HEALTH INSURANCE REFORM ACT
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HEALTH INSURANCE REFORM ACT
(Senate - April 18, 1996)
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HEALTH INSURANCE REFORM ACT
The Senate continued with the consideration of the bill.
Mr. HATCH. Mr. President, I understand the pending business is the
Brown amendment. It is my understanding that he will make his arguments
and then withdraw the amendment; am I incorrect on that?
Mr. BROWN. Mr. President, the Senator is correct.
Mr. HATCH. I am correct.
Mr. SIMPSON. I yield the floor.
Mrs. KASSEBAUM addressed the Chair.
The PRESIDING OFFICER. The Senator from Kansas.
Mrs. KASSEBAUM. Mr. President, prior to returning to Senator Brown's
amendment, if I may propose a unanimous consent request on behalf of
Senator Dole.
Let me yield and say, evidently, this has not been cleared fully on
both sides, so we will return to Senator Brown's amendment.
Mr. KENNEDY addressed the Chair.
The PRESIDING OFFICER. The Senator from Massachusetts.
Mr. KENNEDY. Mr. President, we want to try and accommodate the
greatest number of Members. We have several Senators who are here with
their amendments ready to address them and ready to act on them. We
believe that if we are able to do that, we can afford, whoever wants to
speak, as much time as they want to speak on other kind of matters. But
we are here to deal with this legislation.
We have been urging Senators to come over here and offer their
amendments. They are here now, and we can either do this later--I plan
to stay here until it is done, but the greater numbers of Members would
like to have at least some finality to the legislation. I believe we
can do it. It is 6 o'clock now and we had the chance for general
discussion during the course of the day. Many of our colleagues have
come over here to address these issues and to vote on them, and they
have been waiting as well.
I hope we will urge our colleagues who are not going to talk on these
matter--we know they can; people can get up and address any other
matters--but out of consideration of other Members, please try and see
if we cannot focus on the matter that is at hand, and that is the
Kassebaum-Kennedy bill, which is of enormous importance to many
American families.
I see other Members here, and I am sure they will do what they have
to do, but we are trying to conclude this and then to let others speak
so that at least others will not be here tomorrow. We are going to end
up being here tomorrow as sure as I am standing here unless we are able
to make progress. That is fine with me, if that is what it is. But with
some cooperation of the Members, we have a very good chance of
finishing this. Otherwise, Members ought to understand we are going to
be here late tonight voting and end up starting the votes later this
evening and tomorrow.
We are just about to ask for the final list so that we can agree with
that. But in the meantime, we have the Senators who are here who are
prepared to move ahead. Senator Brown is here, and Senator Jeffords was
here just a few moments ago to deal with an extremely important measure
and has been here now for an hour and a half trying to gain the floor.
Mr. CHAFEE addressed the Chair.
The PRESIDING OFFICER. The Senator from Rhode Island.
Amendment No. 3678
Mr. CHAFEE. Mr. President, I am going to address the amendment that
is before us, the Brown amendment,
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but I say to the managers of the bill, I join with them in their
enthusiasm to finish it up. I do not see why we do not seek time
agreements, in case we get off on another Social Security argument,
whatever it might be. But that is up to the managers.
Mr. President, I have a statement that I wish to make that deals with
the subject Senator Brown has been addressing, and Senator Pryor,
likewise, and which I joined in the past.
All I can say, Mr. President, is I just wish we would address this
matter, both in the committee, and I understand Senator Brown has been
trying to achieve that, but also on the floor of the Senate. We have
had one vote. It was a one-vote margin difference. Perhaps people's
minds have been changed since then. Nonetheless, I support the efforts
of Senators Brown and Pryor.
Congress and the administration made a simple--but costly--error in
drafting the Uruguay Round Agreements Act of 1994. That inadvertent
error is costing consumers, State governments, and the Federal
Government millions of dollars, while providing an unintended windfall
to a handful of drug companies. I don't believe we should let that
error stand.
What happened? The facts of the case are straightforward. Back in
1994, Congress was drafting omnibus trade legislation designed to bring
the United States into conformity with the important new global trade
agreement known as the GATT. As part of our commitment to fulfill our
new GATT obligations, the United States pledged to increase patent
protection for future patents. In addition, the United States also
pledged to boot protection for patents already in existence--a key
point that goes to the heart of the issue before us today.
Accordingly, the trade bill that Congress wrote, boosted existing
patent terms by up to 3 years, giving current patentholders a valuable
extension on their patents. To be fair to generic manufacturers who had
been preparing to go to market on the old patent expiration date,
Congress fashioned a compromise: generic companies who had made a
substantial investment in preparing for market would be allowed to
proceed as planned, but would have to pay equitable remuneration--that
is, a royalty--during the extended term. This carefully balanced
compromise became law as part of the 1994 Uruguay Round Agreements Act.
However, in drafting this 653-page bill, Congress and the
administration made a small--but very costly--mistake. A simple
conforming amendment to an FDA statute was omitted. Yet the impact was
enormous: the omission singlehandedly prevented the generic drug
industry from going to market during the extended term. The result is
that a handful of brand-name drug companies have received a staggering
$4.3 billion windfall, at the expense of consumers, that Congress,
United States trade officials, and even the brand-name companies
themselves, neither intended nor expected.
