Ted Kennedy

Mr. KENNEDY

Mr. KENNEDY. Mr. President, I am pleased to introduce the Children's Health Improvement and Protection Act today, along with my good friends Senator Orrin Hatch, Senator Jay Rockefeller, and Senator Lincoln Chafee. This bill will provide needed funding to keep children enrolled in the Children's Health Insurance Program and to allow the program to grow. Without this legislation, hundreds of thousands of children will lose their CHIP coverage and rejoin the ranks of the uninsured. Monday is the fifth anniversary of the Children's Health Insurance Program. Senator Hatch and I have worked together on many proposals, but none has had more lasting benefit for millions of American children than our legislation to create CHIP. We first proposed CHIP after we became acutely aware of the health defects facing children and the need to assure that every child got a healthy start in life. Before we passed CHIP, 500,000 children with asthma never saw a doctor. Another 600,000 children with earaches and 600,000 with sore throats never received medical care. A sick child can't learn. A child who can't hear the teacher can't learn. A child who can't see the doctor when they're sick can't learn. That's why uninsured children are more likely to fall behind or drop out of school altogether. We also became aware of the ravages of smoking on health, and that the key to addressing this problem was to discourage children from starting to smoke. In my own state of Massachusetts, there had been a very successful campaign to raise money to expand children's health coverage by raising the cigarette tax. This united anti-tobacco activists and child health advocates. So Senator Hatch and I decided that the winning, fiscally responsible, right health policy approach was to develop a major expansion of children's health insurance and finance it with an increase in the tobacco tax. And what a success CHIP has been. This legislation has touched every community in America. Last year, over 4.5 million children received health insurance through either Children's Health Insurance Program or through Medicaid expansions under the CHIP program. Last year, 105,000 children in Massachusetts were covered through these programs, and many other states have had similar successes. Despite the clear evidence that health insurance provides children with a healthier start, funding cuts to the CHIP program of more than $1 billion this year and each of the next two years puts the gains we have made in insuring children at risk. This ``CHIP dip'' is a result of the budget constraints when CHIP was enacted in 1997 as part of the Balanced Budget Act. This funding cut comes at the same time enrollment in the program is rising and will cause 900,000 children to lose the health insurance they have today through CHIP. While states are facing a drop in funding that will cause them to drop insured children, almost $3 billion in unspent CHIP funds will be lost if we do nothing. CHIP funds must be spent within three years of allocation. Because of a mismatch between the time unspent funds were reallocated to the states and when the states needed the funds, some states will not be able to use all of their CHIP funds within the allocation period. It makes no sense to have funds expire and revert to the Treasury when we know states will be facing a funding drop that will cause them to cut children from their programs. One of this nation's most fundamental guarantees should be that every child has the opportunity to succeed in life. But that commitment rings hollow if children are doomed to a lifetime of disability and illness because they lack needed health care in their early years. That is why we are introducing the Children's Health Insurance Program. This bill will allow states to maintain and expand their CHIP programs. It lets states keep a portion of their unspent funds that would otherwise expire. It also establishes a new caseload stabilization pool with funds that would otherwise expire. The pool will direct unspent funds to states that are expected to use up all their CHIP funds. Finally, the bill provides additional CHIP funding for fiscal years 2003 and 2004 so that CHIP enrollment can be maintained and expanded. This legislation will move us one important step closer to fulfilling the promise that no child in America will be left behind because of inadequate health care coverage. I urge my colleagues to support this important legislation.

Mr. KENNEDY

Mr. KENNEDY. I suggest the absence of a quorum.

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

Mr. KENNEDY. I understand there are 4\1/2\ minutes remaining.

Mr. KENNEDY. I yield 2 minutes to the Senator from North Carolina.

