David Pryor

Mr. PRYOR

Mr. PRYOR. Mr. President, part 2 is the windfall itself. Remember: The drug industry is the only industry which enjoys special protection because of this GATT loophole. [[Page S 16594]] As a result of that special protection, the American consumer is going to pay more for a handful of bestsellilng drugs--in fact, as much as $2 billion to $6 billion more. If we take Zantac, an ulcer drug as well as the world's best-selling drug, for example, a consumer is going to have to pay twice as much for Zantac. If we take Capoten for hypertension, for example, we are going to be paying from 40 to 45 percent more for the next 2 or 3 years for Capoten than we would if we corrected this mistake. Here, for example, is a bottle of Zantac made by Glaxo Welcome. Typically, you can go to the retail pharmacy and spend $180 for a 2- month supply of Zantac. If we simply correct the GATT loophole, we would have a generic drug out there within weeks, and the consumer could be buying this same bottle of Zantac for no more than $90. Mr. President, that is outrageous. We should be embarrassed. We should be embarrassed if we do not correct this horrendous mistake. There is no conceivable reason why we should allow this loophole to remain uncorrected. Do you want a second opinion? Ask Mickey Kantor, the U.S. Trade Representative, as well as the Patent and Trademark Office or the Food and Drug Administration. Ask the people who know. All of them agree that this provision should be fixed and that this loophole should be closed. The GATT negotiators, Mr. President, the people who personally negotiated the treaty itself and who represented this country in those complex negotiations, say without question that a mistake was made. Even the drug companies which benefit from our mistake and currently enjoy this undeserved profit admit it was all a mistake. In fact, one of their spokesmen, upon reading our legislative error--and realizing they had gained a multibillion dollar windfall--said, ``Eureka.'' Mr. President, Congress is faced with a choice: Do the right thing, fix the legislative error and save the taxpayers and the consumers money, or cave in to the lobbying and to the deception of several pharmaceutical companies. Mr. President, that brings us to the third and the last part of the equation; that is, the solution. What is the solution? Closing this loophole is very simple. It will not change our patents. It will not violate the sanctity of our patent law. It will not alter our trade policy nor the GATT treaty. It simply applies GATT to those free-riding drug companies the same way it applies to every other company and every other product in America. This amendment would save consumers as much as $6 billion. The Government would save hundreds of billions of dollars. People are talking about slashing Medicare and Medicaid, and here are billions of dollars that we could save if we would just fix a simple mistake. Let me add that this is not a partisan issue. It never has been. I hope it will not be. It is about fixing a mistake, saving taxpayer money, and basically doing the right thing. I know for a fact that many of my colleagues, Republican and Democrat alike, support our amendment. I also know that some of my colleagues have come to me in the last 2 or 3 weeks especially, and have said, ``Gosh, we want to vote with you. But we have a Glaxo factory, or we have a Glaxo office, or we have a Glaxo facility in our State, and we do not know if we can be with you or not.'' Mr. President, I hope that they will look at the overall picture. There is only one possible reason to oppose this solution. You have to honestly believe that these companies deserve a multibillion-dollar windfall. I do not. You have to ignore the fact that this was a mistake. That is the truth. And you have to believe that the consumers should pay more for those drugs because a legislative drafting error is a sound basis for public policy. Is that what we believe, Mr. President? I do not believe that is the case in the U.S. Senate. I have summarized the three pieces of this issue: the loophole, the windfall, and the solution. But there is a dark side to this issue, a shadow cast by a few companies who will enjoy this multibillion-dollar windfall. They have pulled out the stops. They have hired every lobbyist, law firm, and consultant inside and outside the beltway. Their motto is, ``Don't confuse me with the facts, because on this one there's just too much money at stake.'' This is how a newspaper headline read just last week: ``Money Greases Massive Effort to Protect Glaxo Windfall.'' Mr. President, Glaxo is the name of the company with the most at stake. They have hired the lawyers, they have hired the lobbyists, and they are here right this minute. They make the No. 1 drug in the world, Zantac. Last year, they sold $2.2 billion worth of Zantac. Every day Glaxo sells $6 million worth of this particular drug. That means the windfall for this single company is absolutely enormous. The amount of money Glaxo has at stake is $3.6 billion. That doesn't include the $300 million for Squibb and the more than $100 extra million for Searle. Mr. President, finally, does our proposed amendment violate the sanctity of patent rights? Of course, it does not. Here is a letter of September 25, 1995, directed to our friend on the other side of the aisle, from Rhode Island, Senator John Chafee. It was signed by Mickey Kantor, our U.S. Trade Representative. It says there is no way that it would violate the sanctity of patent rights. Why is this a question at all? Because, with all of the simple facts against them, Glaxo and its cohorts have had to create an issue out of thin air to lobby with. Does our amendment curtail research dollars? Certainly not. In the case of Zantac, all of the research on this particular drug was completed 20 years ago. Glaxo has had a 17-year monopoly to collect a fair and deserved return. And does anybody believe Glaxo will commit this money to research? The fact is, the industry still spends more on advertising than it does on research. And when was the last time someone invested money they don't deserve? Look under Glaxo's mattress and look at their campaign donations: that's where this money is going. In fact, a lot of the underlying research on these products was done at taxpayer expense, not Glaxo's. We fund the National Institutes of Health. We give the industry generous research and development tax write-offs. We protect them in Puerto Rico from paying income taxes by section 936 of the Tax Code. And they still charge the American consumer far more than they charge the overseas consumer. And now we are about to allow Glaxo and other companies an additional 3 years' worth of illegitimate monopoly. Remember, we are talking about $6 million a day of competition-free cash on one, single product. Is that what we are all about in the United States Senate? Handing out $3.6 billion in consumers' hardearned money as an unjustified bonus? The great Notre Dame football coach, Lou Holtz, formerly coached the Arkansas Razorbacks. Coach Holtz was known for many things, but one thing that is indelible in my mind is his ``do-right'' rule. Coach Holtz had a rule that if something was not covered in the rule book or if it was a close question or what have you, he would just say, ``Let's use the do-right rule.'' Mr. President, I think now is the time for the Senate to adopt a do- right rule--to protect the taxpayer and to protect the consumer from an unjustified, undeserved windfall for a few pharmaceutical companies. On a few occasions in the near future, I will be discussing this GATT loophole again. I hope that my colleagues in this body will help us correct this absolutely unthinkable situation. I trust they will join me in correcting this loophole in the GATT treaty. I thank the Chair. I yield the floor. I see no others seeking recognition. I suggest the absence of a quorum.