The cost to consumers is enormous. The drugs that are covered by the
windfall are widely prescribed, and are used for everyday ailments that
affect millions of Americans. Keeping the generic version off the shelf
for up to 3 years means that Americans--including and especially older
Americans--are paying far more than was ever intended for their
medications.
Not only are consumers paying for this error, but so are State
governments and the Federal Government--in the form of higher
reimbursements for prescription drugs for the elderly, veterans, and
low-income Americans.
This is not right. We made a mistake. We should fix it. In this case,
the solution is obvious and easy: simply enact the missing conforming
amendment. That is exactly what Senator Pryor, Senator Brown, and I--
and many others--have been working to do.
Let me take a moment to put to rest a few red herrings. Our amendment
would not affect our GATT commitments or our efforts to promote patent
protection worldwide. Our amendment would not upset the balance in U.S.
drug patent laws, nor impede research and development of new drugs. If
any of these misrepresentations were true, we simply would not be
sponsoring this amendment. It is that simple.
It is time to correct this injustice--an injustice to consumers in
our Nation, an injustice to the Federal and State governemnts that are
paying extra and needless sums into Medicaid and Medicare and an
injustice to the generic manfuactures who made the investment in
reliance on the law as it was supposed to be.
It is time we fixed this unfairness.
Mr. BROWN addressed the Chair.
The PRESIDING OFFICER. The Senator from Colorado.
Mr. BROWN. Mr. President, it is my intention to try and expedite the
deliberations here tonight. In that regard, my thought would be to make
a statement, hopefully, shedding some light on this amendment. I know
Senator Pryor has worked so hard in this area. He wants to make a
statement, and then it will be my intention to withdraw the amendment.
I withdraw it reluctantly, because I think it needs to be considered
and dealt with as soon as possible. But I am persuaded that we will not
have some votes that we need to adopt it if we insist on attaching it
to this measure.
Having said that, let me simply outline the issue that is before us.
It is well described in a New York Times editorial of February 28. I
will quote a portion of that, because I think it is quite succinct and
to the point:
Congress finds it hard to remedy the simplest mistakes when
powerful corporate interests are at stake. In 1974, when
Congress approved a new trade pact with more than 100 other
countries, it unintentionally handed pharmaceutical drug
companies windfall profits. More than a year later, Congress
has yet to correct the error. The trade pact obliged the
United States to change its patent laws to conform with those
of the rest of the world. They had the effect of extending
some American patents for up to 20 months.
Mr. President, those are the opening lines of the editorial.
The simple fact is this. We had people research drugs and put the
investment into it and receive the full length of their exclusivity
that this Congress has supported and put into statute. The GATT
agreement gave a serendipitous extension to that. In other words, under
the GATT agreement and the conforming changes of law that this Congress
adopted, people who had invested in and relied on our laws got a longer
period of patent protection than they have ever planned for. But the
GATT agreement also had a provision, an exception for that extended
protection when someone had made a substantial investment in reliance
on our laws in providing competitive products.
In other words, what we propose in this amendment is nothing more
than absolutely the process that was contemplated and planned for under
GATT. And, I might mention, Mr. President, many countries have done
exactly the same thing. As a matter of fact, this country has done a
similar kind of thing with other products.
What this amendment simply suggests is that where we have given
someone an unexpected, unplanned extension in their patent protection,
that we make an exception for that extension where someone else has
made a substantial investment in producing and providing a competitive
product--in this case, a generic drug.
If we do not adopt this, we will have said to people who produce
products in reliance to our laws, ``After you have made the investment,
after you have put the money into it, after you have made under the
terms of what will be the statute a substantial investment on reliance
of our laws, we are going to pull the rug out from under you and change
the rules retroactively.''
Mr. President, that is not right. That is not honest. That is not
fair. That is not a good way to do business. We have talked about the
horrible damage--and it is enormous damage--done to consumers by this
unjustified quirk of the ratification document.
But I want to focus the Members' attention on what is unfair to
business. I believe it is unfair to business to say, ``Look, here are
the laws. Here is how long you have for patent protection. And by the
way, we're going to change the law retroactively, and even though you
made substantial investment in producing a competing product, we're not
going to let you compete.'' Now, that is what has happened.
If we do not pass this bill as it is in committee or the amendment as
we offer it on the floor, what you are going to do is not only impact
consumers to the tune of billions of dollars, but you are going to say
to businesses that have relied on the law, that it is tough luck, you
should not have believed us. You should not have relied on what we did.
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Why is it important to pass it on this bill or pass it quickly? I
think that is a fair question. I must tell the Members, I am
disappointed I have not been able to persuade all the other people who
support the concept that it is important to pass it on this measure.
It is important because the impact of this, if it goes uncorrected,
could be over $2 billion, according to the Washington Post. It is
important because this costs consumers up to $5 million a day while we
delay. Mr. President, let me repeat that because I am not sure people
have focused on the impact of delay. It costs up to $5 million a day to
consumers in this country if we do not act. Some estimates indicated it
may have cost consumers already $700 million.
Mr. President, this is not anything other than fairness. This is not
anything other than saying the patent protection that was planned in
the law ought to be delivered as it was planned in the law.
Mr. President, I will not prolong the argument. I know the
distinguished Senator from Arkansas has worked on this and has some
remarks, but I ask unanimous consent to have printed in the Record the
editorial from the Washington Post, a letter from The Seniors
Coalition, a letter from the National Committee to Preserve Social
Security and Medicare, a letter from the National Women's Health
Network, a letter from the Citizen Action, a letter from the Gray
Panthers, a letter from the Generic Drug Equity Coalition, a letter
from the Consumer Federation of America, and a letter from the Citizen
Advocacy Center, all pertaining to this subject and advocating the
position of this amendment. I ask unanimous consent that all of these
letters be printed in the Record.