Mr. KENNEDY. Five years ago, the first prescription drug legislation was introduced in the Senate. We have waited and the seniors have waited 5 years to see whether the Senate of the United States was going to take action. Under the leadership of Senator Daschle, we have the opportunity to do that. That is because the Democratic leader said so. A week ago, the Republicans said no to the comprehensive program that was introduced by Senator Graham and Senator Miller that would have provided the comprehensive approach about which so many have talked. I have listened to my friends on the other side of the aisle. They are using a favorite technique. That is to misrepresent and distort what is before the Senate, and then differ with it. Senator Graham has given the facts on this program. The basic issue before the Senate now, in the next few minutes, is whether we consider prescription drugs a priority for our senior citizens. If we vote with Senator Graham and Senator Smith, we are saying they are a priority. This bill is not going to solve all the problems, but it is a downpayment. It is a downpayment on those prescription drugs. Every one of us who is going to support that position is committed to coming back next year and the year after to make sure we have the comprehensive issue. That is what is before the Senate: Do we take the problems of our senior citizens seriously or are we going to get behind some kind of facade and say let us put it off for another day? Seniors have listened to that every single year since the time we passed Medicare in 1965. Now is the time to do something about it. This is a downpayment on prescription drugs, and I think it is time the Senate take that action, and take it today. I understand our time is up.

Mr. KENNEDY. Mr. President, this is an important issue, and the Senate is not in order. We have 2 minutes of discussion on this, and important comments will be made by our colleagues who deserve to be heard.

