Orrin Hatch

Mr. HATCH

Mr. HATCH. Mr. President, I also take this opportunity today to right a wrong. Over the past 2 years, members of The Federalist Society have been much maligned by some of my Democrat colleagues, no doubt because they see political advantage in doing so. The Federalist Society has even been presented as an 'evil cabal' of conservative lawyers. Its members have been subjected to questions which remind one of the McCarthy hearings of the early 1950's. Detractors have painted a picture which is surreal, twisted and untrue. The truth is that liberal orthodoxies reign rampant and often unchecked in a majority of this countries law schools and in the legal profession, and that the left is shocked that an association of constitutionalist lawyers would exist, much less include the notable legal minds it does. During the mid-1990's, Professor James Lindgren of Northwestern University Law School conducted a survey of law school professors and came to the fallowing conclusion. At the faculties of the top 100 law schools 80 percent of law professors were Democrats, or leaned left, and only 13 percent were Republicans, or leaned right. These liberal professors promulgate their ideology in and outside the classroom. Anyone associated with America's campuses or law schools knows that nonliberal views are regularly stifled and those espousing those views are often publicly shunned and ridiculed. It was this environment of hostility to freedom of expression and the exchange of ideas in universities that set the stage for the formation of the Federalist Society. And given my Democrat colleagues' reaction to the Society, it appears to be fighting against liberal narrow-mindedness still. In 1982, the Federalist Society was organized, not to foster any political agenda, but to encourage debate and public discourse on social and legal issues. Over the past 20 years the Federalist Society has accomplished just that. It has served to open the channels of discourse and debate in many of America's law schools. The Federalist Society espouses no official dogma. Its members share acceptance of three universal ideas: 1. that government's essential purpose is the preservation of freedom; 2. that our Constitution embraces and requires separation of governmental powers; and 3. that judges should interpret the law, not write it. For the vast majority of Americans, these are not controversial issues. Rather, they are basic Constitutional assertions that are essential to the survival of our republic. They are truths that have united Americans for more than two centuries. Recently we have seen the emergence of some groups that seek to undermine the third of these ideas--that judges should not write laws. These groups have attempted to use the judiciary to circumvent the democratic process and impose their minority views on the American people. This judicial activism is a nefarious practice that seeks to undermine the principle of democratic rule. It results in an unelected oligarchy, government by a small elite. Judicial activism imposes the will of a small group of politicized lawyers upon the American people and undermines the work of the people's representatives. Indeed, if the radical left is successful, if we continue to appoint judges that are committed to writing law and not interpreting it, than all of us can just go home. We can resign ourselves to live under the oligarchical rule of lawyers. I happen to know a few lawyers, and please trust me when I say, this is not a good idea. Beyond acceptance to its three key ideas, freedom, separation of powers, and that judges should not write laws, it is challenging, if not impossible, to find consensus among Federalist Society members. Its members hold a wide array of differing views. They are so diverse that it is impossible to describe a Federalist Society philosophy. The assertion that members are ideological carbon copies of each other is ludicrous. The Society revels in open, thoughtful, and rigorous debate on all issues. It rests on the premise that public policy and social issues should not be accepted as part of a party-line but rather warrant much thought and dialogue. Any organization that sponsors debate on issues of public importance, as opposed to self- serving indoctrination, is healthy for us all. Now, how does the Federalist Society accomplish its goal? Not by lobbying Congress, writing amicus briefs, or issuing press releases. The Federalist Society seeks only to sponsor fair, serious, and open debate about the need to enhance individual freedom and the role of the courts in saying what the law is rather than what it should be. The Society believes that debate is the best way to ensure that legal principles that have not been the subject of sufficient attention for the past several decades receive a fair hearing. The Federalist Society's commitment to fair and open debate can be seen by a small sampling of some participants in its meetings and symposiums. They have included scores of liberals like Justices Ruth Bader Ginsburg and Stephen Bryer, Michael Dukakis, Barney Frank, Abner Mikva, Alan Dershowitz, Laurence Tribe, Steve Shapiro, Christopher Hitchins and Ralph Nader, just to name a few. I would like to include for the Record a list of 60 participants in Federalist Society events that demonstrates the remarkable diversity of thought of Federalist Society events. One of them is Nadine Strossen, President of the ACLU, who has participated in Federalist Society functions regularly and constantly since its founding. She has praised its fundamental principle of individual liberty, its high-profile on law school campuses, and its intellectual diversity, noting that there is frequently strenuous disagreement among members about the role of the courts. Strossen has even said that she cannot draw any firm conclusion about a potential judicial nominee's views based on the fact that he is a Federalist Society member. It seems to me that an organization that includes such a wide array of opinion serves this nation well and does not deserve the vilification it gets from the usual suspects. There are many notable conservatives that also affiliate with the Federalist Society. But as the members of the Senate demonstrate, even amongst those that are often labeled ``conservatives'' there is a much disagreement on most social and political issues. Some often portray the Federalist Society as a tightly-knit, well-organized coalition of conservative lawyers who are united by their right-wing ideology. This is far from true. Allow me to illustrate further. Two years ago the Washington Monthly published an article entitled ``The Conservative Cabal That's Transforming American Law,'' which cited a 1999 decision by a panel of the D.C. Circuit's Court of Appeals as the ``network's most far-reaching victory in recent years''. The decision overturned some of the EPA's clean-air standards on the grounds that it was unconstitutional for Congress to delegate legislative authority to the executive branch. C. Boyden Gray, a former White House Counsel for the first President Bush and a member of the Federalist Society's Board of Visitors, filed an amicus brief making the winning argument. However, this is not the smoking gun case that opponents of the Federalist Society would have us believe it to be to prove that it is part of the vast right wing conservative conspiracy. First, the case was overturned on appeal by the Supreme Court, in a decision written by Justice Antonin Scalia, a frequent participant in Federalist Society activities who was the faculty advisor to the organization when he taught at the University of Chicago. Second, the Washington Monthly piece also attacked Boyden Gray as a water carrier for the Federalist Society for advancing Microsoft's effort against antitrust enforcement. Of course, Mr. Gray serves on the Society's Board of Visitors with Robert Bork, who has been Microsoft's chief intellectual adversary. Not quite the vast right wing conspiracy hobgoblin some of my colleagues would have the American people believe in. A close examination of the Federalist Society reveals not a tight- knit organization that demands ideological unity, but an association of lawyers, much like the early bar associations that first appeared in this country in the late 19th century, made up of individuals from across the political spectrum who are committed to the principles of freedom and the rule of law according to the Constitution. As a former co-chairman myself, I applaud that the President has sought out its members to fill the federal bench.

