically implement a very, I think, political agenda. I might mention 
that the regulations are being contested in court, and most of those 
regulations are being thrown out. In fact, on August 14, 1998, the 
Fourth Circuit Court of Appeals ruled that Congress did not intend to 
give the U.S. Food and Drug Administration (FDA) the authority to 
regulate tobacco. In a 2-1 decision the Appeals Court tossed out a 1997 
federal district court ruling that gave FDA only limited power to 
regulate tobacco. ``The FDA has exceeded the authority granted to it by 
Congress.'' So said Circuit Judge H. Emory Widener Jr., on behalf of 
the three-member panel.
  I happen to favor regulation on tobacco, but I think Congress needs 
to act on it. The FDA does not have the authority to create it out of 
whole cloth, which is certainly what they did. I favor some decent 
regulations. I don't favor the idea of having a team of people making 
4,500 unannounced retail compliance checks all over my State and the 
Federal Government spending over $300,000 implementing this type of 
plan, or having the regs be so ridiculous we are going to be checking 
IDs up to age 27. I don t support regulations that allow the FDA to 
fine people and businesses who don't comply, up to $10,000 per 
violation, basically, fining them out of existence. That doesn't make 
sense.
  Mr. President, I ask unanimous consent that at the conclusion of my 
statement, an FDA talking paper, which announces this implementing 
regulation which has the force and effect of fines up to $10,000, be 
printed in the Record.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  (See Exhibit 1.)
  Mr. NICKLES. Mr. President, another area where I have seen FDA become 
very involved in the political arena deals with the abortion drug RU-
486. I have a press release that is dated May 16, 1994. The headline 
is: ``Roussel Uclaf Donates U.S. Patent Rights for RU-486 to Population 
Council.''
  The first paragraph says:

       HHS Secretary Donna E. Shalala announced today that French 
     pharmaceutical company Roussel Uclaf, at the encouragement of 
     the Clinton administration, is donating, without 
     remuneration, its United States patent rights for 
     mifepristone (RU-486) to the Population Council, Inc., a not-
     for-profit corporation.

  Then further in the press release it says:

       ``FDA will do all it can to quickly evaluate 
     mifepristone,'' said Shalala.

  I ask unanimous consent that this press release be printed in the 
Record at the conclusion of my remarks.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  (See Exhibit 2.)
  Mr. NICKLES. Mr. President, this is an administration that had FDA go 
out and recruit a company that manufactures RU-486, a French company, 
to donate its patent rights to a group which is an abortion proponent 
in the United States and then was doing everything they could to 
expedite the process.
  RU-486 is an abortion pill which terminates the life of a human 
embryo between FOUR weeks and NINE weeks. It is NOT a contraceptive as 
some would have us believe. It is a drug which will stop the beating 
heart of an unborn child.
  In January 1993, President Clinton issued a memo to Sec. Shalala 
directing her to promptly ``assess initiatives by which HHS can promote 
the testing and manufacturing of RU-486 in the US.''
  Thereafter, the FDA engaged in negotiations with Roussel Uclaf, 
French manufacturer and holder of US Patent rights, regarding the 
testing and marketing of RU-486 in the US.

       In May 1994, Shalala issued this press release, I 
     mentioned, announcing the deal and promising FDA would do 
     everything it could to ``quickly evaluate the drug.'' FDA 
     pushed the drug through the review process in a fraction of 
     time required for most drugs.

  FDA's Center for Drug Evaluation and Research reported that the 
median total review time for new drug applications in 1996 was 14.8 
months. FDA review time for RU-486 was only 6 months.
  At a time when the agency was struggling to approve drugs which cure 
diseases and save lives, the Agency was focusing a great deal of time 
and effort on a political agenda which would end the life of an unborn 
child.
  I am offended by that, and I asked Dr. Henney:
  Are you going to be promoting an abortion drug? Is that what an FDA 
Commissioner is supposed to do? Is that their purpose?
  I thought the purpose of FDA was to make sure drugs were safe and 
effective and that medical devices are safe and effective so people can 
have some confidence in these products. I didn't know it was the 
purpose of FDA to recruit companies to bring abortion drugs to into 
this country. That is clearly not their purpose.
  After talking with Dr. Henney, she assured me that wasn't her 
intention. She gave me a letter, and I ask unanimous consent that it be 
printed in the Record at the conclusion of my remarks.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  (See Exhibit 3.)
  Mr. NICKLES. Mr. President, the concluding sentence of her letter 
says:

       If I am confirmed as Commissioner, I would not solicit a 
     manufacturer for RU-486.