Mr. KENNEDY. Mr. President, I am pleased today that the Senate has passed the Schumer-McCain bill. This bill is the Senate's answer to the public's demand for action on lower drug prices. The bill would end-- once and for all--the drug industry's abuses and close legal loopholes the industry exploits to block competition and keep drug prices artificially high. The record is clear that the pharmaceutical industry uses loopholes in the landmark Hatch-Waxman Act to drive up the cost of prescription drugs. Each and every day, pharmaceutical companies exploit those loopholes to maintain their monopoly over their drugs, and to keep more affordable generic drugs off the market. America's consumers pay the price, and today the Senate has said loud and clear--it's time to stop the abuses. Just yesterday, the Federal Trade Commission recommended legislative changes that are incorporated in Schumer-McCain. And here today, the Senate has approved the Schumer-McCain reforms on a strong bipartisan vote. The Senate has spoken and it has said: Stop these abuses. Stop depriving our seniors and our uninsured of safe and effective drugs that they can afford. Stop driving up the cost of health care for employers and health plans and consumers by delaying lower cost generic drugs. What is it we have done today? Schumer-McCain amends the Hatch-Waxman Act, which provides for the approval of generic drugs. The Hatch-Waxman Act has been a tremendous success in promoting competition and innovation in the pharmaceutical industry. Indeed, both the brand drug and generic drug industries have flourished under it. Yet there are clearly weaknesses in the Hatch-Waxman Act. Today, of the top 15 best-selling drugs potentially subject to generic competition, the basic patents on at least five have long expired. Their exclusive rights to market their drugs have passed. Yet there is no generic competition. The system needs repairs. Prescription drug costs are spiraling out of reach of the elderly and uninsured. They are draining the health care budgets of State governments, employers and labor unions. All because brand-name drug companies have exploited loopholes in the law to pocket windfall profits. Drug prices have skyrocketed at double digit rates annually since 1996, and experts expect this trend to continue. This drug price inflation has been far in excess of the rate of consumer price inflation. And experts agree that spiraling drug prices have accounted for almost two-thirds of growth in drug spending especially the higher prices of new, aggressively promoted drugs. Generic drugs are clearly part of the answer. Simply put, a 1 percent increase in generic use can decrease the Nation's yearly bill for drugs by a billion dollars. And ensuring the timely approval of generic drugs could save consumers $60 billion over the next 10 years. These savings are easy to understand. For patients and health plans alike, the costs of brand-name drugs are four times higher than for their generic equivalents. That difference is even higher for the elderly and uninsured, who must often pay full price for their medicines. On average, a month's supply of a generic drug costs a patient $4 and the health plan $16; the costs for a brand drug are 4 times higher: $16 for the patient, $64 for the plan. For the uninsured, and seniors who lack prescription drug coverage, the full costs are either $20 for the generic or $80 for the brand drug. The antidepressant Prozac is a clear example. Generic companies challenged and defeated a Prozac patent. Today, you can buy 30 generic Prozac tablets for less than $30--less than a third of what brand-name Prozac will cost you. But some pharmaceutical companies game the system by listing spurious patents with the FDA--patents on unapproved uses, unapproved compounds, or formulations that they don't even market. Then they get automatic 30 month stays delaying approval of generic drugs. For example, Neurontin is a drug approved by FDA to treat epilepsy. In 2001, Neurontin sales exceeded $1.1 billion. The basic patent on the drug compound expired in 1994, and the patent on the approved method of use expired in 2000. But the company had listed two additional patents on the drug that the generic companies had to certify were invalid or not infringed. These two patents were on an unapproved compound--just the addition of a water molecule to the basic compound--and on an unapproved use, the treatment of neurogenerative disease, patents that never should have been listed at FDA. The first 30-month stay needlessly delayed generic competition for half a year. But before that stay was up, Neurontin's manufacturer listed a third formulation patent with FDA. The generic applicant had to certify to that patent as well and another 30 month stay will delay generic approval until December 2002. In total, a generic version of this drug will be delayed 30 months, at a cost to consumers of $1.4 billion. In effect, Neurontin's manufacturer blocked generic competition by obtaining a patent for simply adding a water molecule to its basic drug. That patent meant months of delay in which that company enjoys huge profits while preventing affordable generic versions from reaching the market. This single water molecule will cost consumers at least $1.4 billion in savings for their prescription drugs. We still do