Mr. PRYOR

Mr. PRYOR. Mr. President, I thank the Senator from New Mexico. I think he just answered my question. I was just going to ask the Senator from New Mexico if he could give us approximately the time for a vote. I guess it would be sometime after 5. I thank the Senator.

Mr. PRYOR

Mr. PRYOR. I thank the Chair. Mr. President, this amendment is offered by myself and Senator Cohen and several of our colleagues. This amendment very simply reinstates the nursing home standards that we adopted in 1987 with a bipartisan effort. These standards have worked. They have worked well. They have saved money. The nursing home industry is not trying to repeal these standards. And we are going to hear that another proposal from the other side of the aisle is going to fix this issue. But I will say, Mr. President, we have not seen all of the ramifications. We know that there is a gaping hole----

Mr. PRYOR. In the waiver process and that there are no standards going to be submitted on the other side.

Mr. PRYOR. Mr. President, will the Senator from New Mexico yield for a question?

Mr. PRYOR. I just want to ask a question, Mr. President.

Mr. PRYOR. Mr. President, if I can ask my friend from New Mexico, is the so-called nursing home regulation or standard fix, is this a part of the larger omnibus Finance Committee package that none of us have seen?

Mr. PRYOR. I thank the Chair.

Mr. PRYOR

Mr. PRYOR. Mr. President, I thank the distinguished manager for recognizing me and allowing me a few moments. This morning, by a vote of 51 to 48, the U.S. Senate voted in a bipartisan way to restore the OBRA 1987 nursing home regulations. They have worked well. They have served residents well. They have served the taxpayers well, and I am strongly committed to achieving that end once again. Mr. President, with all due respect to the distinguished manager's amendment that we now have before the Senate, even though the distinguished manager says we are fixing or even improving upon current Federal nursing home standards, over the course of today I have been in contact with numerous consumer groups and nursing home reform advocates who are extremely critical of the language offered in the so-called manager's amendment. First, this so-called ``fix'' does not indicate in any way the length of time for which a State could operate under a waiver and opt out of the Federal standards. Would the waiver last for 1 month where there would be no Federal standards applying to a nursing home or to a State? Would the waiver be for 1 year or 2 years or 10 years? There is nothing in the amendment to address this issue. Basic question. Also, in the manager's amendment, there is absolutely no guidance whatsoever as to how the Director of HCFA or HHS would determine that a state's standards were sufficient to opt out of the Federal standards; there is no guidance whatsoever as to what the rules or the guidelines would be in granting making that determination. Also, Mr. President, there is a major flaw in this amendment, I say with all due respect. I am just wondering if the distinguished manager knows that under this particular proposal that unless the Federal Government revokes a State's waiver, it could take--I repeat this--the Federal Government could take no action whatsoever against an individual facility, no matter what was going on in a particular nursing home. No action whatsoever means that the Federal Government's hands are tied, notwithstanding the fact that we are appropriating billions and billions and billions of dollars for the safety and well- keeping of the some 2 million nursing home residents out there in our country. The very worst facilities in America could be getting away with just about anything, and the Federal Government would have absolutely no power, no recourse, no opportunity to go in and correct the wrongs in a particular home, simply because the State would have a waiver from Federal regulations and all of the Federal involvement allowing it. Also--and finally, Mr. President--the Roth amendment provides a 120- day period during which the Secretary must review a State's waiver proposal to make sure that it contains all the essential elements, which would be insufficient time to go out and investigate that State's nursing homes or a particular nursing home. This timeframe, 120 days, to decide whether or not a State could get a waiver, opt out of the programs, free of Federal regulations is going to be an impossible time to meet. Let me say once again that the regulations that we adopted on a bipartisan basis in 1987 have worked and they have worked well. I do not know of one Member on either side of the aisle who can argue against that. I am very hopeful that we will make certain that when this process is over, that we will have the very strongest standards, and I truly believe that those strongest standards were supported this morning by the vote of 51 to 48 for the so-called Pryor-Cohen amendment adopted by the U.S. Senate. I hope that will ultimately be the language that will be retained and that we will follow in the decades to come. Mr. President, I yield the floor. Change of Vote

