David Pryor

Mr. PRYOR

Mr. PRYOR. Mr. President, as I have only a few moments, let me point out that the Hatch substitute was born out of a proposal by PhRMA. PhRMA is the group that represents the major brandname drug companies. Every element, according to a memo of April 30, 1996, of a draft PhRMA proposal which, as they wrote to their members, ``benefits members of PhRMA'' wound up in the so-called Hatch substitute. That, Mr. President, is what they are interested in. They are not interested in benefiting the consumer, they are interested in benefiting their own-- regardless of what happens to consumers and taxpayers. This is why we should really call this proposal the PhRMA-Glaxo substitute. I hate to call it the Hatch substitute because I have such respect for my friend from Utah. Certainly he would not want to have his name associated with what he knows is an enormous boon to special interests. Finally, the Hatch substitute has become a Christmas tree, literally a Christmas tree, of patent extensions and special favors for a variety of drug companies like Wyeth-Ayerst, Merck and Zeneca. Once again, I will quote our friend, Paul Simon from Illinois. Senator Simon, who we will miss greatly in this body, said: ``This is a classic case of the public interest versus the special interest.'' Mr. President, that is precisely what this vote we are about to take is all about. I yield the floor.

Mr. PRYOR. Mr. President, did the Senator from Utah conclude his statement?

Mr. PRYOR. Mr. President, I will reserve the remainder of my time. Mr. HATCH addressed the Chair.

Mr. PRYOR. Mr. President, I will respond by saying that this expedited procedure and the substantial investment, is basically what the GATT Treaty calls for and lays out the rules for every other industry in the world today with the exception of the pharmaceutical industry. We left out, by mistake, a conforming amendment that would guarantee the application of the GATT Treaty to brand name drug companies and as a result a few companies are protected against any generic competition. Now, who pays the bill for that? Who pays the ante? Well, we know who pays. The consumer pays--the elderly pay, the veterans pay, the Medicaid Program pays, the government pays. But across the board these windfall profit dollars are going to the major drug companies, and we are asking today for the Senate to support less expensive drugs. We are begging today for competition in the pharmaceutical marketplace. Just recently--and I ask that this item be placed in the Record at the appropriate place--Glaxo cut the cost of Zantac to the German people by 30 percent. The concern they were responding to was that a generic was about to become available and be a competitor to Zantac in that country--a 30-percent decrease in the cost of that drug. I wish they would give us the same cost decrease in this country. But what the Senator from Pennsylvania is talking about--simply wait another 7 months for these drugs to be available in generic form--is another $1 billion in consumer losses and another $1 billion windfall profits for three companies in this country. Mr. President, I do not think the Senate supports extension of this type of benefit to a few drug companies. I see my friend from Utah. I would like to ask how much time I have remaining, please.

Mr. PRYOR. Mr. President, I simply respond by saying the generic companies cannot get the market because they cannot meet the requirements and the obstacles set forth in the Hatch substitute. It is that simple.

Mr. PRYOR. I ask that the time be allocated to the Senator, if I might respectfully say so. I have a letter from Donna Shalala, the Secretary of HHS, and I quote from the letter that has been distributed throughout the Senate this afternoon. Secretary Shalala says: It will be nearly impossible to meet the substantial investment requirement under the Hatch substitute. She concludes saying: It would be virtually impossible for a manufacturer to obtain FDA approval for a generic drug product during this transition period.

Mr. PRYOR. Are we on the Senator's time?