There being no objection, the material was ordered to be printed in
the Record, as follows:
[From the Washington Post, Dec. 4, 1995]
The Zantac Windfall
All for lack of a technical conforming clause in a trade
bill, full patent protection for a drug called Zantac will
run 19 months beyond its original expiration date. Zantac,
used to treat ulcers, is the world's most widely prescribed
drug, and its sales in this country run to more than $2
billion a year. The patent extension postpones the date at
which generic products can begin to compete with it and pull
the price down. That provides a great windfall to Zantac's
maker, Glaxo Wellcome Inc.
It's a case study in legislation and high-powered lobbying.
When Congress enacted the big Uruguay Round trade bill a year
ago, it changes the terms of American patents to a new
worldwide standard. The effect was to lengthen existing
patents, usually by a year or two. But Congress had heard
from companies that were counting on the expiration of
competitors' patents. It responded by writing into the trade
bill a transitional provision. Any company that had already
invested in facilities to manufacture a knock-off, it said,
could pay a royalty to the patent-holder and go into
production on the patent's original expiration date.
But Congress neglected to add a clause amending a crucial
paragraph in the drug laws. The result is that the
transitional clause now applies to every industry but drugs.
That set off a huge lobbying and public relations war with
the generic manufacturers enlisting the support of consumers'
organizations and Glaxo Wellcome invoking the sacred
inviolability of an American patent.
Mickey Kantor, the president's trade representative, who
managed the trade bill for the administration, says that the
omission was an error, pure and simple. But it has created a
rich benefit for one company in particular. A small band of
senators led by David Pryor (D-Ark.) has been trying to right
this by enacting the missing clause, but so far it hasn't got
far. Glaxo Wellcome and the other defenders of drug patents
are winning. Other drugs are also involved, incidentally,
although Zantac is by far the most important in financial
terms.
Drug prices are a particularly sensitive area of health
economics because Medicare does not, in most cases, cover
drugs. The money spent on Zantac is only a small fraction of
the $80 billion a year that Americans spend on all
prescription drugs. Especially for the elderly, the cost of
drugs can be a terrifying burden. That makes it doubly
difficult to understand why the Senate refuses to do anything
about a windfall that, as far as the administration is
concerned, is based on nothing more than an error of
omission.
____
The Seniors Coalition, Protecting the Future You Have
Earned,
Washington, DC, April 17, 1996.
Hon. Hank Brown,
U.S. Senate,
Washington, DC.
Dear Senator Brown: The Seniors Coalition urges you to
support legislation offered by Senator Brown in the Judiciary
Committee to correct an egregious mistake made in the
implementation of the GATT treaty. This mistake has cost the
consumers, and primarily the elderly, of this nation millions
of dollars. This loophole has allowed a few drug companies to
take advantage of a situation that was unintended and to line
their pockets with unearned money from American citizens.
I ask you to read the article ``What you don't know about
brand name drugs is costing you millions'' (pp. 4-5) in our
latest edition of The Senior Class which outlines the problem
and then to vote to support the correction. Your support for
this effort is critical to the financial well being of
thousands of senior citizens.
I submitted testimony to the Senate Judiciary Committee on
this issue when the committee held hearings on this issue in
February. At that time I called for the Congress to correct
the mistake and reject the efforts of brand name companies to
thwart the correction. The so-called ``compromise'' that has
been drafted by Glaxo and may be offered by a member of the
Judiciary Committee is nothing more than a thinly veiled
effort to codify the mistake that was made. A careful reading
of the language will find that it does even more damage to
the ability of consumers, especially seniors, to find safe
and affordable pharmaceutical products in the marketplace.
Again, please support Senator Brown and his effort to
correct this mistake. Now is the time for the Congress to do
something for the American public.
Sincerely,
Thair Phillips,
CEO.
____
National Committee to Preserve Social Security and
Medicare,
Washington, DC, March 27, 1996.
Honorable Hank Brown,
Senate Judiciary Committee, U.S. Senate, Hart Senate Office
Building, Washington, DC.
Dear Senator Brown: We understand the Senate Judiciary
Committee plans to mark-up legislation addressing and General
Agreement of Tariff and Trade (GATT) patent pharmaceutical
issue tomorrow. We urge you to support legislation (
S. 1277)
sponsored by Senators Chafee, Pryor, and Brown to correct an
oversight in the GATT implementing legislation that will save
consumers and taxpayers billions of dollars in prescription
drug costs. We urge you to oppose any alternative measures
that would maintain this costly and unintended loophole under
GATT.
As you know, because of an oversight in patent changes
approved under the GATT treaty implementing legislation, the
availability of lower-priced generic versions of more than 25
widely-prescribed drugs must be delayed for up to an
additional three years. As a result, seniors and other
consumers will wait longer for access to less-costly generic
drugs.
Every day Congress delays in correcting this oversight
costs consumers $5 million dollars in additional prescription
drug costs. In fact, the delay has already cost consumers an
additional $500 million dollars. The biggest losers among
U.S. consumers are senior citizens, as older Americans
consume about one-third of the prescription drugs sold in the
United States. On fixed incomes and with no pharmaceutical
coverage under Medicare, three out of four seniors cite
prescription drugs as their largest out-of-pocket expense.