  She also says:

       As a general matter, I believe the Agency should only 
     solicit product applications in extraordinary circumstances 
     in which there is a clear public health need.

  Certainly trying to recruit a manufacturer and provider of abortion 
drugs doesn't fit in that category, and I appreciate her statement she 
will not solicit a manufacturer of RU-486.
  It bothers me that the Secretary of Health and Human Services and 
this Clinton administration have done so much to circumvent the 
process, to use FDA in the process. I think it is politicizing an 
agency that is supposed to be focused on its mission to protect the 
public health and to expeditiously review drugs and medical devices 
that will save and extend life.
  Mr. President, I also met with Secretary Shalala a couple of times 
and

[[Page S12690]]

wanted assurances from her that the Department of Health and Human 
Services would interpret the law as written, would enforce the law as 
written and not try to rewrite it.
  Unfortunately, we found out that the Department of Health and Human 
Services was trying to redefine the Hyde amendment which Congress 
defined. They were trying to redefine it to broaden the exceptions.
  The Hyde amendment, as most of my colleagues know, says we will not 
have Federal funding for abortion except for in cases of rape, incest 
or to save the life of the mother. There is not a mental health 
exemption in that. Many people have tried to put it in. The 
administration has. But we clearly defined it, Congress defined it as 
the Hyde amendment, no mental health exception.
  I have a letter from Secretary Shalala that says this activity will 
cease and they will interpret the Hyde amendment as written.
  We also found, Mr. President, that under the Kidcare Program HHS had 
misinterpreted the abortion language. We made it very clear in three 
different sections in that law that abortion was not going to be a 
fringe benefit which we were going to provide for teenagers. We made 
the language very, very clear.
  Much to my consternation, we were contacted by officials of the State 
of Virginia who said HHS was trying to mandate that they have abortion 
services covered even though it was certainly their wish and option 
that they didn't want that to be the case.
  After meeting with Secretary Shalala, and after an exchange of 
several letters, she finally assured me that wasn't the case. I will 
insert her letters and mine and Representative Bliley's letter into the 
Record. But we now have assurances from Secretary Shalala. I will read 
the last part of her letter sent to me on October 15:

       States are not required to provide abortion services, 
     including abortion services for which coverage is permissible 
     under title XXI of the Social Security Act, under any of the 
     S-CHIP--

  That is the State Children's Health Insurance Program--

     benefit package options in section 2103. No State will be 
     denied approval of its S-CHIP plan because its benefit 
     package under section 2103 does not include coverage of 
     abortion services, including abortion services for which 
     coverage is permissible under title XXI.
       Thank you for your interest in this matter.

  I am pleased that Secretary Shalala agreed with us that she would 
interpret the law as written, and that includes both the Hyde language 
and language in the Kidcare program dealing with abortion. I am pleased 
that I have assurances from Dr. Henney that if she is confirmed 
Commissioner of FDA, she will not recruit manufacturers and providers 
for an abortion drug, including RU-486.
  Mr. President, I ask unanimous consent that this entire set of 
letters be printed in the Record at the conclusion of my remarks.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  (See Exhibit 4.)
  Mr. NICKLES. Mr. President, it is my intent to support the nomination 
of Dr. Henney. After meeting with her a couple of times, and having 
discussions on these and other issues, I am confident that she will be 
a very able administrator who will not play politics. In my opinion, 
she doesn't have a political agenda, and I believe she will try to 
administer the Food and Drug Administration as a professional 
organization to make sure that drugs and medical devices are safe and 
effective for America's population, and that she won't try to implement 
legislation through regulation.
  Mr. President, I wasn't the only Senator who had reservations about 
this nominee. I had reservations until we could get certain 
clarifications. I received those. I have asked they be printed in the 
Record to substantiate the progress that was made, and I urge my 
colleagues to support her nomination.
  I yield the floor.