Mr. HATCH

Mr. HATCH. Mr. President, this morning we moved closer to the confirmation of Judge Julia Smith Gibbons of Tennessee to the 6th Circuit Court of Appeals. In so doing, we will bring relief to a Circuit with a 50 percent vacancy rate, with 9 empty seats out of 18, despite the fact that the President nominated 6 fine public servants to fill those seats on May 9, 2001, well over 400 days ago. I look forward to confirming her finally. I rise this morning to express my most profound concern for the course of judicial confirmations in general and my support for the confirmation of Justice Priscilla Owen of Texas. The Judiciary Committee gave Justice Owen a 5-hour hearing earlier this week, which I am afraid did not do credit to the Committee. I will comment on Justice Owens' qualifications, and to address some of the deceptions, distortions and demagoguery orchestrated against her nomination, that we have all read in the national and local papers. I would like first to comment on the two jingos that are being used about her record as if they had substance: namely, that Justice Owen is ``conservative'' and that she is ``out of the mainstream.'' Of course, this comes from the Washington interest groups, in many cases, who think that mainstream thought is more likely found in Paris, France, than Paris, Texas. I must admit that it's curious to hear it argued that a nominee twice elected by the people of the most populous State in the Circuit for which she is now nominated is ``out of the mainstream.'' Texans are no doubt entertained to hear that. Listening to some of my colleagues' commentary on judges, I sometimes think that main-stream for them is a northeastern river of thought that travels through New Hampshire early and often, widens in Massachusetts, swells in Vermont, and deposits at New York City. Well, the mainstream that I know, and that most Americans can relate to, runs much broader and further than that. The other mantra repeated by Justice Owen's detractors is that she is ``conservative.'' I believe that the use of political or ideological labels to distinguish judicial philosophies has become highly misleading and does a disservice to the public's confidence in the independent judiciary, of which the Senate is the steward. I endorse the words of my friend, and former Chairman of the Judiciary Committee, Senator Biden, when he said some years ago that: ``[Judicial confirmation] is not about pro-life or pro-choice, conservative or liberal, it is not about Democrat or Republican. It is about intellectual and professional competence to serve as a member of the third co-equal branch of the Government.'' I believe it is our duty to confirm judges who stand by the Constitution and the law as written, not as they would want to rewrite them. That was George Washington's first criterion for the Federal bench, and it is mine. I also want common sense judges who respect American culture. I believe that is what the American people want. I believe we do a disservice to the independence of the Federal judiciary by using partisan or ideological terms in referring to judges. My reason was well stated by Senator Biden when he said that: ``it is imperative [not to] compromise the public perception that judges and courts are a forum for the fair, unbiased, and impartial adjudication of disputes.'' We compromise that perception, I believe, when we play partisan or ideological tricks with the judiciary. Surely, we can find other ways to raise money for campaigns and otherwise play at politics, without dragging this nation's trust in the judiciary through the mud, as some of the outside groups continue to do. All you have to do to see my point is read two or three of the fund- raising letters that have become public over the past couple of weeks that spread mistruths and drag the judiciary branch into the mud, as many recent political campaigns increasingly find themselves. On a lighter note, while on ideology, let me pause to point out that one of the groups deployed against Justice Owen is the Communist Party of America, but then I don't know that they have come out in favor of any of President Bush's nominees. I suspect after the fall of the Berlin Wall, they must have a lot of time on their hands. Today I wish to address just why a nominee with such a stellar record, a respected judicial temperament, and as fine an intellect as Justice Owen has, who graduated third in her class from Baylor's law school, a great Baptist institution, when few women attended law school, let alone in the South, who obtained the highest score in the Texas Bar examination, and who has twice been elected by the people of Texas to serve on their Supreme Court, the last time with 83 percent of the votes and the support of every major newspaper of every political stripe, I would like to address just why such a nominee could get as much organized and untruthful opposition from the usual leftist, Washington special interest groups that we see. I will peel through what is at play for those groups. We need to expose and repel what is at play for the benefit and independence of this Senate. And I would like to address also the reasons why I am confident that she will be confirmed notwithstanding. Not least of which is that, far from being the ``judicial activist'' some would have us believe her to be, she garnered the American Bar Association's unanimous rating of ``well qualified.'' The Judiciary Committee has never voted against a nominee with this highest of ratings. The first reason for the organized opposition, of course, is plain. Justice Owen is from Texas, and Washington's well paid reputation destroyers could not help but attempt to attack the widely popular President of the United States, at this particular time in an election year, by attacking the judicial nominee most familiar to him. Justice Owen, welcome to Washington. But as I prepared more deeply for the Hearing earlier this week, the second reason became apparent to me. In my 26 years on the Judiciary Committee I have seen no group of judicial nominees as superb as those that President Bush has sent to us, and he has sent both Democrats and Republicans. In reading Justice Owen's decisions, one sees a judge working hard to get it right, to get at the legislature's intent and to apply binding authority and rules of judicial construction. It is apparent to me that of all the sitting judges the President has nominated, Justice Owen is the most outstanding nominee. She is, in my estimation, the best, and despite what her detractors say, she is the best judge that any American, any consumer and any parent could hope for. Her opinions, whether majority, concurrences or dissents, could be used as a law school text book that illustrates exactly how, and not what, an appellate judge should think, how she should write, and just how she should do the people justice by effecting their will through the laws adopted by their elected legislatures. Justice Owen clearly approaches these tasks with both scholarship and mainstream American common sense. She does not substitute her views for the legislature's, which is precisely the type of judge that the Washington groups who oppose her do not want. She is precisely the kind of judge that our first two Presidents, George Washington and John Adams, had in mind when they agreed that the justices of the State supreme courts would provide the most learned candidates for the Federal bench. So in studying her record, the second reason for the militant and deceptive opposition to Justice Owen became quite plain to me. In this world turned upside down, simply put, she is that good. Another reason for the opposition against Justice Owen is the most demagogic, the issue of campaign contributions and campaign finance reform. Some of her critics are even eager to tie her to the current trouble with Enron. Well, she clearly has nothing to do with that. Neither Enron nor any other corporation has donated to her campaigns, in fact, they are forbidden by Texas law to make campaign contributions in judicial elections. It was embarrassing to me, as it would be to any American who watched the hearing earlier this week, to see Justice Owen defeat these demagogic allegations, but being a Texas woman, she did so with style, elegance, and grace--and without embarrassing her questioners. Not that there was even a need for more questions. The Enron and campaign contributions questions were amply clarified in a letter to Chairman Leahy and the Committee dated April 5 by Alberto Gonzales. I will ask unanimous consent, to place this and other related letters into the Record. And I would place into the Record a retraction from The New York Times saying that they got their facts wrong on this Enron story. Such retractions don't come often, not as often as the invention of facts by the smear groups. And despite the retraction, CNN was repeating the same wrong facts just this week! Notably, at the hearing Justice Owen received no questions from my Democrat colleagues on her views on election reform and judicial reform, of which she is a leading advocate in Texas. She is also a leader in Gender Bias Reform in the courts and a reformer on divorce and child support proceedings. But my colleagues seemed to take little interest in this, nor in her acclaimed advocacy to improve legal services and funding for the poor. All of these are aspects of her record her detractors would have us ignore, I certainly did not read these positive attributes in those fancy documents, or should I say booklets, released prior to the hearing by the Washington radical special interests lobby. I will also ask unanimous consent, to place into the Record letters from leaders of the Legal Society and 14 past presidents of the Texas Bar Association, many of whom are leading Texas Democrats. The fourth reason for the opposition to Justice Owen is the most disturbing to me. For some months now, a few of my Democrat colleagues have strained to point out when they believe they are voting for judicial nominees that they believe to be pro-life. I have disputed this when they have said it because the record contains no such information of personal views from the judges we have reported favorably out of the Judiciary Committee. Each time they assert it, my staff has scoured the transcripts of hearings and turned up nothing. What does turn up is that each time my colleagues have asserted this, they have done so only for nominees who are men. I am afraid that the main reason Justice Owen is being opposed, is not that personal views, namely on the issue of abortion, are being falsely ascribed to her, they are, but rather because she is a woman in public life who is believed to have personal views that some maintain should be unacceptable for a woman in public life to have. Such penalization is a matter of the greatest concern to me because it represents a new glass ceiling for women jurists. And they have come too far to suffer now having their feet bound up just as they approach the tables of our high courts after long-struggling careers. I am deeply concerned that such treatment will have a chilling effect on women jurists that will keep them from weighing in on exactly the sorts of cases that most invite their participation and their perspectives as women. The truth is that Justice Owen has never written or said anything critical of abortion rights. In fact, the cases she is challenged on have everything to do with the rights of parents to be involved in their children's lives, and nothing to do with the right to an abortion. Ironically, the truth is that the cases that her detractors point to as proof of apparently unacceptable personal views are a series of fictions. This is what I mean about exposing the misstatements of the left-wing activist groups in Washington. I will illustrate just three of these fictions. The first sample fiction is the now often-cited comment attributed to then Texas Supreme Court Justice Alberto Gonzales, written in a case opinion, that Justice Owen's dissent signified ``an unconscionable act of judicial activism.'' Someone should do a story about how often this little shibboleth has been repeated in the press and in several websites of the professional smear groups. The problem with it is that it isn't true. Justice Gonzales was not referring to Justice Owen's dissent, but rather to the dissent of another colleague in the same case. The second sample fiction is the smear group's misrepresented portrayal of a case involving buffer zones and abortion clinics. In that case, the majority of the Texas Supreme Court ruled for Planned Parenthood and affirmed a lower court's injunction that protected abortion clinics and doctor's homes and imposed 1.2 million dollars in damages against pro-life protestors. In only a few instances, the court tightened the buffer zones against protestors. Justice Owen joined the majority opinion and was excoriated by dissenting colleagues, who were, by that way, admittedly pro-life. When describing that decision then, abortion rights leaders hailed the result as a victory for abortion rights in Texas. Planned Parenthood's lawyer said the decision ``isn't a home run, it's a grand slam.'' Of course, that result hasn't changed, but the characterization of it has. This is how Planned Parenthood describes this same case in their fact sheet on Justice Owen: ``[Owen] supports eliminating buffer zones around reproductive health care clinics . . .'' In fact, her decision did exactly the opposite. The third and most pervasive sample fiction concerns Justice Owen's rulings in a series of Jane Doe cases which first interpreted Texas' then-new parental involvement law. The law, which I think is important to emphasize was passed by the Texas legislature, not by Justice Owen, with bipartisan support, requires that an abortion clinic give notice to just one parent 48 hours prior to a minor's abortion. Unlike States with more restrictive laws such as Massachusetts, Wisconsin, and North Carolina, consent of the parent is not required in Texas. A minor may be exempted from giving such notice if they get court permission. Since the law went into effect, over 650 notice bypasses have been requested from the courts. Of these 650 cases, only 10 have had facts so difficult that two lower courts denied a notice bypass, only 10 have risen to the Texas Supreme Court. Justice Owen's detractors would have us believe that in these cases, she would have applied standards of her own choosing. Ironically, in each and every example they cite, whether concurring with the majority or dissenting, Justice Owen was applying not her own standards but the standards enuniciated in the Roe v. Wade line of decisions of the United States Supreme Court, which she followed and recognized as authority. For example, detractors take pains to tell us that Justice Owen would require that to be sufficiently informed to get an abortion without a parent's knowledge, that the minor show that they are being counseled on religious considerations. They appear to think this is nothing more than opposition to abortion rights. They are so bothered with this religious language that various documents produced by the abortion industry lobby italicize the word religious. But this standard is not Justice Owen's invention, but rather the words of the Supreme Court's pro-choice decision in Casey. Should she not follow one Supreme Court decision, but be required to follow another? Is that what we want our judges to do, pick and choose which decisions to follow? That appears to be the type of activist judge these groups want, and this Senate should resist all such attempts. The truth is that rather than altering the Texas law, Justice Owen was trying to effect the legislator's intent. No better evidence of this is the letter of the pro-choice woman Texas Senator stating her ``unequivocal'' support of Justice Owen. Senator Shapiro says of Justice Owen: ``Her opinions interpreting the Texas [parental involvement law] serve as prime example of her judicial restraint.'' I understand why the Washington left-wing groups don't like that in a judge, but the Senate and the Judiciary Committee should applaud and commend such restraint and temperament. The truth is that, rather than being an activist foe of Roe, Justice Owen repeatedly cites and follows Roe and its progeny as authority. She has to, it's what the Court has said is the law. Compare this to Justice Ruth Bader Ginsburg who wrote in 1985 that the Roe v. Wade decision represented ``heavy handed judicial intervention'' that was ``difficult to justify.'' In relation to this, I would like briefly to comment on the mounting offensive of some to change the rules of judicial confirmation by asking nominees to share personal views or to ensure that nominees share the personal views of the Senator on certain cases. To illustrate my view, I'll tell you that many people have recently called on the Judiciary Committee to question nominees as to their views on the pledge of allegiance case. My full-throated answer to this is no, as much as I think that that case was wrongly decided. I also happen to think that the recent School Voucher case is the most important civil rights decision since Brown but I am not going to ask people what they think about that case either. Such questions threaten the heart of the independent judiciary and attempt to accomplish by hidden indirection what Senators cannot do openly by constitutional amendment. It is an attempt to make the courts a mere extension of the Congress. I speak against this practice in the strongest terms, and, in my view, any nominee who answers such questions would not be fit for judicial office and would not have my vote. The truth is that there are many who, like Justice Ginsburg, think that cases like Griswold or Roe were wrongly decided as a constitutional matter even if they agree with the policy result, just as the great liberal Justice Hugo Black did in his dissent in Griswold. A few weeks ago we heard testimony from Boyden Gray, a former White Counsel and a former Supreme Court clerk, that Chief Justice Warren though that Brown v. Board of Education was his worst ruling as matter of constitutional law, but not his least necessary to end desegregation. Some of Justice Owen's detractors have made much about the fact that she is not afraid to dissent. Of course, they fail to mention dissents like her opinion in Hyundai Motor v. Alvarado, in which Justice Owens' reasoning was later adopted by the United States Supreme Court on the same difficult issue of law. They also overlooked here dissent in a repressed memory/sexual abuse case where she took the majority to task with these words: ``This is reminiscent of the days when the crime of rape went unpunished unless corroborating evidence was available. The Court's opinion reflects the attitudes reflected in that era.'' Perhaps, they thought that this dissent showed her too representative of American women. Despite deceptive opposition I think that Justice Owen should be confirmed. I will ask unanimous consent to place into the Record an editorial of earlier this week from The Washington Post, a liberal publication, calling on us to be fair and calling on this Senate to confirm Justice Owen. I have hope that my Democrat colleagues on the Judiciary Committee will be led by the time-tested standards well-stated by Senator Biden, and look again to qualifications and judicial temperament, not base politics. Whether the Biden standard will survive past our time, will be tested now. If we fail the test we will breach our responsibility as auditors of the Washington special interest groups and the Judiciary's stewards on behalf of all the people, and not just some. Mr. President, I ask unanimous consent that the documents to which I have referred be printed in the Record.