On behalf of our millions of members and supporters, the
National Committee to Preserve Social Security and Medicare
urges you to support and report out of Committee the Chafee/
Pryor/Brown generic drug legislation.
Sincerely,
Martha A. McSteen,
President.
____
National Women's Health Network,
Washington, DC, March 21, 1996.
Dear Judiciary Committee Member: In this time of federal,
state and local budget-cutting, threats to Medicare and
Medicaid, and continually rising medical costs, health care
savings are more important than ever to the American public.
Given the seriousness of skyrocketing health care costs, it
is unconscionable that Congress has so far failed to address
an error that needlessly increases the cost of health care
for millions of Americans, and unnecessarily boosts costs to
the federal government, as well.
More than a year ago, Congress discovered that the
legislation implementing the GATT Treaty contained an
unintended loophole for some pharmaceutical drug companies.
An error of omission granted the manufacturers of brand-name
drugs treatment unique in all of American industry.
By failing to include generic drugs in its rules concerning
transition to new patent terms under the GATT Treaty,
Congress has done a disservice to women's health,
specifically, and to consumers and taxpayers, generally.
While the mistake was unintentional, the consequences are
grave. Each day that passes without Congressional action to
correct this error costs millions of dollars; the total cost
is expected to exceed $2 billion.
The beneficiaries of the current situation are the handful
of giant pharmaceutical corporations that will enjoy windfall
profits for three additional years. Their glee at this
unanticipated windfall is evidenced by the fierceness with
which the lobbyists for these companies are fighting to
preserve their protected status.
The exemption of drug companies from the GATT transition
rules was a mistake. It
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would be intolerable to compound this mistake by failing to
correct it. Please support the solution proposed by Senators
Brown, Chafee and Pryor.
Sincerely,
Cynthia Pearson,
Program Director.
____
Citizen Action,
Washington, DC, March 26, 1996.
Dear Judiciary Committee Member: On behalf of Citizen
Action and our three million members, I would like to ask
your support for a proposal which will shortly be offered by
Senators Brown, Chafee and Pryor. This proposal would undo a
legislative error which, if not corrected, will cost U.S.
consumers hundreds of millions of dollars in unnecessary
prescription drug costs.
When Congress passed new patent terms under the GATT
Treaty, it failed to include prescription drugs under its
transition rules. GATT extends patent terms of U.S. products
from 17 to 20 years. Because many manufacturers had already
invested millions of dollars in competing products in
expectation of the 17-year limit, Congress adopted transition
rules to allow those companies to introduce generic
alternatives on the date that the 17-year patent would have
expired.
The omission of prescription drugs in the transition rule
means that makers of lower-cost generic drugs will be unable
to bring their products to market until the full 20-year term
of patent protection has expired. This loophole will allow a
few large pharmaceutical companies to reap more than $2
billion in windfall profits. Because lower-cost generics will
be kept off the market, consumers will be forced to pay
higher prices for more than a dozen drugs, including big-
sellers Zantac and Capoten.
Without a correction, taxpayer-funded federal and state
health programs, as well as individual purchasers of
prescription drugs, will be forced to pay higher than
necessary costs. The Department of Veterans Affairs estimates
that it alone will spend $211 million in additional costs
over the next three years.
The Judiciary Committee has an opportunity to correct a
provision that will have grave consequences for consumers.
Again, Citizen Action urges that you act now to remove this
unique loophole which rewards certain large pharmaceutical
companies at the expense of taxpayers and consumers.
Sincerely,
Cathy L. Hurwit,
Legislative Director.
____
Gray Panthers Project Fund,
Age and Youth in Action,
Washington, DC, February 29, 1996.
Hon. Hank Brown,
U.S. Senate, Senate Hart Office Building, Washington, DC.
Dear Senator Brown: Attached please find copies of
Tuesday's ABC World News Tonight news story focusing on the
negative impact that the GATT loophole will have on American
consumers like Eleanor Black and her mother Sally. In
addition, attached are copies of the testimony submitted to
the Judiciary Committee from Ms. Black and myself, as well as
Wednesday's New York Times editorial on the issue.
With the Senate Judiciary Committee hearings on GATT now
behind us, Senators Chafee, Brown, and Pryor have vowed to
introduce legislation within the next few weeks that will
correct this loophole and bring relief to millions of
consumers like the Blacks who rely on the savings that
generic pharmaceuticals offer.
In December, an effort to bring the Chafee-Brown-Pryor
amendment to the Senate floor was narrowly defeated by one
vote. When the Chafee-Brown-Pryor amendment is introduced in
the near future, I urge you and your colleagues to do the
right thing and correct this Congressional oversight and save
American taxpayers from a costly mistake.
Please support the Chafee-Brown-Pryor amendment and close
the GATT loophole.
Sincerely,
Dixie D. Horning,
Executive Director.
____
Generic Drug Equity Coalition,
Washington, DC, March 29, 1996.
To: Members, United States Senate
FR: Generic Drug Equity Coalition
RE: No More Delays, Pass Chafee/Pryor/Brown
When the Senate adjourns today for the Spring recess,
consumers and taxpayers will have paid $580 million more for
prescription drugs than they should have because of a mistake
Congress and the administration made in December 1994, $580
million. Everyday that passes costs consumers and taxpayers
$5 million more.