                               Exhibit 1

                  [From FDA Talk Paper, Oct. 2, 1998]

      FDA Partners With Oklahoma To Protect Children From Tobacco

       The Food and Drug Administration (FDA) has contracted with 
     the Oklahoma State Dept. of Health to enforce FDA's new 
     regulation that prohibits retailers from selling cigarettes 
     and smokeless tobacco products to children under 18.
       Under the contract, the State of Oklahoma will receive 
     $312,386.75 to conduct approximately 4,500 unannounced retail 
     compliance checks over the next 12 months. Minors in typical 
     dress, accompanied by an adult, will attempt to purchase 
     cigarettes or spit tobacco in retail stores throughout the 
     State of Oklahoma.
       Information about the compliance checks will be sent to 
     FDA, which will issue a warning for the first violation to 
     retailers found selling to the adolescents. These retailers 
     will be subject to repeat inspections. FDA will seek a fine 
     of $250 for the second violation, $1,500 for the third, 
     $5,000 for the fourth, and $10,000 for the fifth.
       The first provisions of FDA's final rule to protect 
     children from tobacco took effect Feb. 28, 1997, making age 
     18 the national minimum age to purchase tobacco products and 
     requiring retailers to check photo IDs of anyone under age 
     27. These measures are part of a comprehensive program 
     designed to reduce by half the number of young people who 
     smoke in the next seven years. FDA published the final rule 
     Aug. 28, 1996, with provisions that limit access by children 
     and adolescents to tobacco products and reduce the appeal 
     these products have for underage smokers.
       Children and adolescents have long had easy access to 
     tobacco products. In 13 studies reviewed by the Surgeon 
     General, minors were successfully able to buy cigarettes 67 
     percent of the time.
       In fact, 3,000 children and adolescents become regular 
     smokers every day, and nearly 1,000 will die prematurely from 
     a smoking-related disease.
       On Aug. 14, 1998, a majority of a three-judge panel of the 
     U.S. Court of Appeals for the Fourth Circuit in Richmond, 
     Va., ruled that FDA lacks the jurisdiction to regulate 
     tobacco products, reversing the decision of the U.S. District 
     Court for the Middle District of North Carolina. However, the 
     Department of Justice is seeking review of this decision by 
     the full Fourth Circuit. Under the court of appeals' rules, 
     unless otherwise directed by the Fourth Circuit, the effect 
     of the decision is automatically stayed, meaning the status 
     quo is maintained until the Court has the opportunity to rule 
     on the government's rehearing request. This means, pending 
     the Court's review, the parts of the FDA tobacco program that 
     have been in effect since February 1997 will remain in effect 
     and that state contracts such as this one with Oklahoma 
     continue to be awarded and implemented.
       This case involves an appeal of an April 25, 1997, decision 
     from Judge William Osteen of the U.S. District Court in 
     Greensboro, N.C. He ruled that FDA has jurisdiction under the 
     Food, Drug and Cosmetic Act to regulate nicotine-containing 
     cigarettes and smokeless tobacco. The court upheld all 
     restrictions involving youth access and labeling, including 
     the two provisions that went into effect Feb. 28.
       The State of Oklahoma is one of 53 states and territories 
     that are eligible to contract with FDA. FDA will use a 
     portion of the $34 million it has budgeted this year to 
     assist states in enforcing the regulation and to educate 
     retailers and the general public on the new provisions that 
     went into effect in last February. President Clinton has 
     requested $134 million for tobacco regulation in his FY 1999 
     budget submission to Congress.
                                  ____


                               Exhibit 2

                    [From Eagle Forum, Oct. 9, 1998]

   Roussel Uclaf Donates U.S. Patent Rights for RU-486 to Population 
                                Council