Mr. HATCH

Mr. HATCH. Mr. President, I rise to speak on the pending legislation, S. 812, the Greater Access to Pharmaceuticals Act. Even if I had major differences of opinion on the substance of this legislation, I commend Senators McCain and Schumer, Kennedy and Edwards for their efforts in this area. I especially wish to recognize the efforts of Senators Kennedy, Edwards, and Collins for their work, which was almost a complete rewriting of the McCain-Schumer bill. Let me also hasten to commend Senators Gregg and Frist for working to improve the bill that emerged from the HELP Committee and for their leadership during the debate. Mr. President, last week, I provided a brief summary of the existing statute that S. 812 seeks to amend, the Drug Competition and Patent Term Restoration Act of 1984. I happen to know something about this law, which is commonly referred to as the Waxman-Hatch Act, or alternatively, the Hatch-Waxman Act. Last week, I gave an overview of my concerns with the HELP Committee legislation. With those comments in mind, today, I want to delve further into the details of the HELP Committee re-write of S. 812 the bill originally introduced by Senators McCain and Schumer. The central components of S.812 are aimed at rectifying concerns raised in recent years over two features of the 1984 law: first, the statutory 30-month stay granted to a pioneer firm's facing legal challenges to its patents by generic competitors; and, second the 180- day period of marketing exclusivity awarded to generic drug firms that successfully challenge a pioneer firm's patents. During debate on S. 812, there have been a number of comments indicating that there is a substantial problem with these two provisions. That may or may not be the case. One great disadvantage of holding the floor debate at this time is that we do not have the benefit of an extensive Federal Trade Commission survey of the pharmaceutical industry that focuses on precisely these two issues that go to the heart of S. 812 and the substitute adopted by the HELP Committee. The results of this long-awaited, extensive, industry-wide FTC survey are expected in a few weeks. I have stated on numerous occasions that before this body undertakes a substantial rewrite of provisions central to the Hatch-Waxman Act, we should have the benefit of the FTC study and its implications. The Senate could have taken a more prudent course. The Senate could have waited for the FTC report. We--and by we I specifically include the Senate Judiciary Committee--could have held hearings on the FTC study, evaluated the data, and then discussed, debated, and refined the actual, now barely two-week old, legislative language that is pending on the floor today. But this was not possible due to the tactical decision of the Majority to dispense with the regular order so as to minimize the politically-inconvenient fact that the Senate Finance Committee would have most likely have rejected any Democratic Medicare drug proposal in favor of the Tripartisan approach. To my great disappointment, although not anyone's great surprise, we failed to arrive at the 60-vote consensus required to enact a Medicare drug bill in the Senate. Make no mistake about it. This is a great failure for the American people because for two years now we have set aside $300 billion in the federal budget to be spent over 10 years to provide prescription drug coverage for Medicare beneficiaries. We have all heard from elderly constituents many of whom live on limited, fixed-incomes--who have had substantial difficulties in paying for prescription drugs. Rather than rise to the occasion and make good on our promise to rectify that situation, and we are letting this abundant opportunity slip between our fingers. I am very disappointed with the outcome of the votes Tuesday. It is my hope that we can find a way to come together on the important issue of a Medicare drug benefit for our seniors. At a minimum, we should use the $300 billion already in the budget to expand drug coverage for those seniors who need the most help. What we should not do is enact an expensive, government-run scheme that could bankrupt our country and plunge our economy further into the abyss when the government usurps what should legitimately be a private- sector-run benefit. The collapse of any 60-vote consensus on the Medicare drug benefit does not show the public the type of bipartisan spirit that voters across the country say they prefer, in poll after poll after poll. And so, we move back to the important, if more mundane, matters in S. 812. One of the real marvels of this debate is that we have finally found out who the bad guys are in this debate. It is not the government that has failed to make good on the promise to provide needy seniors with pharmaceutical coverage. No, it's the pharmaceutical industry, an industry that is working day and night to bring us the medicines, the miracle cures that seniors seek. I just had no idea that is who was going to be blamed. This game plan comes right out of the Clintoncare play-book. As you hear attack after attack on the drug companies, I just want all of you listening to this debate to know that a similar tactic was employed by the Democrats when they tried to foist Clintoncare on a very unreceptive public back in 1993 and 1994. Here is how David Broder and Haynes Johnson, two highly respected journalists, described the tactics of the Clinton White House in trying to pass its too grand health care reform plan: This quote is from ``The System,'' a book by Haynes Johnson and David Broder, two leading political writers in this town, both of whom write for the Washington Post. Neither of them would be considered, by any stretch of the imagination, conservative. This is what they had to say in this book called ``The System,'' talking about the American way of politics and how health care policy is formed: In the campaign period, Clinton's political advisors focused mainly on the message that, for ``the plain folks, it's greed--greedy hospitals, greedy doctors, greedy insurance companies. It was an us versus them issue, which Clinton was extremely good at exploiting. This is the second quote: Clinton's political consultants--Carville, Begala, Grunwald, Greenberg--all thought ``there had to be villains.'' At that point, the insurance companies and the pharmaceutical companies became the enemy. As you can see, here are two liberal political writers who summarized the Clinton health plan. Villains . . . enemies all this sounds familiar in this debate. So, I will stipulate for the purpose of this debate that the pharmaceutical industry is the designated villain. It strikes me as curious at least that the sector of the economy that plows back the highest portion of its revenues back into research--and research on life-threatening diseases no less--is treated with such disdain, at times even contempt, on the floor of the Senate. Mr. President, from what has been said on the floor of the Senate you would think that this industry is trying to cause cancer, not trying to find cures. I note that Senator Kennedy has suggested our nation's biomedical research establishment has not really made much progress over the past few decades in terms of developing new drugs. I think the facts speak otherwise. For example, consider the array of medicines that have been developed to treat HIV infection and the complications of AIDS. Through the unique public/private sector partnership that comprises the U.S. biomedical research enterprise, AIDS is being transformed from an invariably fatal disease into a chronic condition that we are so hopeful one day will have a cure. These advances do not come easily or on the cheap. I would note the exciting reports from the recent International AIDS meeting in Barcelona concerning the new class of AIDS medications represented by the new drug, T-20. Unlike many of the current anti-retroviral medications like AZT that seek to inhibit the replication of the HIV virus, T-20 attempts to block entry of the virus into healthy cells. Here is what one press account has said about this still unapproved, but highly promising drug: But it takes 106 steps more than 10 times the usual number of chemical reactions to make the lengthy peptide, making production a serious factor in its price. Roche refurbished a plant in Boulder, Colorado, just to make T-20. Almost 100,000 pounds of specialized raw materials are needed to make a little more than 2,200 pounds of the drug. In all, Roche has invested $490 million in T-20's development and manufacturing. Let us not be too quick to characterize as villains and enemies those scientists and companies who are working every day to overcome dread diseases like AIDS. Think of the imagination and expertise required to design all 106 chemical reaction required to make T-20. How many times must they have failed to come up with the correct chemical pathway? I might add, as Senator Frist pointed out on the floor last week, that infectious disease experts like Dr. Tony Fauci at NIH have said that despite the substantial promise of T-20, there is still more work to be done on this drug. Specifically, it is imperative to develop a tablet form of this currently intravenous preparation if we will be able to effectively use the product in the Third World. Some in this debate have minimized the importance of product formulation patents and have suggested that such patents should not be eligible for the 30-month stay. But public health experts such as Dr. Anthony Fauci one of the leading experts in the world, are telling us that the formulation of drugs like T-20 is critical. Who is to say that the steps in addition to the 106 steps already painstakingly identified to make the IV preparation necessary to make a tablet form of the drug are not worthy of the same protection afforded other pharmaceutical patents since 1984? And if it turns out that such a formulation patent issues more than 30-days after FDA can one-day approve a new drug application for a tablet form of T-20, why should this patent be given less procedural protection than other related patents? But this differential treatment of patents is exactly what could occur if we adopt the pending legislation. Mr. President, the Hatch-Waxman Act has been called one of the most important consumer bills in history. It has helped save consumers, by the Congressional Budget Office reckoning, $8 billion to $10 billion every year since 1984. It created the modern generic drug industry by creating this delicate balance between the pioneer research companies, and the generic companies that could readily copy drugs under Hatch- Waxman. The scientific work that had taken R & D firms up to 15 years, $800 million and at least 5,000 to 6,000 failed drug companies for each successful new drug could be used by general firms under the 1984 law. I might add, the Hatch-Waxman Act has brought the generic industry from little over 15 percent of the marketplace to 47 percent as we speak, and it is going up all the time. That is what we thought should happen. We are at $490 million and still counting for this still unapproved promising new AIDS drug, T-20. Remarkable progress in the field of drug development has been made over the past 18 years since Waxman-Hatch was adopted. We have seen enormous strides in the treatment of heart disease, diabetes, arthritis, Alzheimer's and many others, including the 200 new drugs that have been approved to treat lower prevalence, so-called orphan diseases another bill that I helped author. I am proud to have been an author of the Orphan Drug Act that has given hope to so many American families. If our Nation is going to develop diagnostic tests, treatments, and vaccines to prevent and counter attacks of bioterrorism and potential chemical or even nuclear terrorism, just whom do you think is going to develop these products? I will tell you who. It will be those ``villains'' in the pharmaceutical industry, in partnership with government and academic researchers, unless we hamper their ability to do so, if we do not watch ourselves carefully on this Legislation. At some point we must put aside this one-dimensional, simplistic vilification of the pharmaceutical industry and examine more closely the actual substance of the pending legislation. Are the PhRMA companies always right? No, they are not, and neither are the generic companies always right. Hatch-Waxman created a delicate balance so they were competitive against each other, and it has worked very well. It is my strong preference to conduct the debate over amending the Hatch-Waxman Act with our eyes focused on the policies, not the politics. As I said last week, the pending legislation, S. 812, addresses important and complex issues of patent law, civil justice reform and antitrust policy. A strong case could be made that Senate consideration of this bill would be improved if the Judiciary Committee were given the opportunity to study the legislation, review the Federal Trade Commission report, and make its voice heard in this debate. It seems unlikely that anything resembling this process will unfold given the decision to rush the HELP Committee patent, antitrust, civil justice reform bill to the floor of the Senate. As a threshold matter, it seems to me that before we adopt S. 812, we should be certain that this bill is consistent with the longstanding goals of the statute S. 812 seeks to amend, the Drug Price Competition and Patent Term Restoration Act. Let me remind my colleagues, the goals of this law, passed in 1984, are twofold: First, to create a regulatory pathway that allows the American public to gain access to more affordable generic drugs; and, Second, to create incentives for manufacturers of pioneer drug products to see that the American public has access to the latest, cutting-edge medicines. As I described last week, the 1984 law is a carefully balanced statute and contains features designed to accomplish these two somewhat conflicting goals. This tension is inherent because of the competing nature of the desire, on one hand, to develop breakthrough drugs and, on the other hand, to make available generic copies of these pioneer products. As legislation is crafted to address the problems that have arisen up in recent years with respect to the Waxman-Hatch law, we must be careful not to devise a remedy that upsets the delicate balance of the law. I am concerned that the manner in which the HELP Committee substitute tries to fix the two most widely cited shortcomings of the 1984 law may, in fact, disturb the balance of the statute by, in some areas, overcorrecting and, in other areas, undercorrecting for the observed problems. Specifically, while the manner in which the Edwards-Collins HELP Committee substitute addresses the 30-month stay issue represents a major improvement over McCain-Schumer bill, I am afraid though, the 30- month stay language represents a case of overcorrection. Last Thursday, I gave a short summary of the key provisions of the Hatch-Waxman Act. It only took me 1 hour and 32 minutes. After providing this background and context, I explained why I thought that the provisions of the pending legislation relating to patent rights and the 30-month stay went too far. Let me reiterate my concerns with the 30-month stay. As has been stated by many during this debate, a pioneer drug patent holder, whose