By the time you return in two weeks, the cost to consumers
and taxpayers will have reached $650 million.
Yet, despite written commitments to markup a bill to close
the GATT loophole in the Senate Judiciary Committee in March,
nothing has happened.
A few companies continue to reap unintended windfall
profits at the expense of American consumers, taxpayers and
generic drug manufacturers.
While you are away observing the Easter and Passover
Holidays be sure to think about Americans like 69-year old
Eleanor Black and her 89-year old mother Sally who spend $339
a month, one quarter of their monthly income, for Zantac
because of the GATT loophole.
The Generic Drug Equity Coalition urges you to support the
Chafee/Pryor/Brown proposal and close the GATT loophole.
The Judiciary Committee leadership has missed its own,
self-imposed deadline. It is time for a vote on the Senate
floor.
____
Consumer Federation of America,
Washington, DC, March 27, 1996.
Dear Senate Judiciary Committee Member: The Senate
Judiciary Committee plans this week to examine the loophole
in the General Agreement on Tariffs and Trade (GATT) which
exempts the pharmaceutical industry from patent transition
terms. We urge you at this time to support the efforts of
Senators Brown, Chafee, and Pryor to redress this unintended
and potentially costly, effect of the GATT Treaty.
As you know, an error of omission in the legislative
language implementing the GATT Treaty has exempted the
pharmaceutical industry from the patent transition terms. As
a result, the pharmaceutical drug industry--alone among all
industries--enjoys a 20-year patent term, and generic
manufacturers are unable to market long-planned products.
The unintended effects of the patent extension include
diminished market competition, an undeserved windfall to pre-
GATT patent holders, and further inflated costs to millions
of Americans. The Congressional Budget Office (CBO) has
estimated that this simple mistake will cost consumers and
taxpayers as much as $2 billion as drug companies reap
windfall profits in the absence of competition. This windfall
was not intended by Congress, nor envisioned in the GATT
treaty itself.
Senators, Brown, Chafee, and Pryor have proposed closing
the loophole, thereby protecting consumers' health and
taxpayers' wallets. This solution would not convey special
status on the generic drug industry; instead, this amendment
provides for equal treatment, and would compel brand-name
drug manufacturers to live under the same rules as every
other American industry.
In the interest of consumers, taxpayers and fairness, we
urge you to support the efforts Senators, Brown, Chafee, and
Pryor have made to redress this costly error.
Sincerely,
Mern Horan,
Legislative Representative,
Consumer Federation of America.
____
Citizen Advocacy Center,
Elmhurst, IL, March 25, 1996.
Dear Judiciary Committee Member: An oversight in the
legislation implementing the GATT Treaty has granted the
pharmaceutical industry a privileged status at the expense of
consumers and taxpayers. More than a year after the
implementing legislation was adopted, Congress has yet to
correct this windfall benefit. Now, Senators Brown, Chafee,
and Pryor have developed a solution that is fair and
reasonable and deserving of your support.
GATT is premised on opening world markets to competition.
Under our implementing legislation, however, manufacturers of
generic drugs, alone among all industries in the United
States, are prohibited from bringing products to market until
the full twenty-year patent term has expired for brand-name
drugs. This anticompetitive windfall is estimated to be worth
two billion dollars in profits. Health care consumers are
thus forced to pay higher costs, as will taxpayers, who fund
drug purchases through a number of government programs. The
City of Elmhurst has a high percentage of Senior Citizens, a
group that is disproportionately harmed by high health care
costs, and the adverse effects of the as yet uncorrected
legislation.
Congress did not intend to bestow this windfall on drug
companies when it adopted the transitional rules for GATT. We
urge you, in the interest of consumers, seniors, and
taxpayers, to correct this oversight and to not be lulled
into inaction by the multi-million dollar lobbying blitz of
the companies enjoying this windfall daily.
Senators Brown, Chafee and Pryor have proposed a simple
solution that would protect the balance of interest between
generic and brand-name manufacturers envisioned in the Hatch-
Waxman Act of 1984. It's time to support their proposal.
Very truly yours,
Theresa Amato,
Executive Director,
Citizen Advocacy Center.
Mr. PRYOR addressed the Chair.
The PRESIDING OFFICER. The Senator from Arkansas.
Mr. PRYOR. Mr. President, my apologies to the Senator from Colorado.
Has the Senator from Colorado finished his statement?
Mr. BROWN. Yes.
Mr. PRYOR. Mr. President, I will take but a few moments of the
Senate's time this evening. We need to move on. The distinguished
managers have requested that we move to final resolution of this very
important measure. But I would like to take, Mr. President, in opening,
a few moments to discuss our particular concerns over this uncorrected
error in our laws which has led to unnecessarily high drug prices.
I would like to quote from my good colleague who is departing the
Senate and is a great friend, Senator Paul Simon of Illinois. Senator
Simon recently spoke on the issue of correcting
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this problem in the GATT treaty. I quote from Senator Simon when he
said, ``This is a classic example of special interests versus the
public interest.''
Mr. President, that is what this debate, I am afraid, has boiled down
to. I know my friend from Colorado, Senator Brown, in his eloquent
statement has placed into the Record a recent editorial of December 4,
1995 from the Washington Post. I will read a paragraph from that
editorial:
All for lack of a technical conforming clause in a trade
bill, full patent protection for a drug called Zantac will
run 19 months beyond its original expiration date. Zantac,
used to treat ulcers, is the world's most widely prescribed
drug, and its sales in this country run to more than $2
billion a year.