       HHS Secretary Donna E. Shalala announced today that French 
     pharmaceutical company Roussel Uclaf, at the encouragement of 
     the Clinton administration, is donating, without 
     remuneration, its United States patent rights for 
     mifepristone (RU-486) to the Population Council, Inc., a not-
     for-profit corporation.
       RU-486 has been marketed for non-surgical termination of 
     pregnancies in France, the United Kingdom and Sweden. The 
     drug is also under study for labor induction, contraception, 
     Cushing's syndrome, endometriosis, meningioma and breast 
     cancer.
       ``We strongly believe that women in America should have 
     access to the full range of safe and effective alternatives 
     to surgical abortion,'' Shalala said. ``The donation 
     announced today is a big step in that direction.''
       On Jan. 22, 1993, President Clinton signed a Presidential 
     Memorandum directing the Department of Health and Human 
     Services to assess initiatives to promote the testing and 
     licensing of RU-486 in the United States.
       Shalala commended Roussel Uclaf and the Population Council 
     for coming to closure after months of complex negotiations 
     amid repeated urging from the Clinton administration.
       Shalala emphasized, however, that the donation does not 
     mean RU-486 has been approved for use in the United States. 
     The Population Council must conduct clinical trials, identify 
     a manufacturer and submit a new drug application to the Food 
     and Drug Administration.
       ``The FDA will do all it can to quickly evaluate 
     mifepristone,'' said Shalala. ``FDA's decision will be based 
     solely on the scientific and medical evidence as to the 
     safety and efficacy of the drug. That is our responsibility 
     to the women of America.''

[[Page S12691]]

     
                                  ____
                             HHS Fact Sheet


          mifepristone (ru-486). brief overview, may 16, 1994

       On Jan. 22, 1993, in one of his first official acts, 
     President Clinton issued a memorandum directing HHS Secretary 
     Donna E. Shalala to assess initiatives to promote the testing 
     and licensing of mifepristone (RU-486) in the United States.
       During early 1993, Secretary Shalala and FDA Commissioner 
     David Kessler communicated with senior Roussel Uclaf 
     officials to begin efforts to pave the way for bringing RU-
     486 into the American marketplace.
       In April 1993, representatives of FDA, Roussel Uclaf and 
     the Population Council, a not-for-profit organization, met to 
     discuss U.S. clinical trials and licensing of RU-486. Over 
     the last year, the parties continued their negotiations, 
     culminating in the donation announced today. Roussel Uclaf 
     will transfer, without remuneration, its United States 
     patient rights to mifepristone to the Population Council. In 
     turn, the Population Council will take the necessary steps to 
     bring RU-486 to the American market.
       Mifepristone was developed by the French firm Roussel 
     Uclaf. The drug has been marketed for use to non-surgically 
     terminate pregnancy in France, the United Kingdom and Sweden. 
     There are several investigative trials underway with FDA for 
     other uses of the drug, including contraception, labor 
     induction, Cushing's syndrome, endometriosis, meningioma and 
     breast cancer.
       It must be recognized that termination of a pregnancy is 
     not a simple medical procedure, whether it is done surgically 
     or through a medical regimen. In France, the United Kingdom 
     and Sweden, where RU-486 has been administered to 
     approximately 150,000 women, the procedure requires several 
     visits to the medical facility, a precisc dosing scheme using 
     two different drugs, and close monitoring to care for women 
     who may experience excessive bleeding or other complications. 
     Any use of mifepristone in the United States would have to 
     follow the same type of strict distribution and use 
     conditions.
                                  ____


                               Exhibit 3

                                                 October 14, 1998.
     Hon. Don Nickles,
     Assistant Majority Leader,
     U.S. Senate, Washington, DC.
       Dear Senator Nickles: Thank you for meeting with me and 
     Secretary Shalala concerning my nomination to be Commissioner 
     of the Food and Drug Administration (FDA). I appreciate the 
     time and consideration that you have given to my nomination.
       I want to take this opportunity to restate that during my 
     earlier service at FDA (1992-1994) I was not involved either 
     in the solicitation or the review of the RU-486 application. 
     As a general matter, I believe the Agency should only solicit 
     product applications in extraordinary circumstances in which 
     there is a clear public health need.
       If I am confirmed as Commissioner, I would not solicit a 
     manufacturer for RU-486.
       Thank you again for considering my nomination.
           Sincerely,
                                              Jane E. Henney, M.D.
                                 ______
                                 