patents are under challenge by a generic drug manufacturer, is accorded an automatic 30-month stay. This was not some giveaway to the innovator pharmaceutical industry. We inserted this mechanism to protect the intellectual property of companies that develop patented medications, companies, I might add, that were going to be afforded less intellectual property protections than any other industry as part of the 1984 law. We knowingly added this provision because we wanted to give them a fair opportunity to defend their patents. We know that patent litigation is itself a risky endeavor with the federal circuit court overturning about 40 percent of the trial court decisions in some areas of patent law. The public policy purpose for this stay is to allow time for the courts to determine the status of validity of drug patents and/or to decide whether valid patents are, or are not, infringed by a generic drug challenger. That was the intent of the law. Many believe--and I share that view-- that the 30-month stay provision has come to present problems in two areas: First, later issued patents that trigger last minute 30-month stays; and, second, multiple uses of the 30-month stay provision in a consecutive, over-lapping manner that work to bar generic competition for as long as the litigation can be made to drag on by lawyers who are paid by the hour. Some in this debate have characterized that both of these problems are at epidemic proportions. While I think there is evidence that problems have occurred and it is important that we work to modify the law so that the 30-month stay can not be misused in the next few years when so many blockbuster drugs come off-patent we should all take a close look at the FTC report before we conclude that as a general matter the entire research-based pharmaceutical industry has systematically abused the 30-month stay. That is just a speculation at this point until we see all the data. I will be very interested in what the FTC reports on a number of issues--the frequency of use of multiple 30-month stays; stays stemming from late issued patents; the outcome of litigation on the merits when such multiple stays have been employed; and 11th-hour stays exercised due to late-issued patents. It seems to me that we should be highly skeptical whenever a patent is listed in the official FDA records, called the Orange Book, years after the FDA approved the drug. One would have to think that all key patents would have been at least applied for prior to the end of the lengthy FDA review. We all know of the now infamous case of the drug, Buspar. An attempt was made to take advantage of the 30-month stay by listing in the Orange Book a new patent of the metabolite form of the active ingredient of the drug literally in the last day before the original patents were set to expire. A Federal district court stepped in to limit the stay to four months, not 30-months. The appellate court found, however, that this forced de-listing of the patent was improper. My opinion is that Congress, after getting the better understanding of the facts that the FTC report can provide, should address the consecutive stay and last-minute stay problems. From what I know today, I am not prepared to conclude that the Edwards-Collins substitute is a measured solution to the cited problems. The bill that passed the HELP Committee and is pending on the floor would limit the 30-month stay to those patents issued within 30- days of FDA approval of the drug. The pending legislation contains major improvements over substantial elements of the McCain-Schumer bill, such as the language that would have completely eliminated the 30-month stay in favor of a system that required case-by-case application of injunctive relief. It is also better than the language the HELP Committee Chairman Kennedy circulated briefly before the mark- up that would have limited to 30-month stay to certain types of patents. As I laid out in detail last Thursday, given the facts available at this time, I think a better policy may be to permit one, and only one, 30-month stay to apply to all patents issued and listed with FDA prior to the time a particular generic drug application is filed with the agency, which cannot occur under the law until at least four years have elapsed in the case of new chemical entities. At a minimum, I do not see what justification exists to differentiate, for the purpose of the 30-month stay, patents issued prior to four years after the FDA first approves a drug. I would also add that in most European nations and in Japan, it is my understanding that the law provides a 10-year period of data exclusivity--independent of patent term before a generic copy may be approved for marketing. The public policy behind these periods of data exclusivity is to recognize the fact that in approving generic drugs, the government regulatory agency is relying upon the extensive, expensive--and prior to enactment of Hatch-Waxman, generally proprietary, trade secret--safety and efficacy data supplied by the pioneer firm. At any rate, as I explained last week, current U.S. law does not even allow a generic drug applicant to challenge a pioneer firm's patents until four years have elapsed. Why shouldn't, for example, a formulation patent issued one year after a drug is approved not be protected by the 30-month stay if the challenge cannot be made for 3 more years? The 30-month stay must be understood in the context of the complexities of the 1984 Waxman-Hatch law that generally provides 5 years of marketing exclusivity to pioneer drug products as part of the recognition for allowing the generic firms to rely on the pioneer's expensive safety and efficacy data. Moreover, I think that any discussion of the 30-month stay is incomplete if it does not include the fact that, under Hatch-Waxman, generic drug firms are given a unique advantage under the patent code that allows them to get a head start toward the market by allowing them to make and use the patented drug product for the commercial and ordinarily patent infringing purpose of securing FDA approval and scaling up production. Let me quickly review the general rule against patent infringement that is set forth in Title 35 of the United States Code, section 271(a). It says: . . . whoever without authority makes, uses, offers to sell, or sells any patented invention . . . during the term of the patent . . . infringes the patent. This is a clear, unambiguous protection of property rights, as it should be to protect the creative genius of America's inventors. Section 271(e) of title 35 contains the so-called Bolar amendment that was added to the patent code by the Hatch-Waxman Act to create a special exception for generic drug manufacturers. Section 271(e)(1) states: It shall not be an act of infringement to make [or] use . . . a patented invention . . . solely for uses reasonably related to the development and submission of information under a federal law which regulates the manufacture, use, or sale of drugs or veterinary biological products. Essentially, this particular provision I have just read gives generic drug manufacturers a head start over virtually all other producers of generic products. In other words, it gives the generic industry a tremendous advantage. Normally, making and using a patented product for the purpose of securing regulatory approval would be a clear case of patent infringement under section 271(a), but the Bolar Amendment-- which overrode a 1984 Federal Circuit Court of Appeals decision that precluded generic drug firms from using on-patent drugs to secure FDA approval or gear up production, in other words, the case overruled that right--allows the generic firms to violate customary patent rights because we put it in Hatch-Waxman. Section 271(e) is the Hatch-Waxman language. The public policy purpose of the Bolar Amendment meaning the Bolar amendment provided by the Hatch-Waxman Act is to allow generic drug makers to secure FDA approval and come onto the market the day after the patent on the pioneer drug expires. As I explained last week, there is a balance between the head start that the Bolar Amendment gives to generic manufacturers and the protection that the 30-month stay gives pioneer firms to litigate the validity of their patents. Given the unique head start that the Bolar Amendment grants generic drug manufacturers over virtually all other generic product manufacturer and the other factors I have discussed, I question whether restricting the 30-month stay to only those patents issued within 30- days of FDA approval is either necessary, fair, or wise. Moreover, the HELP Committee bill contains file-it-or-lose-it and sue-on-it-or-lose-it provisions as well as a new private right of action which also act to further diminish the value of pharmaceutical patents, or should say pharmaceutical patents, to be more accurate. Let me first address my concerns regarding the creation of a private right of action, and then move on to the serious and detrimental effects that the file-it-or-lose-it and sue-on-it-or-lose-it provisions would have on pharmaceutical patent holders. I have two fundamental concerns with authorizing a private cause of action that would allow applicants to bring declaratory actions to correct or delete patent information contained in the FDA ``Orange Book.'' First, over the past 30 years, the courts have explicitly held that no private right of action is authorized under the Federal Food, Drug, and Cosmetic Act or ``FDCA'' e.g., ``It is well settled . . . that the FDCA creates no private right of action.'' In re: Orthopedic Bone Screw Products Liability Litigation, 193 F.3d 781, 788 (3d Cir. 1999). Moreover, the Court of Appeals for the Federal Circuit specifically addressed whether the Waxman-Hatch amendments to the FDCA did not indicate any congressional intent to create a private right of action, stating that the court could ``see nothing in the Hatch-Waxman Amendments to alter'' the conclusion that private parties are not authorized to bring suit to enforce the FDCA. By seeking to create a private right of action, this provision represents a truly unprecedented step that runs contrary to 30 years of judicial interpretation. I believe that this would create an unwise, and potentially dangerous precedent that could be used to justify future legislation authorizing private suits to enforce the numerous and varied provisions of the FDCA. Although I understand--and am sympathetic to--the underlying rationale for this provision, I simply do not think that creating a private right of action is an appropriate answer to the problems cited by the advocates of this provision. Second, as the Administration has succinctly stated: ``this new cause of action is not necessary to address patent abuses,'' and may ``unnecessarily encourage litigation'' surrounding the approval of new drugs. I certainly agree. Authorizing this new cause of action will not effectively address the alleged patent abuses. Now, I want to emphasize here that I strongly support efforts to halt anti-competitive abuses of the patent laws and the laws and regulations involving the listing of patent information in the FDA ``Orange Book.'' I am willing to work with members from either side of the aisle on this issue. However, I am convinced that creating a private right of action will not only fail to stop the patent abuses at issue, but will likely have substantial unintended detrimental effects on the drug approval process. The file-it-or-lose-it provision that says patent rights are waived if each new patent is not promptly filed with FDA and the sue-on-it-or- lose-it provision that would result in the forfeiture of patent rights if a pioneer drug firm does not sue within 45 days of being notified of a patent challenge should be contrasted with current law for all other types of patents. Section 286 of the federal patent code establishes a six-year statute of limitations on seeking damages for patent infringement. Why should this usual six-year period be decreased to 45- days for pharmaceutical patents? I should also note the section 284 of the patent code explicitly authorizes the courts to award treble damages in patent infringement actions. This is a strong signal that Congress wants to protect intellectual property. We should think twice when we are considering adopting measures, such as the Edwards-Collins language, that act to undermine longstanding patent rights such as the six-year statute of limitation on patent damage actions. As I said last week, I am mindful that the treble damage provision places a generic firm patent challenger in a difficult decision if the firm were forced to go to market upon a district court decision in a patent challenge situation. That is why I am generally sympathetic to the argument of generic manufacturers that current law should be overturned and any marketing exclusivity a generic firm might earn by beating a pioneer firm's patents should toll from an appellate court decision. In the case of multiple patents and multiple challengers, the policy might have to be refined if the result is that no generic product can reach the market within a reasonable period of time. As I pointed out, HELP Committee Edwards-Collins language is barely two weeks old, I am not alone in raising concerns about this new language. The Administration opposes this language. The Statement of Administration Policy states, in part, that: S. 812 would unnecessarily encourage litigation around the initial approval of new drugs and would complicate the process of filing and protecting patents on new drugs. The resulting higher costs and delays in making new drugs available will reduce access to new breakthrough drugs. That is important. I look forward in the next weeks to hearing the detailed comments from Administration experts on these matters as we get the FTC report. We are also starting to hear from others on this new, substantially changed, language. Senator Frist placed in the Record last week a letter from the Biotechnology Industry Organization that complains about the manner in which the bill undermines existing patent protection. I would just note that the organization representing our nation's cutting edge biotechnology companies, BIO, expressed great dissatisfaction with this new bill language. The July 15th BIO letter says in part: If enacted, these proposals would significantly erode the measures in Hatch-Waxman to ensure an effective patent incentive for new drug development, and would create undesirable precedents for sound science-based regulations of drug products in the United States. BIO also has some sharp criticism of the patent forfeiture provisions set forth in the file-it-or-lose-it and sue-on-it-or-lose-it clauses in the bill. BIO says: This forfeiture will occur without compensation, without a right of appeal and without any recourse. This provision is probably unconstitutional, and in any event is totally unconscionable. Also adding its voice to the debate over this new, unvetted language is the American Intellectual Property Law Association. The AIPLA is a national bar association representing a diverse group of more than 14,000 individuals from private, corporate, academic and governmental practice of intellectual property law. Mr. President, I ask unanimous consent to have printed in the Record a copy of a July 22, 2002 letter from the AIPLA.