Mr. PRYOR. Mr. President, I thought that Senator Hatch would be speaking now. I think he has stepped out of the Chamber. Therefore, I will make a few remarks in response to my friend from Pennsylvania. First, we are not changing the GATT language. We are keeping the GATT language as it relates to the term ``substantial investment.'' This is simply what we are trying to do with the Pryor-Brown-Chafee substitute amendment at this time. We are trying to basically reinforce what we already have built into the GATT treaty, adopt that language, and apply to the drug companies the exact same rules and definitional standards that we apply to every other industry in our country and in our world today who are signatories to the GATT. I want to make a couple of more points. The Senator from Pennsylvania has mentioned that we needed 70 days in order to resolve all of this. What the Senator from Pennsylvania must be aware of, and what the Senator from Arkansas is aware of, is that every day that goes by these companies are getting, in my opinion, egregious windfalls totaling $5 million extra every day that we estimate could be used to purchase cheaper or less expensive generic drugs. What this is about, Mr. President, really is about a few drug companies. For example, here is Zantac. If we had a generic substitute today for Zantac, we would be paying about 40 percent or 50 percent less than we are paying with the brand name Zantac today in our drugstores. Mr. President, this is an absurd situation. It is time for us to correct this. We hope that the Senate will avail itself of this opportunity. Mr. President, inadvertently a few moments ago when I sent the amendment to the desk I did not mention our original cosponsor from Vermont, Senator Leahy. I ask unanimous consent that his name be added as an original cosponsor.

Mr. PRYOR. Mr. President, I will speak only for a very few moments and then I will yield time to my friend from Rhode Island, Senator Chafee, and those others who want to enter into this debate. I had lunch with my interns a few moments ago, Mr. President. One of the young men at the table said, ``What is all of this GATT-Glaxo debate all about?'' It is very hard to explain, and sometimes it is arcane. Mr. President, the bottom line was stated by our colleague from Illinois recently as eloquently as I know how to frame this debate. I quote Senator Paul Simon: ``This is a classic case of the public interest versus the special interest.'' This is indeed a classic case of the public interest versus the special interest. That is exactly what the issue is today on the floor. Let me anticipate, Mr. President, if I might, and I hope I am not being presumptuous, as to what is going to happen and what the arguments of the Senator from Utah might be. First, Mr. President, the Pryor-Brown-Chafee amendment closes a loophole that every expert in this field, from our Patent Office and the Food and Drug Administration to our U.S. Trade Representative, says should be closed. We are also seeking to have the prescription drug industry play by the very same rules as every other industry in our country. The third thing our amendment does, Mr. President, is guarantee that American consumers have access to affordable generic drugs as was intended by the GATT treaty. We are simply saying that affordable generic drugs should be able to come to the marketplace without the obstacles presented by Senator Hatch will not be allowed. The fourth thing we do, Mr. President, is not affect medical research in any way. It is not an issue, although we will debate that point later. Nor does our amendment affect intellectual property rights in any way. That has been absolutely nailed down in concrete. Since our amendment is consistent with the GATT agreement, that is a moot argument and is simply a scare tactic. Finally, Mr. President, our amendment guarantees that the financial windfall created by our mistake in the GATT agreement does not go to the drug companies. Instead, it goes to the consumers, it goes to the elderly, it goes to the veterans, and it goes to those who are vulnerable and in need of assistance in buying life-sustaining pharmaceuticals. Today, in the absence of our amendment, you will find that these companies are gaining a multibillion dollar windfall as a result of our error. Let me briefly state what the so-called Hatch substitute does. It codifies and puts our original mistake into law. It guarantees that the American consumer never gets the affordable, generic drugs intended under the GATT agreement. Here is the so-called Rube Goldberg chart, Mr. President, showing what the Hatch substitute actually does. This chart shows how the Hatch substitute guarantees that generic competition is locked out and leaves it up to the consumer to continue paying for the multibillion dollar windfall to a few drug companies as a result of a congressional mistake. Let me emphasize that affordable generic drugs will be something that will not be within the grasp of our American consumer should the Hatch provision prevail. The Hatch substitute guarantees Glaxo and a few other drug companies that they get the entire $2.5 billion windfall. It is an enormous Christmas gift, Mr. President, that we have no business doling out as a special favor to undeserving companies. Finally, Mr. President, the Hatch substitute would also grant a 2- year patent extension for a drug called Lodine, manufactured in the State of Pennsylvania by Wyeth-Ayerst, a division of one of the major pharmaceutical companies in the country, American Home Products. This patent extension was added by the Judiciary Committee, Mr. President. In addition, the Hatch substitute creates the Christmas tree of other gifts like additional patent protection to brand name companies like Zeneca and Merck. These provisions were, once again, added by the Judiciary Committee. Mr. President, this is what I think is going to be occurring during the next several minutes. I am wondering now if my colleague from Utah would like to respond, or if my colleague from Rhode Island would like Mr. CHAFEE addressed the Chair.