                               Exhibit 4


                                Congress of the United States,

                                  Washington, DC, October 7, 1998.
     Hon. Donna E. Shalala,
     Secretary, Department of Health and Human Services, 
         Washington, DC.
       Dear Madam Secretary: Last July, the Health Care Financing 
     Administration (HCFA) sent to state Medicaid directors a note 
     correctly interpreting the Hyde Amendment as it was enacted 
     in your Department's appropriations bill for FY 1998.
       ``The recently enacted Appropriations Act contained new 
     requirements for federally funded abortions. One of those 
     requirements is that, in order to receive federal funding, a 
     physician must certify that a woman suffers from a physical 
     disorder, physical injury, or physical illness, including a 
     life-endangering physical condition caused or arising from 
     the pregnancy itself, that would place the woman in danger of 
     death unless an abortion is performed.''
       That directive forecloses any possible consideration 
     concerning mental health. Yet it now appears that a HCFA 
     departmental meeting has been scheduled to discuss whether 
     some mental problems that have a physical origin might make a 
     patient eligible for a taxpayer-funded abortion. This is the 
     worst kind of bureaucratic loophole-knitting. It must stop.
       We, therefore, call upon you to take immediate action to 
     investigate and stop any activities that may be taken by 
     officials at HCFA in an effort to circumvent the Hyde 
     Amendment. We also request that you report back to us, by 
     November 1, 1998, your findings regarding this investigation 
     and the action taken by you to halt these activities.
           Sincerely,
     Don Nickles,
                                        Assistant Majority Leader,
                                                      U.S. Senate.
     Henry J. Hyde,
                             Chairman, Committee on the Judiciary,
     U.S. House of Representatives.
                                  ____

                                                     Department of


                                    Health and Human Services,

                                 Washington, DC, October 12, 1998.
     Hon. Don Nickles,
     Assistant Majority Leader, U.S. Senate, Washington, DC.
       Dear Senator Nickles: Thank you for the letter from you and 
     Chairman Hyde concerning the Department's interpretation of 
     the Hyde amendment as it affects federally funded abortions. 
     As you know, I take very seriously the Department's 
     obligation to fully implement the law as enacted by the 
     Congress, Nancy Ann DeParle, the Administrator of the Health 
     Care Financing Administration (HCFA), shares this commitment.
       Let me assure you that in order for federal funds to be 
     used to cover abortion, a physician must certify that a woman 
     suffers from a physical disorder, physical injury, or 
     physical illness, including a life-endangering physical 
     condition caused or arising from the pregnancy itself, that 
     would place the woman in danger of death unless an abortion 
     is performed.
       We have no intention to instruct states on this issue other 
     than to reiterate the statutory obligation that must be met 
     to utilize federal funds for legally permissible abortions.
       I trust this addresses your concerns. Please let me know if 
     I can be of further assistance in this matter. An identical 
     letter has been sent to Chairman Hyde.
           Sincerely,
     Donna E. Shalala.
                                  ____

                                            U.S. Senate, Office of


                                    Assistant Majority Leader,

                                  Washington, DC, October 7, 1998.
     Hon. Donna E. Shalala,
     Secretary, U.S. Department of Health and Human Services, 
         Washington, DC.
       Dear Madam Secretary: It has come to our attention that the 
     Health Care Financing Administration (HCFA) is wrongly 
     interpreting provisions included in the Balanced Budget Act 
     of 1997 (BBA) regarding Title XXI of the Social Security Act. 
     Despite the clarity of the law, your agency is seeking to 
     compel States to cover abortions under their State Children's 
     Health Insurance Program (S-CHIP) plans HCFA's actions are in 
     direct contravention of the Balanced Budget Act of 1997.
       As you are aware, Congress codified the Hyde language in 
     the new Title XXI language establishing the S-CHIP program 
     (See sections 2105(c)(1), 2105(c)(7) and 2110(a)(16)). This 
     language prohibits the use of funds under this program to pay 
     for any abortion or to assist in the purchase, in whole or in 
     part, of health benefit coverage that includes coverage of 
     abortion except where the abortion is necessary to save the 
     life of the mother or if the pregnancy is the result of an 
     act of rape or incest.
       Of particular relevance to the current dispute is the fact 
     that in each of the aforementioned sections, even this 
     limited scope of permissible abortion payment or coverage is 
     triggered by the extent (if any) to which a State elects to 
     include abortion payment or coverage in its S-CHIP State 
     plan. As a result, there exists no requirement that States 
     cover abortions in the case of rape, incest, or life 
     endangerment. Rather, these are the only instances in which a 
     State which chooses to pay for abortions or abortion coverage 
     may do so.
       In addition to codifying the Hyde amendment, Congress 
     explicitly distinguished in BBA between abortion and 
     medically necessary services under Title XIX of the Social 
     Security Act (See section 4707(e)(1)). By citing abortion as 
     an exception to the standard of medical necessity, Congress 
     removed the basis upon which Medicaid coverage of abortion 
     was previously required.
       Based on these provisions of law, HCFA has no authority to 
     require any State to provide abortion coverage as part of 
     their Title XXI program. As a result, any disapproval of a 
     State plan on these grounds is contrary to law. We request 
     your immediate written assurance that HCFA will no longer 
     require States to cover abortions under their S-CHIP plans.
           Sincerely,
     Don Nickles,
                                        Assistant Majority Leader.
     Tom Bliley,
     Chairman, Committee on Commerce.
                                  ____