I continue quoting from the Washington Post editorial:
The patent extension postpones the date at which generic
products can begin to compete with it and pull the price
down. That provides a great windfall to Zantac's maker, Glaxo
Wellcome, Inc.
That is the beginning paragraph, Mr. President, of the Washington
Post editorial. To conclude from that editorial, let me read:
That makes it doubly difficult to understand why the Senate
refuses to do anything about a windfall that, as far as the
administration is concerned, is based on nothing more than an
error of omission.
Well, once again, this issue is with us. We failed by one vote back
on December 7 to rectify this mistake. Since that time, a few companies
like Glaxo Wellcome have earned more than $600 million in extra
revenues because of a congressional error. It also means that the
Veterans Administration, the Medicaid programs, the consumers of
America, and especially the elderly of America are having to pay double
for Zantac than what they would be paying had we allowed a generic to
come into the marketplace and compete.
This is not fair, Mr. President. We know that this is not fair. The
Judiciary Committee this morning had scheduled a markup, one which has
already been delayed from last month. They continue to promise that
they are going to mark up
S. 1277, the measure offered by Senator Brown
and Senator Chafee and myself to correct this mistake in the GATT
treaty.
But, once again, this morning an unnamed Senator objected to the
Senate Judiciary Committee marking up this measure, and, once again, it
means more and more windfall profits for undeserving companies at the
expense of consumers. These delays are completely unacceptable and
unwarranted. The American public simply cannot abide further delays on
behalf of special interests.
What is at stake? Back on November 27, 1995, an editorial in the Des
Moines Register stated that:
A month's supply of Zantac ordinarily sells for around
$115; the generic price--meaning the same drug without the
Zantac label--would be around $35, the generic makers
contend.
Mr. President, I ask unanimous consent that a copy of that Des Moines
Register editorial be printed in the Record.
There being no objection, the editorial was ordered to be printed in
the Record, as follows:
[From the Des Moines Register, Nov. 27, 1995]
A Costly Oversight
fine print in gatt law could cost zantac users millions
The nation's prescription drug makers are at war again,
with a $1 billion-plus purse going to the winner. If the
brand-name drug manufacturers win, the losers will include
the millions of Americans who suffer from ulcers or
heartburn, and take the drug Zantac regularly to combat the
problem. It's going to cost each of them about $1,600.
Zantac is made by GlaxoWellcome, the biggest in the
business.
Here's what started the current war:
When a new prescription drug hits the market, generic drug
manufacturers await the patent expiration so they can enter
the market with the same drug. They offer it for sale without
the brand name, usually at a fraction of the brand-name
price.
The new international GATT treaty signed by the United
States and 122 other countries sets the life of a patent at
20 years from the date of application. Former U.S. law
provided patent protection for pharmaceuticals for 17 years
from the date of approval. Because the difference could have
a significant impact on the number of years a firm could
market its patented drug without competition. Congress made
special provisions for drugs under patent at the time GATT
was approved last summer.
But when the legal beagles got done reading all the fine
print, it turned out that Zantac was granted a 19-month
extension of its patent life--and it is such a hugely popular
drug that that translates into a multimillion-dollar
windfall.
Generic drug makers call the windfall a congressional
oversight, and estimate the difference is worth $2.2 billion
to Glaxo, because the generics can't enter the market for 19
more months. Glaxo counters that Congress made no mistake,
that the extension was part of the compromise with generics.
It won't wash. Nothing in the GATT treaty was intended to
further enrich the happy handful of brand-name drug makers
who hold lucrative patents--or to personalize the users of
the drugs.
A month's supply of Zantac ordinarily sells for around
$115; the generic price--meaning the same drug without the
Zantac label--would be around $35, the generic makers
contend. Unless Congress changes the wording of the law
regarding transition to GATT provisions, Zantac users will
pay the difference for 19 months longer.
Some generic drug manufacturers had already spent a bundle
preparing to enter the market before the GATT treaty took
effect. They lose. So do taxpayers, who pay for Medicaid
prescriptions. The Generic Drug Equity Coalition estimates
that the higher costs of Zantac and some other drugs affected
by the mistake (such as Capoten, for high blood pressure)
will cost Iowa Medicaid $3.5 million. Further, say the
generic drug makers, it will tack another $1.2 million onto
the cost of health-insurance premiums for Iowa state
employees.
Glaxo's political action committee has doubled its
contributions to Congress in recent months. Glaxo wants the
mistake to stay in the law. Generic drug manufacturers want
it out.
So should ulcer sufferers. So should taxpayers. So should
Congress.
Mr. PRYOR. Mr. President, finally, let me say we all know what this
issue is about. We have debated this issue to some extent on the floor
of the Senate and to a great extent in the Judiciary Committee. We
heard our U.S. Trade Representative, Ambassador Kantor conclusively
explain the situation, and I quote:
The provision was written neutrally because it was intended
to apply to all types of patentable subject matter, including
pharmaceutical products. Conforming amendments should have
been made to the Federal Food, Drug and Cosmetic Act and
section 271 of the U.S. Patent Act, but were inadvertently
overlooked.
One other quote from Ambassador Kantor:
We intended to apply this grandfather provision to the
pharmaceutical area.