Mr. PRYOR. If my good friend from Maine, who has worked very hard on this bill, would point out where in this language it says that after a State receives a waiver--where in the world the Senator might even infer that the Federal Government would have an opportunity to impose fines, penalties, or to have any jurisdiction on individual facilities? In fact, if I might, on page 37, it says, ``. . . State oversight and enforcement authority over nursing facilities,'' not Federal.

Mr. PRYOR. Mr. President, I thank the manager. Mr. President, on page 38 in section (C)--let me say to my good colleague and friend from Maine that, according to this section and the sections preceding it, if a State has opted out, if they have been granted a waiver for an indeterminate amount of time--and it could be 30 days or 30 years; who knows?--but if that State is under a waiver of the requirement, the Federal Government cannot fine any nursing home in that particular State, the Federal Government cannot penalize, cannot say you cannot take in any more Medicaid patients. Only the State has this jurisdiction. I am trying to impress upon my friend that, he not knowingly, not willingly, is helping to weaken drastically the nursing home standards that have worked so well since 1987.

Mr. PRYOR. Mr. President, I will not use all my 2 minutes. Mr. President, I rise to ask a parliamentary inquiry. Mr. President, this morning by a vote of 51 to 48, the Senate voted for an amendment offered by myself and Senator Cohen of Maine. The amendment was adopted and agreed to. Presently pending is another amendment with different language proposed by the distinguished chairman of the Finance Committee, Senator Roth, in the manager's amendment. Should the manager's amendment pass, does the manager's amendment encompassing or including the nursing home provisions of Senator Roth, does it prevail over the amendment passed this morning by a vote of the Senate?

Mr. PRYOR. Mr. President, then if I have any time remaining, I would simply ask my colleagues on the other side of the aisle, why? Why are we obliterating these nursing home standards that have worked so well for these years, that my colleague from Maine was saying just now are having their bite? Why are we taking that bite out? I think, Mr. President, we are going to be committing a terrible mistake if we do. I hope we will not adopt the chairman's amendment.

Mr. PRYOR

Mr. PRYOR. Mr. President, as many of my colleagues are aware, there are a number of tax issues of significant importance to the 1.9 million American businesses that are S corporations that did not get resolved during the Finance Committee markup last week. Many of those issues-- which include the current law's severe limitations on capital formation, growth, corporate streamlining, family business planning, estate planning, and tax simplifaction--are addressed in a bill I introduced earlier this year with my colleague from Utah, Senator Hatch. That bill, S. 758, the S Corporation Reform Act of 1995, has the bipartisan cosponsorship of a third of the Senate. While it is unfortunate that none of the provisions of S. 758 were included in the bill reported by the Finance Committee and made part of the Budget Reconciliation Bill that is before us, I am pleased to note that many of these provisions were included in the tax bill passed by the House Ways and Means Committee.

Mr. PRYOR. Mr. President, I agree with my colleague from Utah. Specifically, I believe that it is very important that we extend the S corporation reform initiative in the budget process to include all the items in the House bill, as well as such provisions as: The ability of S corporations to issue preferred stock and general convertible debt; The ability of S corporations to form ESOPs, so their employees can share in the success of the business; The ability of financial institutions to be shareholders of an S corporation's stock, which is often a critical element of obtaining financing for corporate growth; and The ability of all members of a family to be counted as a single shareholder of an S corporation, since family-owned S corporations are frequently stifled as they continue to grow from one generation to the next. I hope that these issues will be on the table for discussion, and that my colleagues will be willing to help S corporations--most of which are small and/or family owned businesses--be more effective competitors in the marketplace.