                                              Department of Health


                                           and Human Services,

                                  Washington, DC, October 3, 1998.
     Hon. Don Nickles,
     Assistant Majority Leader, U.S. Senate, Washington, DC.
       Dear Senator Nickles: Thank you for the letter from you and 
     Chairman Bliley concerning abortion coverage under the Title 
     XXI State Children's Health Insurance Program (S-CHIP). As 
     explained in greater detail below, states do have the 
     discretion to determine whether to provide coverage for 
     permissible abortion services in their S-CHIP programs.
       First, let me say that we have gone to great lengths to 
     ensure that the Department's implementation of the S-CHIP 
     program is consistent with congressional intent and flexible 
     to meet the needs and circumstances of individual states. We 
     have consulted frequently with Members of Congress and staff 
     on a bipartisan basis, and have worked with state officials 
     to facilitate the implementation of their programs. To date, 
     we have approved 42 state plans under the Title XXI program.
       In addition to the Title XXI Medicaid expansion option, 
     states have three options for insurance coverage under the S-
     CHIP program, Benchmark, Benchmark-Equivalent, or Secretary-
     Approved Coverage. States are

[[Page S12692]]

     free to exclude coverage for permissible abortion services in 
     their Benchmark (provided a state's Benchmark plans does not 
     cover abortions) or Benchmark-Equivalent options.
       To ensure as much consistency as possible in our approval 
     process, we have limited the exercise of our discretion under 
     the third option, Secretary-Approved Coverage, to cases in 
     which the benefits offered under a state's S-CHIP program are 
     the same as under its Medicaid plan. This provided state with 
     the flexibility to use their existing Medicaid programs and 
     structures without have to extend an entitlement to new S-
     CHIP enrollees. Given the substantial flexibility in design 
     their benefit packages that states enjoy under the Benchmark 
     and Benchmark-Equivalent options, this limited approach to 
     Secretary-Approved Coverage does not unduly constrain the 
     benefits options available to states.
       Please let me know if I can be of further assistance on 
     these issues. An identical letter has been sent to Chairman 
     Bliley.
           Sincerely,
     Donna E. Shalala.
                                  ____

         U.S. Senate, Office of Assistant Majority Leader,
                                 Washington, DC, October 13, 1998.
     Hon. Donna E. Shalala,
     Secretary, U.S. Department of Health and Human Services, 
         Washington, DC.
       Dear Madam Secretary: Thank you for your recent letter. 
     While I appreciate your timely response, I would like 
     specific answers to the concerns that were raised in my 
     earlier letter. On behalf of chairman Bliley and me, I 
     request your direct response to the following questions:
       (1) On the basis of your letter dated October 13, 1998, is 
     it the Department's view that the Hyde language contained in 
     the S-CHIP program does not require states to provide 
     abortion coverage in the circumstances where the abortion is 
     necessary to save the life of the mother or if the pregnancy 
     is the result of an act of rape or incest (See section 
     2105(c)(1), 2105(c)(7), and 2110(a)(16))?
       (2) Is it your contention that a state which covers 
     elective abortions under Medicaid and which opts to offer 
     ``Secretary-approved coverage'' under S-CHIP must cover 
     elective abortions for teenage girls under its S-CHIP 
     program?
       (3) In light of your letter, is it your contention that 
     abortion is no longer considered a ``medically necessary'' 
     service under the Medicaid program (See section 4707(e)(1)?
       (4) In what manner do you view abortion as ``appropriate 
     coverage for the population of targeted low-income children 
     proposed to be provided such coverage'' by Virginia or any 
     other state which submits an application for Secretary-
     approved coverage (See section 2103(a)(4))?
       Again, I request your immediate written response to the 
     questions above. Thank you in advance for your cooperation.
           Sincerely,
                                                      Don Nickles,
     Assistant Majority Leader.
                                  ____