Mr. HATCH. While taking no position on the need for changing the patent listing provisions of Hatch-Waxman, the AIPLA said that it believes that: Providing a new civil action to delist patents is ill advised . . . Irrespective of the merits of allowing challenges to the listing on the basis of its accuracy, vesting courts with jurisdiction over patent issues in this circumstance where there is no case or controversy is inappropriate. The AIPLA also red flags the file-it-or-lose-it patent forfeiture provisions of the pending legislation by pointing out that these, and I quote, . . . would be limitations on pharmaceutical patents which could implicate certain nondiscriminatory obligations of the United States under the Agreement on the Trade Related Aspects of Intellectual Property Rights (TRIPS). At a time when the Agreement is under challenge from many quarters following the Doha Ministerial Conference, certainly these provisions of S. 812 should be vetted with the Office of the U.S. Trade Representative for their consistency with TRIPS. I agree we should hear from United States Trade Representative on this matter. I also agree with the American Intellectual Property Law Association when it closed its letter with the following statement: ``If reform is needed, it should take other forms and directions.'' Finally, Mr. President, I would like to make my colleagues aware of, and ask unanimous consent to have printed in the Record, a statement from the law offices of David Beier.

Mr. HATCH. Mr. Beier was a member of the staff of the House Judiciary Committee when Hatch-Waxman was adopted in 1984. After that, for many years he headed the Washington office of the biotechnology company, Genentech. Mr. Beier then spent four years serving as the chief domestic policy advisor for Vice President Gore. He is recognized as an expert in high technology issues and is now a partner in highly respected Washington law firm. David is certainly not a conservative Republican although I still have my hopes for him! In Mr. Beier's view, ``the pending amendment is a bad idea on policy grounds, procedurally suspect and legally subject to challenge.'' Mr. Beier lays out the Takings Clause problems, the procedural due process concerns, and the TRIPS considerations. With respect to the potential for negative impact on foreign trade Mr. Beier warns: Imagine if another nation proposed to cut off the right to sue for infringement for the violation of an aerospace, computer or computer software patent. We would certainly assert that it violated our Nation's rights under TRIPS. The pending Amendment offers the same kind of flawed and illegal approach. In the case of a TRIPS violation the penalty could, after adjudication in the WHO, result in the imposition of retaliatory tariffs on American exports. Mr. President, I share these concerns. I urge my colleagues to consider the views of BIO, the AIPLA, and David Beier, as well as the other organizations cited by Senator Frist last week, before we rush to adopt this virtually unvetted, far-reaching language that has not been the subject of a hearing in any committee of Congress. Not the HELP Committee, not the Judiciary Committee, not the Commerce Committee, and not the Finance Committee which has jurisdiction over matters of international trade. But more important than any payments that the Treasury might be compelled to pay due to judgments related to the Takings Clause or than any retaliatory trade sanctions that the WHO may impose on the United States down the road, we need to consider what the public health consequences might be if we unjustifiably lower protections on pharmaceutical patents. Don't get me wrong. I am in favor of fierce price competition in the pharmaceutical marketplace. I favor not just less expensive general drugs today, but also better breakthrough drugs tomorrow. We need to keep in mind the relationship between public health and intellectual property. As David Beier has observed with respect to this linkage and the threat of this bill: In the last 50 years there have been dramatic improvements in life expectancy and better health care outcomes, in pertinent part, because of new drugs and therapies. These advances have occurred because the United States, unlike other nations, has used a strong patent system to help create a balanced set of incentives. That system of incentives for innovation is at risk, if as proposed in the pending legislation, the investment backed and settled property rights in patents are retroactively taken away. In short, while better in some key respects than McCain-Schumer, I am afraid that the HELP Committee-reported bill goes too far with respect to the 30-month stay. As I testified before the HELP Committee in May, if the problems we are trying to solve are the multiple use of 30-month stays and 11th hour-issued patents that unfairly trigger the stay, it seems to me that a more appropriate--and more narrowly-tailored-- legislative response might be a rule that allows one stay, and one stay only. Further, it might be appropriate to restrict the use of the sole stay only with respect to those patents listed in the FDA Orange Book at the time when a particular generic drug application is submitted. I will be interested if such a rule satisfies the problems that the FTC finds with respect to abuses of the 30-month stay and how the FTC, FDA, DOJ and other experts and interested parties think about this perspective. I am open to other alternatives as more information becomes available and more discussion takes place among interested parties. For now at least, I am forced to conclude that this new NDA-plus 30- day rule coupled with the file-it-or-lose-it and sue-on-it-or-lose-it provisions and the new private right of action amounts to legislative overkill that creates a host of new problems. In contrast to this over-correction with regard to the 30-month stay, I am concerned that the Edwards-Collins HELP Committee Substitute under-corrects in fixing the 180-day marketing exclusivity issue. Perhaps no single provision of the 1984 law has caused so much controversy as the 180-day marketing exclusivity rule. As I explained last week, the statute contains this incentive to encourage challenges that help test the validity of pioneer drug patents and to encourage the development of non-patent infringing ways to produce generic drugs. The policy motivation behind the 180-day rule is to benefit consumers by earlier entry of cost-saving generic products onto the market in situations where patents were invalid or could be legally circumnavigated. For many years as we intended and envisioned FDA awarded this 180-day exclusivity only to a generic drug applicant that was successful in patent litigation against the pioneer firm. In 1997, FDA's longstanding successful defense requirement was struck down by the D.C. Circuit Court of Appeals in the case of Mova Pharma v. Shalala. The next year, the D.C. Circuit issued its opinion in Purepac Pharm v. Shalala which upheld FDA's new system of granting the 180-day exclusivity to the first filer of a generic drug application even if the pioneer firm did not sue for patent infringement. Also in 1998, the Fourth Circuit Court of Appeals held in Granutec v. Shalala that a court decision with respect to a second or third filer could trigger the exclusivity period of a first filer. Taken together, these decisions, which strictly construed the statutory language, awarded the exclusivity to the first filer of a generic drug application. As a co-author of the legislation, I will be the first to concede that we drafters of the 1984 law came up short in this area because we were attempting to reward the first successful challenger, not the first to file papers with the FDA. Once the successful defense requirement was struck down, the mismatch between first filers of generic drug applications and the generic drug firms actually litigating the patents resulted in a number of controversial contractual arrangements in which generic firms in the first-to-file blocking position were paid by pioneer firms not to go to market. These agreements prevented the 180-day marketing exclusivity clock from ever starting, and the statute prevented FDA from approving second and subsequent filers from going to market. Here is how my good friend, Bill Haddad, an astute political analyst, generic drug manufacturer, gifted writer, incorrigible liberal, and participant in the 1984 negotiations recalled the intent of the 180-day marketing exclusivity provision: There was never any doubt that the goal .. was to bring generics to the market earlier using the route of legal challenge with a reward to be paid to the entrepreneur with the courage and facts to successfully challenge. It was and is very clear that the law was not designed to allow deals between brand and generic companies to delay competition. Unfortunately, the string of court decisions that interpreted these imprecisely drafted statutory clauses has resulted in a wholly unintended result. As David Balto, a former senior official at the FTC, has described the problem: The 180-day exclusivity provision appears to have led to strategic conduct that has delayed and not fostered the competitive process. Mr. Balto assessed: The competitive concern is that the 180-day exclusivity provision can be used strategically by a patent holder to prolong its market power in ways that go beyond the intent of the patent laws and the Hatch-Waxman Act by delaying generic entry for a substantial period. He is right. He is absolutely right. This wholly unintended dynamic has properly brought intense antitrust scrutiny. As a matter of fact, in May of 2001, the Judiciary Committee examined the antitrust implications of pharmaceutical patent settlements inspired by the 180-day rule. The Federal Trade Commission has been very active in this area. The FTC has brought and settled three of these cases in which brand name companies pay generic firms not to compete. At this point I will not go into the details of the consent decrees in the Abbott--Geneva case, the Hoescht--Andrx agreement, and the FTC's settlement with American Home Products. FTC Chairman Tim Muris provided a great deal of information in his testimony before the Senate Commerce Committee in April. The FTC is doing the right thing in taking enforcement actions against those who enter into anti-competitive agreements that violate our Nation's antitrust laws. Probably in no small part due to the FTC's vigorous enforcement under the existing antitrust laws and the development of Senator Leahy's Bill, The Drug Competition Act, S. 754, I understand that no more of these type of anti-competitive agreements have been initiated for over two years. The FTC report will no doubt shed light on this area In a post-Enron, post-WorldCom environment, who would be so reckless as to enter into such an agreement? Nevertheless, I must also point out that the agency recently suffered a set back when the FTC administrative law judge issued a ruling in the on-going K-Dur litigation that reminds us that not all pharmaceutical patent settlements are per se violations of federal antitrust law. In any event, the McCain-Schumer bill addressed the 180-day collusive reverse payments situation by adopting a so-called rolling exclusivity policy. If the eligible generic drug filer does not go to market within a specified time period, the 180-day exclusivity rolls to the next filer. As I testified before the HELP Committee, I do not favor rolling exclusivity. Here's what Gary Buehler, then Acting Director of FDA's Office of Generic Drugs, said before the Judiciary Committee last year: We believe that rolling exclusivity would actually be an impediment to generic competition in that the exclusivity would continue to bounce from the first to the second to the third if, somehow or other, the first was disqualified. In 1999, FDA proposed a rule which embraced a use it or lose it policy whereby if the first eligible generic drug applicant did not promptly go to market, all other approved applicants could commence sales. Molly Boast, Director of the FTC Bureau of Competition, testified last May that, at the staff level, FTC supported FDA's use it or lose it proposal. If our goal is to maximize consumer savings after a patent has been defeated, I find it difficult to see how rolling exclusivity achieves this goal. I certainly prefer FDA's use it or lose it policy over the McCain-Schumer brand of rolling exclusivity. In that regard, I must again commend the sponsors of the Edwards- Collins Substitute for rejecting the McCain-Schumer rolling exclusivity policy in favor of what Senator Edwards calls modified use-it-or-lose- it. Having said that, I was alarmed to learn that during mark-up Senator Edwards responded to a question by stating it was conceivable that his modified use-it-or-lose-it language might actually roll indefinitely. This disturbs me. Every time the exclusivity would roll to another drug firm, consumers will be further away from the day when multi-firm generic price competition can begin in the marketplace. Frankly, I am not certain that I completely understand how the forfeiture language in Section 5 of the bill works. I do not think I am alone in this confusion. At some point, I would like to engage in a colloquy with the bill managers to ask some questions designed to clarify precisely how this provision works. Let me say that if the bill reinstates the successful defense requirement and gives awards to the successful challenger so long as the firm goes to market in a timely fashion, I am supportive of the general concept. But I must say that I think that there are some real advantages to Senator Gregg's simple and straight-forward policy of more closely following FDA's old-fashioned