not know when a generic will get to market, but we do know that Schumer- McCain will make it far more likely that a generic Neurontin will be available in 2003. To address the abusive mis-listing of patents at FDA, the ever- greening of patents, and the stacking of successive 30 months stays, Schumer-McCain includes a series of provisions designed to work together to close the loopholes and foreclose future gaming of the system. Schumer-McCain does several things. First, Schumer-McCain permits only one 30-month stay per generic drug application, and only on those patents listed with the FDA within 30 days of brand drug approval. Second, for the patents for which no 30-month stay is available, Schumer-McCain provides an expedited process whereby a patent owner can, within 45 days, seek a preliminary injunction to defend its patent against a particular generic drug applicant. If a patent owner elects not to defend its patent against that generic applicant as part of this process, it cannot later enforce that patent against that applicant or others for the manufacture, distribution, sale, or use of that applicant's generic drug. This provision does not preclude the patent owner from enforcing its patent against anyone else, including a subsequent generic applicant that challenges the patent in its generic application. Schumer-McCain includes related provisions that enhance protections for patents. One requires a generic applicant who challenges a patent to provide better information to the patent owner for it to assess the merits of the generic applicant's patent challenge, while the second clarifies that a preliminary injunction in a drug patent infringement case may be granted notwithstanding the availability of monetary damages. Third, Schumer-McCain clarifies the information that must be filed with FDA on patents that claim a drug or an approved method of using a drug, so that it will be more difficult for drug manufacturers to list inappropriate patents or incorrect or incomplete information with FDA. Fourth, Schumer-McCain enforces this requirement to list patent information at FDA by saying that failure to list a patent bars the patent owner from enforcing the patent against a generic applicant or others for the manufacture, distribution, sale, or use of a generic drug. This provision does not bar enforcement of the patent against anyone else, in particular against any brand drug company or others for the manufacture, distribution, sale, or use of a brand drug that infringes the patent. In addition, the provision provides that corrections to patent information may be made after it is published by FDA in the unusual circumstance of an inadvertent mistake or clerical error. Finally, Schumer-McCain allows generic applicants to sue brand drug companies to delist patents or correct patent information on patents that can trigger 30 month stays. This provision allows for the correction of misinformation in and the removal of incorrectly listed patents from FDA's Orange Book. A second tactic used by brand drug companies is to collude with a generic drug manufacturer to block other generic versions of the drug from getting to consumers. Under the Hatch-Waxman Act, the first generic drug company to challenge a patent on a brand drug has the exclusive right to market its drug for 6 months before any other generic can compete. In some cases, brand drug companies have paid such a generic drug company not to exercise its 6-month right, thereby blocking other generic versions of the drug. For example, terazosin hydrochloride is used to treat high blood pressure and enlarged prostate. Consumers used about $540 million of the drug in 1998. A generic was scheduled for market in April 1999, but Abbott Laboratories reached sweetheart deals with two generic companies, Zenith Goldline Pharmaceuticals and Geneva Pharmaceuticals, to keep their generic products off the market. That in turn blocked other generics from getting to market for 16 months. Abbott paid Zenith a lump sum of $3 million plus $6 million per quarter under their agreement, while Geneva received $4.5 million per month. The Federal District Court in Florida held that the agreements were illegal under antitrust laws. The result was that consumers paid hundreds of millions more than they should have because generic competition was delayed. Schumer-McCain closes this loophole and ensures generic challenges to invalid patents. How does it do this? It provides for six situations in which a generic drug company with the 180 days of exclusivity must forfeit the exclusivity--for example, if the generic is found by the Federal Trade Commission to have colluded with a brand drug company, if it withdraws its application, or otherwise delays in getting to market. When the first generic forfeits the 180 days, the generic applicant that is next ready to be approved and go to market can go to market, and consumers immediately enjoy generic competition and lower costs. If that generic applicant is the second generic to have challenged a patent, it gets the 180 days of exclusivity and subsequent generic applicants are delayed from getting final FDA approval for 180 days. If the generic applicant ready to go to market is not the second generic to have challenged a patent, but rather is the third or the fourth or the fifth, the 180 days of