Mr. PRYOR. Mr. President, I thank my colleague from Missouri for yielding to me, and I thank the distinguished manager, Senator Exon of Nebraska, for giving me the opportunity to address this issue. We all know last spring the Congress passed and the President signed into law H.R. 831. This was a bill to restore the 25-percent health care deduction for the self-employed and for the farmers of America. As my colleagues may remember, Mr. President, this deduction had expired and the self-employed were receiving absolutely no health care deduction at all for a period of time. It was an absurd position in which to place small businesses and the family farm. H.R. 831 also increased the deduction for 30 percent for 1995 and for all years in the future. It was a very good step, a positive step for small business and for the family farm. I was proud, by the way, to join Senator Roth and Senator Bond and others in a letter with 73 of our colleagues who promised not to offer or support any amendment on the floor. It was a strong statement, but we underscored our recognition of the importance of the health care deduction for the self-employed. Last week when the tax bill came before the Senate Finance Committee, I was disappointed that the chairman's markup did not include any progress on the deduction front. I offered an amendment to increase this deduction to 50 percent--from 30 percent to 50 percent. I was further disappointed when this amendment failed on a party-line vote. I am very proud to join with Senator Bond this evening on the floor of the Senate in an amendment to increase the self-employed deduction not to 50 percent, Mr. President, but to 100 percent. There is where it should be, and that is what our amendment does. It is an issue of parity. It is an issue of increasing coverage for small business and for farmers, for making insurance more affordable. It would move the 30-percent rate to 60 percent in 1996 for deduction. In 1997, it would continue at 60 percent. By 1998, Mr. President, we would have a 100-percent deduction for small businesses, for the self- employed, and for the farm families of America. I think it would do more to basically make insurance more affordable and to provide insurance for many, many more millions of Americans that have labored under a very inequitable situation. I reserve the remainder of my time.

Mr. PRYOR. Will Senator Exon like some time?

Mr. PRYOR. Mr. President, just for 1 minute. On many occasions we, all of us, I assume, have gone to town meetings or wherever and said we believe the self-employed, small business, farmers of our country need to have the same rights and same deductibility, especially in purchasing their health care coverage for themselves and their employees. This is exactly what Senator Bond and I are trying to craft tonight, that opportunity. I hope we can give that to these individuals who truly create the jobs in America and who really are deserving of this opportunity to participate in the health care system of America. I hope we can work out something and I pledge my best efforts to do so.

Mr. PRYOR. Thank you, Mr. President. I thank the Chair for recognizing me. Amendment No. 2983 (Purpose: To provide for the continuation of requirements for nursing facilities in the Medicaid Program)

Mr. PRYOR. Mr. President, in this 2,000-page piece of legislation, the budget reconciliation bill of 1995, we would think that just about everything under the sun would have been thought of and included in this to consume some 2,000 pages. But what we did not include in this reconciliation bill is something very, very vital, Mr. President, because those are the nursing home standards that we have had enacted since 1987, and if we fail to reenact those same nursing home standards on the Federal level, we will be failing to protect a very, very fragile and vulnerable asset, which is the elderly population of this country, some 2 million now residing in these American nursing homes. Mr. President, I send the amendment to the desk. I send it to the desk on behalf of myself and Senator Cohen of Maine.

Mr. PRYOR. I have several cosponsors. I will not read all of those at this time. It will consume too much time.

Mr. PRYOR. I ask unanimous consent that further reading of the amendment be dispensed with.

Mr. PRYOR. Mr. President, since we enacted OBRA 1987, we have seen a dramatic change in the care of the nursing home patients in our country. For example, we have seen a 38 percent decline in the number of physical restraints. Since the enactment of the OBRA 1987 nursing home regulations, which was, I might say, a bipartisan effort--the late John Heinz, former Senator Durenberger, former Senator George Mitchell, former Senator Jack Danforth from Missouri--we have seen a dramatic advance in all of the things that make the quality of care in nursing homes better; for example, in resident outcomes, a 50 percent increase in the number of dehydration cases that we have solved, and no longer do we find many of these patients dehydrated. We see also just a characteristic of the nursing home population, Mr. President. And how are we going to afford to look them in the eye and say that we failed to adopt any Federal standards in the budget reconciliation bill and we are going to say to the 77 percent of those who need help dressing, to the 63 percent who need help in toileting, the 91 percent who need help bathing, ``We are sorry, you can just make it on your own. We are doing away with all Federal standards. We are going to leave it to the States''? But, Mr. President, the reason we have Federal standards today as a result of OBRA 87 is because the States were not meeting their obligation and their challenge. Mr. President, I know that there are two or three of my colleagues who want to speak. I know that Senator Rockefeller wants 30 seconds. I yield 30 seconds to Senator Rockefeller.

Mr. PRYOR. I yield 30 seconds to the Senator from Florida.

Mr. PRYOR. Mr. President, I yield 20 seconds to the Senator from Maryland, Senator Mikulski.