use-it-or-lose-it proposal. As I stated earlier, I am generally sympathetic to the concerns of generic drug firms that any exclusivity awarded should be measured from the time of an appellate court decision. But this principle may not hold up if any form of rolling exclusivity is adopted or if we have multiple patents and multiple challengers, some of whom are attacking on invalidity and some of whom or attacking on non-infringement. I must say I am troubled by the provision of the bill that appears to grant each generic firm that qualifies for the benefit of the 18-month marketing exclusivity incentive a 30-month period to secure FDA approval, measured from the from the time of the filing of the generic drug application. Let's say that the first firm eligible to take advantage of the 180- day benefit drops out for some reason. Assume also that the next firm eligible under the terms of Section 5 is in the midst of, for example, a negative good manufacturing inspection and can't go to market, but has say 14 months remaining on the 30-month clock. It would hardly seem like an appropriate outcome if, for example, the next firm eligible on the list already has satisfied all of the FDA requirements and has received tentative final approval, but must wait until the 30-month clock runs out. I hope that the proponents of the substitute amendment will help us all understand just how Section 5 is intended to work. It is difficult for me to see why we should adopt a policy whereby the balance of the 30-month period described in Section 5(a)(2)``(D)(i)(III)(dd)'' on page 44 of the bill, could conceivably be greater than the 180-days of marketing exclusivity. Upon default of the first qualified applicant, why should we wait for a second eligible drug firm to obtain FDA approval when there may be a third, fourth, or fifth applicant in line with FDA approval ready to go? I hope the sponsors of the legislation are not locked into their so- called modified use it or lose it policy, because I think it would be wise for Congress to step back and reassess the wisdom of retaining the 180-day marketing exclusivity provision in essentially the same form as enacted in 1984. Why not take this opportunity to re-think the 180-day rule? At one extreme are those who have suggested that the 180-day marketing exclusivity provision may not even be necessary at all. Liz Dickinson, a top-notch career attorney at FDA, has asked: ``I suggest we look at whether 180-day exclusivity is even necessary, and I know that there is this idea that it is an incentive to take the risk. I say the facts speak otherwise. If you have a second, third, fourth, fifth generic in line for the same blockbuster drug . . . undertaking the risk of litigation without the hope of exclusivity, is that exclusivity even necessary?'' Ms. Dickinson went on to make the following observation with respect to the 180- day rule, ``We have got a provision that is supposed to encourage competition by delaying competition. It has got a built in contradiction, and that contradiction . . . is bringing down part of the statute.'' At the Judiciary Committee hearing on May 24, 2001, Gary Buehler, FDA's top official in the Office of Generic Drugs agreed with his colleague's assessment: . . . we often have the second, third, fourth, fifth challengers to the same patent, oftentimes when the challengers actually realize that they are not the first and there is no hope for them to get the 180-day exclusivity. So with that in mind, I would agree with Liz's statement that generic firms will continue to challenge patents. Whether the 180-day exclusivity is a necessary reward for that challenge is unknown, but it does not appear that it is. Keep in mind that both of these FDA officials are career civil servants with no political axe to grind. I personally favor retaining some financial incentive to encourage patent challenges, but in light of this testimony and other factors, I do not think we need to be wedded to the current form of the 180-day exclusivity benefit. Frankly, I am surprised that neither the McCain-Schumer bill, nor the Kennedy mark, nor the Edwards-Collins amendment, proposed any changes in the current regime in light of the views of the FDA officials among other considerations. But, of course, neither the FDA nor FTC nor any representatives from the Administration testified at the HELP Committee hearing on May 8th. Senator Schumer argues that the task of this legislation is to curb excesses in order to return to the original balance in the 1984 law. But what if conditions have changed and the original balance of the 1984 need to be reassessed? Or what if there was an area that we didn't get right the first time? For example, consider how Paragraph IV litigation treats patent invalidity and patent non-infringement challenges identically under the 180-day marketing exclusivity rule. But invalidity and non-infringement are two very different theories of the case. Here is what Al Engelberg, a smart and tenacious attorney who specialized in attacking drug patents on behalf of generic drug firm clients, has said about this difference: In cases involving an assertion of non-infringement, an adjudication in favor of one challenger is of no immediate benefit to any other challenger and does not lead to multi- source competition. Each case involving non-infringement is decided on the specific facts related to that challenger's product and provides no direct benefit to any other challenger. In contrast, a judgment of patent invalidity or enforceability creates an estoppel against any subsequent attempt to enforce the patent against any party. The drafters of the 180-day exclusivity provision failed to consider this important distinction. As one of the drafters, I must accept my share of responsibility for not fully appreciating the implications of this distinction. I think what Mr. Engelberg is pointing out that the 180-day rule acts as only a floor in non-infringement cases. As long as any patents stand, a particular non-infringer's marketing exclusivity can extend well beyond 180 days until such time as another non-infringer comes along. Conversely, doesn't the 180-day floor work to the detriment of consumers whenever it acts to block market entry of a second non- infringer during the 180-day period ? Why shouldn't a second or third non-infringer be granted immediate access to the market as would occur in any other industry? Consumers would reap immediate benefits for price competition. I hope that my colleagues working on the bill will consider the distinction between invalidity and non-infringement as this debate continues over the next week. While I am of the mind to retain a strong financial incentive to encourage vigorous patent challenges by generic drug firms, we must ask why identical rewards are granted for successful invalidity and non-infringement claims. I welcome the comments and suggestions of my colleagues and other interested parties on this matter Frankly, I think we need more public discussion and debate about the wisdom of retaining--lock, stock, and barrel--the old 180-day exclusivity award. For example, even if we adopt the modified use it or lose it approach of the HELP Committee bill and the first qualified generic manufacturer cannot, or will not, commence marketing and the exclusivity moves to the next qualified applicant, why should the second manufacturer get the full 180-days? Why not 90 days? Why not 60 days? After all, once the exclusivity begins to roll and roll and we move away from granting the marketing exclusivity to the successful generic litigant and Americans always prefer actual winners--we may end up with a mere second filer--and since when does our society grant such lucrative rewards to someone who merely files some papers? And what is so sacrosanct about 180-days in the first place? It is my information that in 1984 the number-one selling drug in the United States was Tagamet, with domestic sales of about $500 million. I am told that today the cholesterol-controlling medicine, Lipitor, has domestic U.S. sales of over $5 billion. Lipitor sales are 10-times higher in the U.S. than domestic Tagamet sales were in 1984. I understand that worldwide sales of Lipitor are about $7 billion. Even adjusting for inflation, it seems clear that 180-days of marketing exclusivity is worth more, and a lot more, today than it was worth in 1984. What might 180-days of marketing exclusivity for today's blockbuster drugs be worth in profits to the generic firm holding the 180-day marketing exclusivity rights? Let's be frank about what is going on here: Retention of the 180-day marketing exclusivity provision is one of those areas in which both the generic sector and the R&D sector have something of a mutual interest. And when all is said and done, I think that the joint interest of the generics and the pioneer firms is not in perfect alignment with the interests of consumers. This is so because during the 180-day time frame, when there is only one generic competitor, the pioneer firm does not take anywhere near the hit on market share and profits that occurs when multiple generic firms enter the market. Similarly, the first generic on the market is under no pressure to cut the price anywhere near as much as when there is competition from multiple generic firms. The report, Drug Trend: 2001, published by Express Scripts, notes this dynamic: The AWP [average wholesale price] for the first generic is usually about 10 percent below the brand. After the six month exclusivity granted to the first generic manufacturer, the price paid . . . for the generic quickly falls, often by 40 percent or more, as multiple manufacturers of the same generic product compete for market share. It seems likely that the value of the 180-day marketing exclusivity award today may be worth much more that it was back in 1984-- perhaps several hundred million dollars more per blockbuster drug. Given the dramatic increase in drug sales for today's blockbuster products, it does not seem far-fetched to project that the 180- marketing exclusivity reward can amount to hundreds of millions of dollars--and perhaps over one billion dollars--in profits to the fortunate generic drug manufacturer. I am all for assuring that there are sufficient incentives to ensure patent challenges, but isn't there a limit beyond which we should direct these excess profits back to consumers? Would we rather see 25 percent to 40 percent of that money in the hands of the trial attorneys who brought the case? Or, would we rather see at least some of those funds earmarked for attorneys' fees, be channeled to help citizens lacking access to prescription drugs? Shouldn't we get the facts concerning the change in value of the 180- day marketing exclusivity today compared to 1984 and make any appropriate adjustment to this incentive? We don't want to set the incentive so low as to discourage challenges to non-blockbuster patents. My purpose in rasing these points is to get an indication from the sponsors of this legislation and other interested parties, such as patient advocacy organization, state Medicaid agencies, and insurers, whether there is interest in discussing the advisability of passing on more of the value associated with the marketing exclusivity to consumers if it appears it is fair to do so. If there is interest, I would be willing to help fashion an appropriate amendment. It seems to me that we need to provide enough of an incentive to assure vigorous patent challenges, but we should give away no more exclusivity than is necessary. Every day of marketing exclusivity awarded to a generic firm comes at the expense of consumers. I think we can and should explore this area further. Let us not too quickly and too blindly retain the basic structure of reward under the 180-day marketing exclusivity provision. Before we change the law, let us have a serious re-examination of whether to retain the 180- day marketing exclusivity in its current form both in terms of the length of the exclusivity period and whether the rewards for successful invalidity and non-infringement challenges should be treated identically. I urge my colleagues, as well as consumer organizations and pharmaceutical purchasers such as insurers and self-insured businesses to reflect upon what I have said on this subject today. This is an area in which I think we would be wise to reject Senator Schumer's argument that all we are doing with this legislation is restoring the integrity of the old Hatch-Waxman Act. But why should we be governed by the world of 1984 when, for example, the best selling drugs in this country have increased sales by a factor of 10? Why should the value of the marketing exclusivity reward increase in direct proportion? On a number of occasions, I have commended Senator Schumer and Senator McCain for moving their legislation forward, even if the bill that came out of the HELP Committee does not resemble very closely their bill, and I still have problems with the floor vehicle as I have laid out in some detail. I commend them again today. I hope to return to the floor before this debate ends to offer a few suggestions for a more comprehensive approach to reforming the Drug Price Competition and Patent Term Restoration Act. This in no way minimizes the importance of he matters that are the subject of the pending legislation, because they are important areas. I do not believe, however, that these are the most important issues we can address. Rather than focusing on how best to bring the law back to the old days of 1984, as Senator Schumer suggests, I want to discuss ways to modify the law to help usher in a new era of drug discovery while, at the same time, increasing patient access to the latest medicines. Mr. President, I yield the floor.