exclusivity disappears and FDA may approve subsequent generic applicants as soon as they are ready. Either way, consumers benefit because the first generic that is ready gets to market as soon as it can. In addition, the 180 exclusivity remains as an incentive for the second generic applicant to challenge a patent, an incentive that is vital to maintain especially for those situations when a patent must be shown to be invalid. In this way, Schumer-McCain speeds generic drugs to market while preserving the 180 day incentive--an incentive that has encouraged generic companies to break patents on several high-priced blockbuster drugs and saved consumers billions of dollars. Schumer McCain also makes some other adjustments to the 180-day exclusivity provision. First, it clarifies that the court decision that can start the 180-day period running is the earlier of the date of a final decision from which no appeal, other than a petition for review by the Supreme Court, has been or can be taken or the date of a settlement order or consent decree that includes a finding that the patent at issue is invalid or not infringed. This provision also clarifies that it is any such decision on the patent that will trigger the 180-day period, not necessarily one in the case to which the generic applicant with the exclusivity was a party. Second, the bill clarifies that the 180-day period is available only to the first applicant to challenge a patent on a brand drug, and that subsequent applicants that challenge different patents on that brand drug do not also receive a 180-day period of exclusivity, unless the first forfeits its exclusivity, as provided for by the bill. Third, the bill clarifies that the 180-day period is only applicable to a generic applicant that challenges a patent if that applicant is sued for patent infringement. Finally, Schumer-McCain includes a provision that is intended to forestall frivolous challenges by brand companies to the legal legitimacy of FDA's bioequivalence regulations, challenges that have substantially delayed the approval of some generic drugs. The court challenges by brand companies have taken several forms, including challenges to the specifics of the FDA's regulations and the FDA's authority to issue the regulations, and have involved drug products such as asthma inhalers and topicals. The challenges themselves frequently start as administrative challenges in the form of citizen petitions and progress to legal challenges. Each challenge delays approval or marketing of the generic, and each one consumes valuable FDA resources in defending against these fundamentally frivolous lawsuits. These lawsuits are also filed notwithstanding the holdings of different circuit courts of appeal upholding the regulations. The provision says that FDA's current regulations on bioequivalence shall continue in effect as legitimate exercises of FDA's statutory authority. The provision allows FDA to amend its regulations through rulemaking, but it does not preclude judicial review of those amended regulations, nor judicial review of an application of either the current or amended bioequivalence regulations. Finally, the provision makes it clear we are not changing FDA's authority under the Federal Food, Drug, and Cosmetic Act over biological products. The Hatch-Waxman Act has been a tremendous success in stimulating both competition and innovation. But there are weaknesses in this law that Schumer-McCain rightly closes. Drug companies are entitled to fair profits on their research and innovation. But when patents expire, those companies must innovate to succeed and help patients, not block competition to their old drugs. I also want to applaud the inclusion of a number of important amendments which will help lower drug costs and ensure drug coverage for all Americans, including Senator Stabenow's amendment to help States negotiate lower prices and Senator Rockefeller's amendment to provide emergency Medicaid relief to States in fiscal crisis. Schumer-McCain restores the balance of the original Hatch-Waxman Act, ends the abuses that block competition, and closes the gaps in the Hatch-Waxman Act. The Senate has said: Stop the abuses. Now the House of Representatives must act with us. I thank my health staff for all their hard work on this legislation-- David Dorsey, David Nexon, Paul Kim and Michael Myers on S. 812. David Dorsey made a particularly important contribution to this effort, and deserves high praise for his work. I also want to particularly recognize the hard work and unwavering dedication of Missy Rohrbach with Senator Schumer. And the record would be incomplete without noting the very important contributions of Carlos Fierro and Jeanne Bumpus with Senator McCain, Kyle Kinner with Senator Edwards, Michael Bopp with Senator Collins, Debra Barrett with Senator Dodd, Sean Donohue with Senator Jeffords, Anne Grady with Senator Murray, Steve Irizarry with Senator Gregg, and Dean Rosen with Senator Frist. And I am so grateful, too, for the excellent contributions of Jane Oates, Stacey Sachs, Brian Hickey, Scott Berkowitz, Amelia Dungan, Kent Mitchell, Jeffrey Teitz, Melody Barnes, Marty Walsh, Jim Manley, Stephanie Cutter and so many others who made this legislation possible. I ask unanimous consent that letters of support for S. 812 be printed in the Record.