                                                     Department of


                                    Health and Human Services,

                                 Washington, DC, October 14, 1998.
     Hon. Don Nickles,
     Assistant Majority leader, U.S. Senate, Washington, DC.
       Dear Senator Nickles: Thank you for your most recent letter 
     and the opportunity to clarify our October 13, 1998 response 
     concerning coverage of abortion services under the Title XXI 
     State Children's Health Insurance Program (CHIP).
       I would like to clarify my response to you concerning the 
     conditions under which I would approve CHIP benefit packages 
     for Title XXI non-Medicaid state programs (S-CHIP). In 
     general, our policy has been that a state must provide a 
     benefit package that is equal to, or better than, Benchmark 
     or Benchmark-Equivalent Coverage. In my letter to you 
     yesterday, I stated that we have limited the exercise of our 
     discretion under the Secretary-Approved Coverage option to 
     cases in which the benefits offered under a state's S-CHIP 
     program are the same as under its Medicaid plan. Indeed, we 
     decided as a matter of policy in devising our S-CHIP 
     implementation process that this approach provided an 
     important benefit option that states might not otherwise 
     have.
       However, after asking staff to review our records 
     yesterday, it appears that in addition to Medicaid plans, we 
     may have considered as Secretary-Approved Coverage other 
     benefit packages. This occurred in instances in which a state 
     provided benefits in excess of the statutorily defined 
     Benchmarks. Apparently, there was discussion in the 
     Department that it might be desirable to use the Secretary-
     Approved Coverage option for states that want to provide more 
     benefits than required by law without requiring them to 
     submit a formal actuarial estimate.
       As a result of this review of our records and staff 
     deliberations, I have decided that as long as a state 
     proposed to provide benefits in excess of Benchmark Coverage, 
     states will not be required to cover permissible abortion 
     services under the Secretary-Approved Coverage option. We 
     have already informed you that states are free to exclude 
     coverage for permissible abortion services in their Benchmark 
     (provided a state's Benchmark plan does not cover abortions) 
     or Benchmark-Equivalent options.
       I would like to address the specific questions you raised 
     in your October 13, 1998 letter.
       (1) On the basis of your letter dated October 13, 1998, is 
     it the Department's view that the Hyde language contained in 
     the S-CHIP program does not require states to provide 
     abortion coverage in the circumstances where the abortion is 
     necessary to save the life of the mother or if the pregnancy 
     is the result of an act of rape or incest (See Section 2105 
     (c)(1), 2105 (c)(7), 2110 (a)(16))?
       As discussed above, states are not required to provide 
     permissible abortion services under any of the three S-CHIP 
     program options. However, to the extent that a state chooses 
     a package that covers abortion services under the Benchmark 
     option, they must provide these services to the extent they 
     are allowed under the CHIP statute.
       (2) Is it your contention that a state which covers 
     elective abortions under Medicaid and which opts to offer 
     ``Secretary-approved coverage'' under S-CHIP must cover 
     elective abortions for teenage girls under its S-CHIP 
     program?
       As discussed above, states are not required to cover 
     permissible abortion services in order to receive Secretary-
     Approved Coverage. States do, however, have to offer at least 
     the scope of benefits provided in their Benchmark plan.
       (3) In light of your letter, is it your contention that 
     abortion is no longer considered a ``medically necessary'' 
     service under the Medicaid program (See section 4707(e)(1))?
       We do not believe that Section 4707(e)(1) affects whether 
     abortion services are medically necessary services under 
     Medicaid. As a general matter, this section of the law 
     describes the intermediate sanction regime a state must put 
     in place in implementing the law. It does not affect the 
     scope of benefits required under a state plan. Specifically, 
     Section (e)(1)(A) permits states to provide for sanctions 
     against any Medicaid managed care organization contracting 
     with a state if that organization fails substantially to 
     provide medically necessary items and services under the law 
     or the organization's contract. Accordingly, if a managed 
     care entity has agreed by contract to provide those services 
     and does not do so, it may be sanctioned by operation of this 
     section of the law. Notwithstanding that provision, Section 
     (e)(1)(B) instructs that there shall not be any sanction 
     imposed on a managed care entity that has contracted with a 
     state and that fails or refuses to provide abortion services, 
     so long as the contract itself reflects no obligation to 
     provide such services. Moreover, the inclusion of these 
     provisions strongly indicates that abortion services are 
     medically necessary services under the Medicaid program, 
     otherwise an exception to the general rule would not have 
     been included.
       (4) In what manner do you view abortion as ``appropriate 
     coverage for the population of targeted low-income children 
     proposed to be provided such coverage'' by Virginia or any 
     other state which submits an application for Secretary-
     approved coverage (See Section 2103(a)(4))?
       Abortion services may be covered under Section 2103(a)(4) 
     to the extent that a state chooses to include coverage for 
     permissible abortion services in its otherwise qualified 
     plan. Limited abortion services qualify as covered services 
     under Section 2110(a)(16) of the CHIP law.
       I hope this information addresses your concerns. Please let 
     me know if you would like to discuss this matter further.
           Sincerely,
     Donna E. Shalala.
                                  ____