S. 1277 would result in a level of
protection that is consistent with our original intent.
Mr. President, let me say, Senator Brown, Senator Chafee and myself
have tried to proceed in good faith. There are Members on each side of
the aisle that have stated their concern about, and in some cases their
objection to, certain language that we had in this legislation. We have
attempted to meet with them. We have attempted to compromise. We have
certainly gone to the negotiating table and attempted to bargain in
good faith and see what their concerns are.
Truly, Mr. President, I believe that we now have come together and
crafted an amendment that is acceptable to all those concerned with
doing what is right for consumers, businesses which have relied upon
the law in good faith and for our compliance with a very important
treaty. The amendment represents the simplest and best means for us to
correct the egregious flaw that persists today because of
unconscionable delays and the efforts of special interests.
Mr. President, I want to say in conclusion that I have thoroughly
enjoyed working with Senator Brown of Colorado and Senator Chafee of
Rhode Island, my colleagues on the other side of the aisle. I hope we
can bring this matter to a resolution in the very near future.
The PRESIDING OFFICER (Mr. Gorton). The Senator from Colorado.
Mr. BROWN. Mr. President, the vote on this measure was close, as has
been noted. Since that time, I believe we have persuaded others to join
us in advocating this amendment. The amendment has been compromised to
the point that specifically we have spelled out in the compromise
version that is before the Senate right now a very clear, bright-line
test of what substantial investment is. It is easy and clear to work
with. I think we have addressed the problems. I am confident we have
the votes.
However, because of the urgency of the particular underlying measure
that is here, some Members whose votes we need and count on are unable
to support this amendment because they fear
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it would bring controversy to the bill. It is, therefore, necessary for
me to reluctantly withdraw this measure.
I must mention, Mr. President, it does seem to me this is the
appropriate kind of thing that ought to be considered on a prompt
basis. Literally, to fail to act costs consumers $5 million or more a
day, and literally if we fail to act very promptly, the issue becomes
moot because the time simply runs out. I believe in fairness to
companies that have reinvested, and, in fairness to consumers, we
should and must act quickly.
I simply want to serve notice that we will be looking for other
vehicles to offer on this floor in a rather prompt fashion.
With that, I reluctantly withdraw the amendment.
The PRESIDING OFFICER. The Senator has the right to withdraw the
amendment.
So the amendment (No. 3678) is withdrawn.
Mrs. KASSEBAUM. Mr. President, I very much appreciate the sponsors of
the amendment withdrawing it. Senator Brown and Senator Pryor are very
persuasive in their arguments, as Senator Chafee was as well. I am
sympathetic to the purpose of the amendment.
As was noted by the sponsors, it is controversial. For that reason,
we would have to oppose it on the health insurance reform bill. I
appreciate the thoughtfulness in their withdrawal.
Unanimous-Consent Agreement
Mrs. KASSEBAUM. Mr. President, I put forward on behalf of the
majority leader a unanimous-consent agreement.
I ask unanimous consent during the remainder of the Senate's
consideration of
S. 1028, the following amendments be the only first-
degree amendments in order, that they may be subject to relevant
second-degree amendments, and following the disposition of the listed
amendments and the committee substitute, the bill be advanced to third
reading, and the Senate then proceed to the House companion bill, that
all after the enacting bill be stricken, the text of the Senate bill be
inserted, the bill be advanced to third reading and the Senate proceed
to vote on passage of
H.R. 3103, as amended, without any intervening
action or debate.
The list that I have of the amendments would be: Nickles, relevant;
Jeffords, lifetime caps; Thomas, rural health; McCain, biological
medical devices; Gramm, relevant; Coats, medical volunteer liability
coverage; Domenici, mental health; Specter, public health; pecter,
public health; Specter, public health; Gregg, choice care; Helms, study
of access by HHS; Senator Brown has withdrawn his amendment; McConnell,
medical malpractice; Bond, administration simplification; Pressler,
CRNAS; D'Amato, fair tax treatment; Kassebaum, relevant; Dole,
relevant; Roth, relevant; Simpson, commission; Bennett relevant; Burns,
telemedicine; Boxer, ban HMO gag rules; Conrad, nurse practitioner,
nurse anesthetists, advance nurse practitioner; Feinstein, nonprofit
insurance; Graham-Baucus, Medicare fraud; Harkin, fraud and abuse;
Harkin, fraud and abuse; Kennedy, relevant; Pryor relevant; Wellstone,
two domestic violence; Simon is a sense-of-the-Senate resolution;
Dorgan, organ donations; Lieberman, MM data banks; Kennedy, nursing
care; Daschle, relevant; Boxer, biomed devices.
Mr. KENNEDY. Would the Senator add Wellstone, relevant, sense of the
Senate.
The PRESIDING OFFICER. Is there objection to the unanimous consent
request?
Without objection, it is so ordered.
Mrs. KASSEBAUM. Mr. President, I believe Senator Jeffords has been
waiting, and I believe he is next to be recognized.
Mr. JEFFORDS. Mr. President, I yield to the Senator from Arkansas.
Mr. PRYOR. Mr. President, if we could ask a question, Mr. President,
while the two distinguished managers are on the floor. It is 6:15; I
did not realize there were quite as many amendments.
Mrs. KASSEBAUM. Neither did we.
Mr. PRYOR. Are we planning to go on into the evening?