Mr. HATCH

Mr. HATCH. Mr. President, I ask unanimous consent that the order for the quorum call be rescinded.

Mr. HATCH

Mr. HATCH. Mr. President, what is the state of the proceedings at this point?

Mr. HATCH

Mr. HATCH. Mr. President, the Senate accomplished two significant feats last week. First, this body took strong action to ensure that candor and accountability will be watchwords in the world of corporate accounting. We have given the Securities and Exchange Commission the tools it needs to better do its job of ensuring that financial statements tell investors, in plain English, how our nation's corporations are really doing. And we crafted 21st-century criminal statutes and tougher penalties for those corporate wrongdoers who willfully mislead investors about corporate finances, and we are still working on that language. Second, and more important, we resisted to a great extent the temptation to turn this bill, on which Senator Sarbanes and Senator Gramm worked so hard, into a tool for demagoguery. With the continuing reports of shoddy bookkeeping at some of our biggest companies, with terrible news coming from Wall Street these past few weeks, and with continuing layoffs at major corporations, it is no wonder that many pundits across the country, and even a few of our colleagues, were tempted to cast about, looking for a bill to support--any bill at all-- that could make them look tough on white-collar crime. But the battle is not over yet. We know that here in Congress, as well as in the regulatory agencies and in State governments, there are still moves afoot to impose more rules, more regulations, and more punishments on American businesses. There are those who are predicting that this wave of corporate scandals could give rise to a new era of big government, much like the Progressive Era or even the Great Depression. I rise today, to say that this Nation must not return down that failed path. A new era of ``re-regulation'' would, without a doubt, damage or destroy the twin engines of innovation and capital formation that have made the American people the richest people the world has ever known. A new era of re-regulation, however well-intentioned, would put us on the path that Europe and Japan have recently trod. We would be playing a constant game of catch-up with whatever country was in the economic lead. People in the leading countries would have access to new inventions today, and then, years later, citizens of the sluggish United States would finally be able to afford them. That is the kind of trickle-down we need to avoid, and that is the kind of trickle-down that the good people of Europe and Japan live with every day. I have faith that the American people will not be led down that path. Instead, I believe that they will remember that in the late 1990s, the forces of competition gave birth to modern wonders in the fields of medicine and telecommunications while Congress cut capital gains taxes and balanced the budget. We saw the promise of venture capital unleashed, as many new start-ups tried out their new ideas in the marketplace even though we knew in advance that only a few would succeed. And as investment and innovation increased, our workers became more productive, and higher productivity led, as always, to higher wages and better living standards. Census figures show that since 1980, the share of families earning over $100,000 per year doubled, even after adjusting for inflation. The number of people living in poverty has declined, and the only reason it has not declined faster is because this land of opportunity draws in poor immigrants from throughout the world. In many cases, however, within a generation these immigrants will rise into the middle and upper ranks of income-earners. And, most saliently, this prosperity reached into almost every part of American life. Overall unemployment rates reached the lowest levels in 30 years, and every race and every age group saw its fortunes improve. Just as the 1980s debunked the pessimists who thought that stagflation and malaise were the waves of the future, so the 1990s, with unemployment rates getting down to 4 percent, debunked those who thought that unemployment rates below 6 percent inevitably spark inflation. Despite the fact that the American people have endured a year of high energy prices, a painful recession, waves of corporate accounting scandals, and the horrific attacks of September Eleventh, our economy's foundations remain strong. Innovation and capital formation have continued even during the depths of the recession, to the amazement of the pessimists. Despite the many buffetings our nation has endured, America's workers are more productive today than they were just a year ago. That continued the trend of the last few years, where we saw productivity grow at an annual rate of 3.1 percent. We have seen the unemployment rate shoot up from its 30-year low of 3.9 percent up to 5.9 percent in June. Mere numbers, of course, can never convey the real cost of losing a job. And tragically, recessions continue to hurt workers months and months after sales pick up. But clearly, this recession is like no other that we have seen: manufacturing has been hit hard, very hard, by this recession. Workers in those industries, and people who live in towns that rely on those industries, have paid a heavy price. But our economy's resilience and flexibility is amazing, and this resilience shows in our labor markets, where our nationwide average unemployment rate of 5.9 percent, while still too high, would have been hailed during most of the 1980's and 1990's. And if Congress acts to restore the economy to its potential, enacting policies that encourage innovation and capital formation, we can continue to improve our standard of living, get the unemployment rate back down, and make our economy more resistant to the inevitable economic shocks of our modern world. As Chairman Greenspan noted last Tuesday, Congress can strengthen our economy's long-run potential through strong fiscal discipline, so that more of our economy's resources are in the hands of our innovating private sector. And since capital formation and technical innovation are keys to productivity growth, we should move aggressively toward expensing capital equipment and finally making the research and development tax credit permanent. The accounting reform bill we passed last week is a good bill, and once it comes out of conference, I hope it is even better. The Senate bill reduces the potential for conflicts of interest between auditing and consulting services. It ensures that the government will vigorously scrutinize audits to ensure that the balance sheet is telling the real story. And it modernizes the criminal codes to deal with the corrupt few who knowingly break the rules outright. But once the final version of this bill becomes law, that is by no means the end of the story. Once the regulators get ahold of the final bill, it will, once again, become a target for anti-corporate activists, those who distrust bigness, who distrust success, and who distrust the competitive spirit of the American people. They will seek to pressure the SEC and the Financial Accounting Standards Board to enact rules that express their hostility toward corporate America. And however well-intentioned the goals of these activists, they could have disastrous consequences. Let us consider an example that sounds reasonable enough. I started off by noting that the Sarbanes bill would ensure that financial statements tell investors, in plain English, how our nation's corporations are really doing. There are good reasons for reporting financial statements in language that ordinary investors can understand, and the SEC has done a good job encouraging corporations and financial services companies to avoid unneeded jargon in their official statements. But at the same time, we need to remember that while corporate finance is not rocket science, it is not that far from it. Some issues will be hard to understand, and they should stay that way. If we insist that every financial dealing be completely understandable to the average investor, then you know what we will end up with. Corporations that the average investor would not want to invest in. Investors want their companies to be run by people who know more about finance than they do, just as they want our homes built by people who know more about construction than they do. Sure, it is good to know the broad outlines about how a house is built. But we expect construction workers to use their specialized knowledge, knowledge that is difficult to convey to a layperson. The same holds true in the world of corporate management. Even after these accounting reforms are up and running, accounting is still going to sound like a foreign language to most people, and plenty of run-of- the-mill business decisions are going to sound complex to outsiders. Critics will accuse anything with a footnote of being a loophole, just another example of ``crony capitalism.'' They will put pressure on America's businesses to simplify their businesses so that it can be ``transparent'' to outsiders. But we cannot give in to the urge to insist that corporate finance be intelligible to high-school students, and we cannot allow pressure groups to dictate how to organize a business. We have seen unjustified awards destroy the careers of many good doctors who can no longer get malpractice insurance just because juries end up being swayed by emotion and genuine human suffering rather than by the difficult medical issues at hand. We cannot let the same thing happen to corporate America. Finally, I want to address an overarching question: Do we really live in a world where a couple of crafty and unscrupulous executives can destroy an entire Fortune 500 company? Is our market economy really a house of cards that needs the ever-present support of the Federal Government to keep from falling down? I do not believe the evidence supports these pessimistic conclusions. The companies that have been in the news made bad business decisions generated by what Chairman Greenspan called ``infectious greed,'' which they covered up with accounting chicanery. It was the bad business decisions that were the root cause here, made far worse by the fact that the mistakes were successfully covered up for so long. By tightening the auditor's scrutiny of business decisions, we expect that in the future, bad decisions will be uncovered sooner, before too much damage is done to the company and to its stock price. But business decisions will continue to be made, both good and bad, and companies will continue to rise and fall as customers and shareholders vote with their dollars. That, as Secretary O'Neill noted, is the ``genius of the market.'' And that brings me to my final point. If auditors uncover a serious problem with a company's books, who will fix it? Surely, in most cases, the board of directors will act aggressively to sack the problem executives and install a new team that will work hard to put things right. Especially with the incentive of stock options and stock ownership, the new management team, facing auditor scrutiny, will have strong reasons to do the best they can to boost shareholder value. The punishments dealt by the stock market are already giving corporations a strong incentive to reform, as stockholders press for clarity and boards of directors interrogate their CEOs and demand answers. But what about those occasional situations where the directors are either incompetent or out of touch? In practice, it is very difficult for shareholders to replace directors on their own. There are sometimes millions of individual shareholders, each of whom has little incentive to put in the time and effort of replacing their directors. It is almost always easier to sell the badly-performing stock than it is to replace incompetent directors. At this point, our last best hope is that much-maligned character from the 1980s, the hostile takeover artist. The Sarbanes bill uses the phrase ``protection of investors'' over 20 times. But who protects investors better than someone who invests a large sum of cash into a failing company, kicks out the old, ineffective, perhaps even corrupt management, and installs new leaders dedicated to maximizing long-run shareholder value? But while we have seen numerous large mergers over the last decade, why have we not seen as many genuinely hostile takeovers? The answer, of course, is legislation. In this case, it was not federal law but state laws that stemmed the tide of hostile takeovers, as laws made it easier for sloppy management to fend off takeover advances. So even if improved audits uncover corporate incompetence or worse, shareholders could still be left with bad managers and worthless investments. The accounting reform legislation on which we have worked will break new ground in the realm of investor protection. It will increase transparency and punish wrongdoers. But that is only half the battle against corporate mismanagement. The second half of the battle comes when directors and shareholders take action to purge the ineffective executives and restore the profitability of their investments. In time, I hope Congress takes action to assist them. The combined calls by the President and the Senate for directors with greater independence is a strong step in that direction. In closing, I want to draw attention again to the true foundation of our nation's prosperity--our nation's workers, the most productive in the world. Whether they work in a factory, behind a desk, or on a farm, the American worker can produce more in an hour than any other worker in the world. That is because they have access to better tools, better knowledge, better education, and in particular, better organizations. From old-economy stalwarts such as Ford to new-economy innovators like Intel to our ever-modernizing agribusiness sector, our economy's large organizations help to coordinate the activities and innovations of countless numbers of people so that we can accomplish more with our scarce time. The quality of American automobiles, the speed of American-designed microprocessors, and the produce of America's farms keep increasing each and every year. I am confident that our accounting reforms, if enforced prudently, will help to strengthen the American corporation's ability to innovate. And by doing so, all Americans will reap the rewards. Mr. President, I yield the floor.