Mr. PRYOR. Mr. President, it gives me great pleasure to announce I am submitting this amendment on behalf of myself and Senator Chafee, Senator Brown, Senator Byrd, Senator Dorgan, Senator Leahy, and Senator Bryan. With that, Mr. President, I see my friend from Utah is seeking recognition.

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

Mr. PRYOR. Mr. President, I thank the Chair for recognizing me. For the benefit of our colleagues, Mr. President, let me state what has gone on today and what I think will go on for the next hour to hour and a half. Mr. President, first, I am going to be sending an amendment to the desk in the first degree. Immediately following that introduction, the Senator from Utah will offer his amendment in the second degree to my first-degree amendment. We will debate these issues and vote on the Hatch amendment some 45 minutes later. After that vote, it will be very possible that I will offer the same amendment as my amendment in the first degree, which we will debate for 45 minutes and then vote. I know this is somewhat of a Byzantine situation, Mr. President, but I have been attempting since December 7 to have an up-or-down vote in this Chamber on my amendment. It appears I am not going to get a clear up-or-down vote, but this is as near as possible. Mr. President, with that explanation, hoping our colleagues understand the nature of this issue and the procedure that we will be following, I send my amendment in the first degree to the desk and ask for its immediate consideration.

Mr. PRYOR. Mr. President, if I might respond by thanking the Senator for his very kind and generous words. I am deeply grateful for that. I have enjoyed a splendid relationship with Senator Hatch through this fight and other issues. He has always been a gentleman in every respect. He is a very eloquent adversary, I might say. Mr. President, I also want to say a special word of thanks to the Senator from Rhode Island, Senator Chafee, who has been our ally in this fight, not only in the Senate Committee on Finance, but on the floor of the Senate. He and his staff have been unfailing in their support. We are very grateful for the opportunity to work with him and by his side. Also, I thank the Senator from Colorado, Senator Brown, and the other cosponsors of this particular amendment. Once again, Mr. President, I see no need to put the Senate through this vote again. I guess I will ask the leadership if they would like to attempt to vitiate the unanimous-consent agreement. Mr. President, I yield the floor. Vote on Amendment No. 4365, As Amended

Mr. PRYOR

Mr. PRYOR. Mr. President, I object.

Mr. PRYOR. Mr. President, I object.

Mr. PRYOR. Mr. President, I ask unanimous consent that the Warner amendment be temporarily set aside.

Mr. PRYOR. Mr. President, may I inquire of the Chair as to what the pending business is of the Senate?

Mr. PRYOR

Mr. PRYOR. Mr. President, reserving the right to object--I do not think I am going to object--I think we are just about to achieve this agreement. Mr. President, I suggest the absence of a quorum.

Mr. PRYOR

Mr. PRYOR. Mr. President, I was trying to protect my rights and protect the opportunity to offer this amendment at the appropriate time either on the DOD or some other subsequent piece of legislation. Mr. President, I will not object. I thank the Chair for recognizing me.

Mr. PRYOR. Mr. President, reserving the right to object, I do not care to object at this moment. On last Thursday I attempted to lay down, but I did not actually send to the desk, an amendment to the defense authorization bill relative to closing of a loophole that we created in the GATT treaty that relates to two or three drug companies that are making enormous windfall profits as a result of our mistake. Mr. President, I got in a little bit late on the distinguished majority leader's request. I am wondering if anywhere in the unanimous consent request if my thrust of offering this amendment is going to be impaired in any way, or will there be an opportunity?