         U.S. Senate, Office of Assistant Majority Leader,
                                 Washington, DC, October 15, 1998.
     Hon. Donnal E. Shalala,
     Secretary, U.S. Department of Health and Human Services, 
         Washington, DC.
       Dear Madam Secretary: Thank you for your letter of October 
     14. Chairman Bliley and I have analyzed your responses to the 
     questions posed in the October 13 letter and continue to have 
     grave concerns about the manner in which the Department 
     interprets the plain legislative language of Title XXI of the 
     Social Security Act. In particular, your most recent response 
     states, in part, that ``to the extent that a state chooses a 
     package that covers abortion services under the Benchmark 
     option, they must provide these services to the extent they 
     are allowed under the CHIP [sic] statute.'' (emphasis added)
       This interpretation has no basis in the statutory language 
     of the State Children's Health Insurance Program (SCHIP). 
     Section 2103 defines the various options that states have in 
     crafting the benefits package offered through their SCHIP 
     plan. In every instance, states are given the full discretion 
     to establish the specific benefits to be offered to children 
     covered under the state's SCHIP plan. We call your attention 
     to the explicit use of the terms ``equivalent'' in Section 
     2103(a)(1) relating to Benchmark Coverage and Section 
     2103(a)(2) relating to Benchmark-Equivalent Coverage. We also 
     call your attention to the ability of states to ``modify'' 
     the benefits package offered through Section 2103(a)(3), as 
     provided in 2103(d)(2).
       We appreciate your recognition, as stated in your October 
     14 response, that ``states are not required to provide 
     permissible abortion services under any of the three S-CHIP 
     program options.'' We also appreciate your recognition, as 
     stated in the same letter, that states are not required to 
     provide abortion coverage under the Secretary-Approved 
     Coverage option (Section 2103(a)(4).
       However, your continuing assertion that any requirement 
     exists in Title XXI of the Social Security Act compelling 
     states to

[[Page S12693]]

     provide abortion coverage or services is unacceptable and 
     contrary to public law.
       Once again, we request your immediate written response to 
     the concerns stated above. In addition, I invite your staff 
     to meet with our staff as soon as possible to explain the 
     legal basis for the interpretation presented to us in your 
     October 14 letter. Thank you in advance for your cooperation.
           Sincerely,
                                                      Don Nickles,
     Assistant Majority Leader.
                                  ____

                                                     Department of


                                    Health and Human Services,

                                 Washington, DC, October 15, 1998.
     Hon. Don Nickles,
     Assistant Majority Leader, U.S. Senate, Washington, DC.
       Dear Senator Nickles: I wanted to provide further 
     information with respect to issues discussed in our recent 
     correspondence.
       States are not required to provide coverage of abortion 
     services, including abortion services for which coverage is 
     permissible under Title XI of the Social Security Act, under 
     any of the S-CHIP benefit package options in section 2103. No 
     state will be denied approval of its S-CHIP plan because its 
     benefit package under section 2103 does not include coverage 
     of abortion services, including abortion services for which 
     coverage is permissible under Title XXI.
       Thank you for your interest in this matter.
           Sincerely,
     Donna E. Shalala.

                          ____________________