Mr. HATCH

Mr. HATCH. Mr. President, just a few years ago, when President Clinton was President, he was asking for a drug benefit program of $168 billion. Last year, the Democrats wanted a $311 billion program. This year it is $600 billion. Frankly, I think it is a lot more than that because they have written in a sunset provision that actually helps to reduce the cost of that program, but also makes the program temporary. I have to say that some of the things I find objectionable about the Graham approach is that the bill sets up a Government formulary that allows only two drugs for each illness. Because of that, it means that literally dozens of drugs that may be prescribed by doctors will have to be purchased by the patients themselves. I might also add that it means a situation of price controls without question. Countries that set price controls on prescription drugs have been unable to duplicate the success of the United States in developing new pharmaceuticals. Our tripartisan plan provides a permanent benefit, not a temporary one like Graham-Miller does. It gives beneficiaries choice in Medicare coverage, drug coverage, and options to select any prescription they want. It is affordable. Our plan costs $370 billion over 10 years. The Graham plan costs $600 billion over 10 years. Our plan, in addition, includes Medicare reforms. The Graham-Miller plan does not. Our plan is not run by the Government, but by the private sector, and it depends on private competition. It trusts seniors to make their own decisions and choices. The Graham-Miller bill does not. Ours is affordable, it creates competition, and there are no price controls on drugs. We take care of the poorest of the poor and we do it within reasonable budgetary limits. Mr. President, I yield back the remainder of my time.

Mr. HATCH

Mr. HATCH. Mr. President, I wish to recognize and pay tribute to Col. Gerard W. Schwartz, former Chief of Staff of the Army Review Board Agency, who will retire on October 1. Colonel Schwartz's career spans three decades in which he distinguished himself as an outstanding soldier and leader. A Utah native, Colonel Schwartz graduated from Weber State College and began his career in the Army as an enlisted soldier. Working his way up through the ranks, he earned his commission as a lieutenant of the Ordnance Corps through Officer Candidate School. During his career, he served in positions of increasingly greater responsibility, from battalion level through the Secretary of the Army. He has successfully trained and led America's soldiers at home and overseas. Colonel Schwartz served in the Army during our operations in Grenada, Panama, Somalia, Haiti, Iraq and Afghanistan. His contributions during this period contributed immeasurably to the successes achieved by our forces and will have a lasting effect on the Army in the years to come. Most recently, he served the Secretary of the Army as the Director of the Military Review Board that administers a number of boards available to current and former members of the Army. He made sure that each board was administered with justice, equity and compassion as expected by the Congress. His character, mature judgment, wisdom, and amiable demeanor have earned him the respect and confidence of his subordinates, fellow officers and the General Officers he served with during his illustrious career. Throughout his career, Col. Gerard Schwartz has demonstrated his profound commitment to our nation, his selfless service to the Army, a deep concern for soldiers and their families, and a relentless commitment to excellence. Colonel Schwartz is a consummate professional whose performance, in over three decades of service, has exemplified the courage, competency, and integrity that our nation expects from its Army officers. I ask my Colleagues to join me in thanking Colonel Schwartz for his honorable service to the people and the U.S. Army. We wish the Colonel and his family Godspeed and all the best in the future.

Mr. HATCH

Mr. HATCH. I yield 15 minutes to the Senator from Nevada.

Mr. HATCH. Yet in this $370 billion program that we have devised, all of those in yellow are covered?

Mr. HATCH. Yes, I am.

Mr. HATCH. Mr. President, I have been listening to the comments of the distinguished Senator from Massachusetts earlier and the distinguished Senator from South Dakota. I mentioned in the early debate, on the first day of debating these matters, the book ``The System,'' written by Haynes Johnson and David S. Broder. It is a failure of the Clinton health care program in part. It is very interesting what they say in this book. Neither Haynes Johnson nor David Broder would be considered leading conservative spokespeople.

Mr. HATCH. Will the Senator yield on that point?

Mr. HATCH. I am. Neither of them would be considered conservative journalists. This is what they wrote on page 90 of ``The System,'' which was published in 1996: In the campaign period, Fried recalled, Clinton's political advisers focused mainly on the message that for ``the plain folks, it's greed--greedy hospitals, greedy doctors, greedy insurance companies. It was an us-versus-them issue, which Clinton was extremely good at exploiting.'' Clinton's political consultants, Carville, Begala, Grunwald, Greenberg, all thought ``there had to be villains.'' Anne Wexler remembered, ``It was a very alarming prospect for those of us looking long term at how to deal with this issue. But at that point, the insurance companies and the pharmaceutical companies became the enemy. That is what is being done here today. The main difference between the two programs is that ours lives within at least some budget constraints. It is more than what the Democrats would have taken last year, $311 billion. This is $370 billion. No. 2, we provide some element of private sector competition so there will be competition in this matter. That is driving costs down. No. 3, we provide there will be a system that will work because one can have more than one program instead of a one-size-fits-all program. No. 4, we are not going to get to price controls by the Federal Government, which would destabilize research and development of pharmaceuticals in this country. To hear some people on the other side, it is the big bad pharmaceutical companies that are causing these problems. Actually, I think if we look at our system, both the generic and the pioneer companies, the research companies, we have a pretty great system that is producing the greatest therapeutic drugs in the world today. The reason we do is that we do not have price controls. Where is the pharmaceutical system in Canada? Where is it in many other parts of the world where they have price controls? They do not have it. We do. We have the greatest system in the world. I think Haynes Johnson and David Broder are right on: ``When you cannot win the debate, start knocking the big companies; speak for ``the little people,'' as they have said. And this has been the tenor of this debate so far. I frankly think we ought to talk about living within the budget, doing the best we can, having a system that works, that has some element of competition in it, that does not set price controls over drugs so that it ruins our domestic companies and research and development plans, so we can ultimately get drugs into generic form so that we can save money. That is what is really involved. I yield such time as she may consume to the distinguished Senator from Maine, Ms. Snowe.

Mr. HATCH. Is the Senator saying that they claim for $600 billion, even in a bill that is sunsetted so they can keep the cost that low, that all of those drugs indicated on your chart in red letters ``not covered'' are drugs they do not cover?

Mr. HATCH. If the car is necessary for daily use, if it is necessary for their job or if it is necessary for a medical purpose----

Mr. HATCH. On your time, I am happy to.

Mr. HATCH. Mr. President, I can see why some seniors would want a trillion-dollar program--no question about it--as long as they think it is free. But it isn't going to be free. Neither is their program going to be free. We have to face some realities around here. Ours is $370 billion. That is a lot of money. We do more with ours than they do with theirs in their alleged $600 billion price tag. The fact of the matter is, that 75 percent of everybody's prescription drug coverage will be covered by our bill. I yield 10 minutes to the distinguished Senator from New Mexico.

Mr. HATCH. I take it they are spending $600 billion or more--almost double what we spend--and not getting nearly the delivery of the drug as in the system we would give to the seniors. It seems to me it is pretty tough to be for the $600 billion program under those circumstances.

Mr. HATCH. Mr. President, I yield 10 minutes to the distinguished Senator from Texas.

Mr. HATCH. They would not be disqualified.

Mr. HATCH. I have read it. And you are misrepresenting what is in our bill.

Mr. HATCH. One minute.