Mr. PRYOR

Mr. PRYOR. This Senator looks forward to working with him on this matter. We also would like to respond by saying that we hope when the Senator offers an amendment or language in this field, that it will not be a lawyers relief amendment, which the substitute amendment very clearly is in fact and in effect. It would tie up the marketplace in litigation with impossible definitions and insuperable barriers for years and years. Speaking of expedited procedure, I have been trying since January to get on the floor and have a vote on this amendment--just a simple vote with an hour or 30 minutes equally divided, whether up or down or to table the amendment. But for some reason or another, some of my colleagues on the other side, including some of my very best friends, have prevented this all year. Before we move forward and before the final vote is cast on this DOD authorization bill, this Senator is going to get a vote on our amendment. We think that it should be voted on. We think that is only fair. And I am going to push for a vote on this proposal on the DOD authorization bill. The Senator from Pennsylvania probably knows that the Department of Defense buys $900 million worth of prescription drugs every year for servicemen and servicewomen all over the world. They can save $30 million overnight by the passage of the amendment that my colleagues and I have proposed. I hope our friend and colleague, the Senator from Pennsylvania, will help us find an expedited procedure to bring this amendment to a favorable resolution by letting the Senate vote up or down on it once and for all. I thank the Senator.

Mr. PRYOR. Professor Levin concluded that the sense-of-the-Senate language in the Hatch substitute purporting to encourage parties to litigate quickly was of little effect. I quote: This is laudable sentiment but without legal impact. In short, it evidences recognition of the problem but not an effective solution. That is from Professor Levin. So my colleagues and I look forward to the Senator's contribution to this issue. We have already addressed this question with him before. I can say without reservation that any changes proposed in the Senate to expedite litigation under the Hatch-Thurmond substitute would be welcome, as it currently contemplates an entirely unworkable and unbalanced process intended to block competition in the marketplace. So I look forward to the Senator from Pennsylvania offering that contribution. I look forward to working with him. I agree that we are very close to a meeting of the minds on this particular issue.

Mr. PRYOR. As I mentioned earlier, we are not in any way changing the URAA or GATT language. In fact, I look forward to the Senator from Pennsylvania offering language or an amendment to expedite the convoluted process contemplated in the substitute version. I emphasize again the reservations of the Department of Health and Human Services, regarding both the interminable delays in litigation and the unique, unattainable requirements imposed on generic competitors through the substitute version's unworkable definition of substantial investment. And as Professor Levin--I might say, probably known well by the Senator from Pennsylvania--of the University of Pennsylvania has concluded----