Mr. KENNEDY. Madam President, I move to reconsider the vote.

Mr. KENNEDY. Mr. President, I yield 18 minutes to the Senator from Florida.

Mr. KENNEDY. Mr. President, how much time remains on our side?

Mr. KENNEDY. I yield 2 minutes to the Senator from Michigan.

Mr. KENNEDY. Mr. President, I yield 1 minute to the Senator from New York.

Mr. KENNEDY. I yield 4 minutes to the Senator from Florida.

Mr. KENNEDY. Madam President, I yield 10 minutes to the Senator from Oregon.

Mr. KENNEDY. How much time remains, Mr. President?

Mr. KENNEDY. Madam President, I yield myself 8 minutes. The history of the American people is one of a never-ending journey toward the goal of a more perfect Union. Americans believe in the ideal of equal opportunity so that individuals can achieve their fullest potential. We also believe that we are members of a great national family which seeks to protect all of its members. We understand that if one of us is hurting, all of us are hurting. In this quest for a more perfect Union, we have encountered and overcome obstacle after obstacle. At the turn of the last century, we passed antitrust laws to begin the long process of controlling corporate abuse and asserting that the public interest must take precedence over the selfish interests of wealthy corporations. We passed minimum wage laws to assert that a worker's right to a living wage took precedence over business rights to maximize profits. We passed the Social Security Act and the Medicare Act to guarantee a secure and dignified retirement to every American who works hard and pays into the system. Just 2 weeks ago, we passed landmark legislation to curb the modern- day robber barons whose dishonesty and greed have done so much to damage our economy and to defraud so many workers and investors of their hard-earned savings. Today, Americans face a crisis in health care. The miracle medicines that can save and prolong life more and more are beyond the reach of average Americans. The prescription drugs we need to stay healthy and alive are just too expensive, and their costs go up and up with each passing day. For the last week, we have been grappling with two more obstacles to a more perfect Union and a better life for all of our people: The exploding costs of prescription drugs and the failure of Medicare to cover those costs. The rapid rise in the cost of drugs burdens families, businesses, and patients, and our economy. For the last 6 years, prescription drug costs have been escalating at double-digit rates: 10 percent in 1996, 14 percent in 1997, 15 percent in 1998, 16 percent in 1999, 17 percent in 2000 and 2001. It is unacceptable when older Americans struggle to afford their heart medicines and diabetes medicines. It is reprehensible when hard- working families are impoverished trying to pay for the drugs that keep their children in the classroom and out of the hospital, but it is intolerable when much of their burden has been created by the wealthiest corporations in America, the brand-name drug companies, deploying an army of lawyers, lobbyists, and campaign contributions to exploit and maintain loopholes in the law to block competition and unfairly boost prices. Today, the Senate is on trial. We will vote on whether to end those abuses, and just as the Senate has voted resoundingly to close accounting loopholes abused by Enron and WorldCom, we must also close the loopholes in our drug patent laws that are exploited by big drug companies and are hurting patients each and every day. Ending the abuses of the law that have contributed to escalating drug prices will help every family. But the most important step we can take in this Congress towards the goal of a more perfect Union is to act at long last to provide prescription drug coverage under Medicare. Last week, the Senate failed to fulfill its responsibility to senior citizens and their families. This week, we have the opportunity and the obligation to do better and to provide a downpayment on our commitment to provide a prescription drug benefit in the Medicare Program. Medicare is a solemn promise between our Government and our citizens. It says: Play by the rules, contribute to the system during your working years, and you will be guaranteed health security in your retirement years. Because of Medicare, the elderly have long had insurance for their hospital bills and doctor bills. But the promise of health security at the core of Medicare is broken every single day because Medicare does not cover the soaring price of prescription drugs. We can no longer ignore the sad fact that too many senior citizens are living in pain because they cannot afford prescription drugs. Too many elderly citizens must choose between food on the table and the medicine their doctors prescribe. Too many elderly are taking half the drugs their doctors prescribe or none at all because they cannot afford them. Senior citizens built our country. They fought in our wars. They created our economic growth and prosperity. They worked hard. They supported their families. They played by the rules. And they stood up for America. Now is the time for America to stand up for them. Last week, a majority of the Senate voted for the Graham-Miller- Kennedy amendment, a comprehensive program to provide prescription drug coverage under Medicare and mend its broken promise. A minority stood against the seniors and with powerful special interests, but under the rules of the Senate that minority was able to block action. Just as the Republican Party opposed the creation of the Medicare Program in 1965, it opposed the enactment of a comprehensive Medicare prescription drug benefit today. The Senate is once again confronted with a choice: Is our priority prescription drugs for the elderly or more tax breaks for the wealthy? Will we give senior citizens the same loyalty that they gave our country or will we continue to offer an open hand to the powerful special interests and the back of our hand to the elderly and their families? Over the coming years, Americans will spend $1.8 trillion on prescription drugs. So far, our Republican colleagues have said no to amendments that would cover only a third of those costs. Yet under the Senate health plan, Senators have 75 percent of their prescription drugs covered. How many of us are willing to face our constituents when we go home in August knowing we have secure coverage for 75 percent of our drug coverage but we reject proposals that do even less for our fellow citizens? The Graham-Smith amendment is a bipartisan compromise. It is not the comprehensive program that I want or that a majority of the Senate wants, but it is an important downpayment on the kind of program senior citizens need and deserve. Under this proposal, every senior citizen will receive assistance and those with the greatest need will receive the most help. I ask that during the quorum call, the time be charged equally against both sides.

Mr. KENNEDY

Mr. KENNEDY. Mr. President, I yield 1 minute to the Senator from Tennessee.

Mr. KENNEDY. Mr. President, how much time do I have?

Mr. KENNEDY. Mr. President, as I understand it, we will have a very brief time after the break. I point out that the National Association of Insurance Commissioners study shows that in 2000--the latest year for which data is available--the total insurance industry profits, as a per average premium for medical malpractice insurance, were twice as high as overall casualty and property insurance profits. In fact, malpractice insurance was a very lucrative area for the industry, averaging a 12 percent profit. Over a 10-year period, their premiums went up 1.9 percent, and they are making 12 percent on that. This is about the insurance industry; it is not about the doctors. We will have more to say about this. This is a lucrative aspect of the insurance industry--everyone knows it--and they just want to cash in on this opportunity at the present time. Mr. President, I see our leader on his feet at this time in anticipation of a consent agreement, so I withhold further comments.

Mr. KENNEDY

Mr. KENNEDY. I yield 7 minutes to the Senator from Illinois.

Mr. KENNEDY. I suggest the absence of a quorum.

Mr. KENNEDY. Madam President, we have 6\1/2\?

Mr. KENNEDY. I yield a minute and a half to the Senator from Delaware.

Mr. KENNEDY

Mr. KENNEDY. I suggest the absence of a quorum.