Mr. PRYOR. Mr. President, I will take a very few moments this afternoon to refresh my colleagues' memories as to why we are here again to act on the GATT issue. When the Congress passed the GATT legislation, we made two changes to U.S. patent law. First, all patents were extended from 17 to 20 years in length. That is the law today for all patents in every industry in this country. Second, we adopted a grandfather provision which permitted generic competitors in all industries to go to the market on the original 17- year date if they had made a substantial investment and if they paid a royalty to the patent holder. But according to the U.S. Trade Representative, the Food and Drug Administration, the Department of Health and Human Services, and the Patent and Trademark Office, the Congress accidentally--and I underline ``accidentally''--omitted a conforming amendment in the GATT legislation. The Congressional Record also documents our very clear intent to apply the GATT treaty universally without any special exceptions. Mr. President, as a result of our error and this missing amendment, a single industry has now been exempted from the GATT grandfather provision. Every single product, every company, and every industry in this country abide by this law today, except for one particular industry. That is the prescription drug industry. The omission of this single industry has created a loophole that benefits just a few drug companies, especially Glaxo Wellcome. The loophole, Mr. President, in the GATT legislation has given them a $2.5 billion windfall. That's $5 million a day. As long as we wait and talk and do nothing, these few drug companies are receiving millions every day which are subsidized by the elderly, by the veterans and by the consumers of America. Today, we have an opportunity to put this to an end. We could bring equity at long last to this issue. Glaxo Wellcome is the largest drug firm in the world. It is today receiving a lion's share of this multibillion dollar windfall through the world's best-selling drug, Zantac. Today, generic competitors to Zantac who have already made a substantial investment and readied their products for the market have been unintentionally denied access to the marketplace. Today, they have idled their factories and their workers wait for us to act. Today, the consumers of America are being denied cheaper prices for their drugs which they should have received months ago. The amendment that I offer today, Mr. President, on behalf of Senator Brown, Senator Chafee, and Senator Bryan, is simply the conforming amendment which should have been a part of the GATT legislation. This is our opportunity to fix a glaring legislative mistake. In the process, we will save American consumers literally billions of dollars, and we will bring our country into full compliance with our treaty obligations. Let me remind my colleagues how our friend and colleague, Senator Paul Simon of Illinois, recently summed up this issue. He said: ``This is as classic a case of public interest versus special interest as you could find.'' Last December, we brought this amendment to the floor and unsuccessfully sought an up-or-down vote on it. There was an effort to kill the amendment with a sense-of-the-Senate resolution that called for a hearing in the Judiciary Committee. When we withdrew the amendment from consideration, we promised, like General MacArthur, to return. But there have been many delays and postponements in the last several months and procedural obstacles thrown up by our opponents. For some mysterious reason, the hearing that was promised took more than 2 whole months to schedule. A markup was promised for March. It was postponed three different times for over a month. Mr. President, here is the price for our opponents' delay. Here is the price that American consumers are paying and putting into the pockets of a few drug companies. As a result of our delay, a few companies have collected $990 million as a windfall. We are just 2 days short of permitting this to grow into a round $1 billion windfall, a windfall which continues because of a congressional mistake we have still not corrected. We have waited and waited and waited, while the Judiciary Committee held a hearing and markup. The result of all this delay is that now the record simply verifies that a costly mistake has been made which needs correction. Ambassador Mickey Kantor, then our Trade Representative, testified at the hearing that our amendment ``would do nothing more than fulfill our obligation to be faithful to what we had negotiated in the GATT treaty.'' He confirmed that it ``would carry out the intent, not only of the negotiations and what the administration intended, but also what the Congress intended.'' When the Judiciary Committee marked up the GATT amendment, it regrettably ordered and reported out a fatally flawed substitute version. According to a letter from the Department of Health and Human Services which has been distributed to each Member of the Senate, the FDA and the Department concluded that the Judiciary or Hatch substitute does not close the loophole. In fact, it would be virtually impossible for a manufacturer to obtain FDA approval under the substitute. To add insult to injury, Mr. President, the substitute version includes a veritable treasure trove of patent extensions and special breaks for other drug companies that are completely unrelated to the GATT loophole. So we have all waited endlessly, enriched a few companies and ended up with a substitute which is worse than the status quo. I would add, Mr. President, that the committee marked up on May 2. The committee has yet to file a report on the substitute version. In fact, the committee also has guaranteed we delay for months the consideration of our amendment. Moreover, I understand the distinguished committee chairman, Senator Hatch, will offer the substitute version as a second-degree amendment to our own and further delay consideration. Mr. President, the only compromise in the committee's work is a compromise of the interests of consumers and our Nation's vital health care programs--Medicaid, Defense Department and CHAMPUS, VA, Public Health and Indian Health Service clinics, private health insurers, and the like. We have a very clear choice before us this afternoon. We can do the right thing. We can do the right thing by voting for this amendment. We can do the right thing by defeating the substitute version offered as a second-degree amendment by the distinguished chairman of the committee, the Senator from Utah. Many have asked me, Mr. President, why we are offering this amendment on the Department of Defense authorization bill. There is a very simple answer. First, this amendment would save the Department of Defense over $30 million. The Department of Defense has estimated that it spends $900 million a year on prescription drugs for our servicemen, servicewomen, and their families. According to estimates consistent with earlier CBO estimates for Medicaid savings, our GATT amendment would cut those expenditures by over $30 million. Mr. President, for this reason alone, we think this is a proper place to bring this amendment to the attention of our colleagues with the intention of receiving their consideration and, hopefully, a positive vote. I also want to summarize, if I might, Mr. President, what I think may become a second-degree amendment to the Pryor-Chafee-Brown-Bryan bill. First, the Department of Health and Human Services, as I have mentioned, has analyzed the substitute. They concluded that ``it does not close the GATT loophole'' and includes legal requirements that are ``nearly impossible to meet'' and ``present nearly insurmountable obstacles'' to fair competition. Second, the substitute was originally drafted by the brand name drug industry association, PHRMA. We have a copy of the PHRMA draft. As PHRMA wrote, the substitute ``protects the interests of PHRMA members''--not consumers, and certainly not taxpayers. As a result, Mr. President, the Hatch amendment that we may be considering--which looks like a Rube Goldberg design as far as judicial procedure is concerned--may be described better as a Christmas tree. It is a Christmas tree of special interest favors, new multimillion dollar patent extensions and provisions intended to overturn Federal court decisions. This Christmas tree preserves the GATT loophole. It blocks generic competition. It protects the Glaxo windfall. It overturns the Federal courts. It guarantees endless litigation. It rewards companies like Merck, Zeneca, and Wyeth with millions in special protections without giving my colleagues and I a single credible legal or policy justification. Finally, Mr. President, Professor Leo Levin, professor emeritus of law at the University of Pennsylvania, is one of the world's leading experts on the problems of cost and delay in civil litigation. I thought it would be interesting if we mentioned the opinions of Professor Levin, the former director of the Federal Judicial Center. Here is what Professor Levin thinks of the Hatch substitute: My conclusion is that, conservatively, I would expect several years to elapse from the commencement of litigation under the Hatch substitute until final disposition on appeal. In other words, this is an ironclad guarantee to Glaxo and its compatriots that they can collect their entire $2.5 billion windfall. It is an ironclad guarantee that competition will be locked out and that windfall profits flow to the wrong parties. There is also a sense-of-the-Senate provision in the Hatch substitute which purports to urge parties to litigate quickly. I am sure my colleague from Utah will say this is a godsend; that it will somehow compel the parties to go to court and resolve their differences quickly so that we can have free and orderly competition. Here is what Professor Levin concluded about that particular sense- of-the-Senate resolution embodied in the Hatch substitute: This is a laudable sentiment but without legal impact. In short, it evidences recognition of the problem but not an effective solution to the problem. Mr. President, I could talk on and on about this issue. I do not think we need to talk a lot longer about it. I would like to say that I would enjoy proceeding, if we could. I would be more than happy to enter into an agreement on time. I have not actually sent the amendment to the desk. I will do so at the appropriate time. But I see my colleague from Utah standing. I wonder if he has any comment. Mr. HATCH addressed the Chair. Mr. THURMOND addressed the Chair.

Mr. PRYOR. Mr. President, if I may respond to my friend from Pennsylvania, we all recognize that the question of substantial investment in this particular issue has been of great concern to the Senator from Pennsylvania. It is true that we have corresponded about this issue. I have attempted to accommodate the Senator's concern in our legislation for a more precise definition of substantial investment. In fact, our original legislation included a provision which very narrowly defined substantial investment. While we, too, sought to provide guidance to the courts, the provision was regrettably attacked by Glaxo and its compatriots as an effort to provide special treatment to their generic competitors. To ensure that all parties understood that our amendment is a simple, straightforward effort to bring a rogue industry into compliance with the rest of the country, we withdrew this language. Mr. President, as I understand the complex GATT implementing law, the generic competitor has the burden of establishing whether it has made a substantial investment in court. This is my understanding of the present law, and the present law would simply be extended in the area of substantial investment to the inappropriately exempted prescription drug industry if my proposal is adopted.