Mrs. KASSEBAUM. Yes, Mr. President, I say to the Senator from
Arkansas, I think it is the hope not only of the managers but also of
the minority leader and the majority leader that we finish tonight.
Mr. PRYOR. Good night, Mr. President, thank you.
Amendment No. 3679
(Purpose: To establish a minimum amount that may be applied as an
aggregate lifetime limit with respect to coverage under an employee
health benefit plan or a group health plan)
Mr. JEFFORDS. Mr. President, I have an amendment at the desk.
The PRESIDING OFFICER. The clerk will report.
The legislative clerk read as follows:
The Senator from Vermont [Mr. Jeffords] proposes an
amendment numbered 3679.
Mr. JEFFORDS. Mr. President, I ask unanimous consent reading of the
amendment be dispensed with.
The PRESIDING OFFICER. Without objection, it is so ordered.
At the end of section 103, add the following new
subsection:
(g) Limitation on Lifetime Aggregate Limits.--
(1) In general.--Except as provided in paragraph (2), an
employee health benefit plan or a health plan issuer offering
a group health plan may not impose an aggregate dollar
lifetime limit of less than $10,000,000 (such amount to be
adjusted for inflation in fiscal years subsequent to the
fiscal year in which this subsection becomes effective) with
respect to coverage under the plan.
(2) Small employers.--Paragraph (1) shall not apply to a
group health plan offered to or maintained for employees of a
single employer that employ
s 25 or fewer employees.
(3) Rule of construction.--Paragraph (1) shall not be
construed as prohibiting the application by an employee
health benefit plan or a health plan issuer offering a group
health plan of any limits, exclusions, or other forms of cost
containment mechanisms with respect to coverage under the
plan other than the aggregate limit permitted under paragraph
(1).
(4) Disclosure.--Any limits, exclusions, or other cost
containment mechanisms permitted under paragraph (3) shall be
disclosed as provided for in section 105(c).
(5) Application of subsection.--This subsection shall not
apply to a health maintenance organization that meets the
requirements of title XIV of the Public Health Service Act.
(6) Effective date.--This paragraph shall become effective
with respect to health plans on the date that i
s 2 years
after the date of enactment of this Act.
At the end of section 105, add the following new
subsection:
(c) Disclosure of Limits and Exclusions.--An employee
health benefit plan or a health plan issuer offering a group
health plan shall disclose, as part of its solicitation and
sales materials and in a form and manner that is conspicuous
and understandable to a reasonable individual, any limits,
exclusions, or cost containment mechanisms with respect to
coverage provided under the plan.
Section 3711 of title 31, United States Code, is amended by
adding at the end the following new subsections:
``(g)(1) If a nontax debt or claim owed to the United
States has been delinquent for a period of 180 days--
``(A) the head of the executive, judicial, or legislative
agency that administers the program that gave rise to the
debt or claim shall transfer the debt or claim to the
Secretary of the Treasury; and
``(B) upon such transfer the Secretary of the Treasury
shall take appropriate action to collect or terminate
collection actions on the debt or claim.
``(2) Paragraph (1) shall not apply--
``(A) to any debt or claim that--
``(i) is in litigation or forelosure;
``(ii) will be disposed of under an asset sales program
within 1 year after the date the debt or claim is first
delinquent, or a greater period of time if a delay would be
in the best interests of the United States, as determined by
the Secretary of the Treasury;
``(iii) has been referred to a private collection
contractor for collection for a period of time determined by
the Secretary of the Treasury;
``(iv) has been referred by, or with the consent of, the
Secretary of the Treasury to a debt collection center for a
period of time determined by the Secretary of the Treasury;
or
``(v) will be collected under internal offset, if such
offset is sufficient to collect the claim within 3 years
after the date the debt or claim is first delinquent; and
``(B) to any other specific class of debt or claim, as
determined by the Secretary of the Treasury at the request of
the head of an executive, judicial, or legislative agency or
otherwise.
``(3) For purposes of this section, the Secretary of the
Treasury may designate, and withdraw such designation of debt
collection centers operated by other Federal agencies. The
Secretary of the Treasury shall designate such centers on the
basis of their performance in collecting delinquent claims
owed to the Government.
``(4) At the discretion of the Secretary of the Treasury,
referral of a nontax claim may be made to--
``(A) any executive department or agency operating a debt
collection center for servicing, collection, compromise, or
suspension or termination of collection action;
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S3584]]
``(B) a contractor operating under a contract for servicing
or collection action; or
``(C) the Department of Justice for litigation.
``(5) nontax claims referred or transferred under this
section shall be serviced, collected, or compromised, or
collection action thereon suspended or terminated, in
accordance with otherwise applicable statutory requirements
and authorities. Executive departments and agencies operating
debt collection centers may enter into agreements with the
Secretary of the Treasury to carry out the purposes of this
subsection. The Secretary of the Treasury shall--
``(A) maintain competition in carrying out this subsection;
``(B) maximize collections of delinquent debts by placing
delinquent debts quickly;
``(C) maintain a schedule of contractors and debt
collection centers eligible for referral or claims; and
``(D) refer delinquent debts to the person most appropriate
to collect the type or amount of claim involved.
``(6) Any agency operating a debt collection center to
which nontax claims are referred or transferred under this
subsection may charge a fee sufficient to cover the full cost
of implementing this subsection. The agency transferring or
referring the nontax claim shall be charged the fee, and the
agency charging the fee shall collect such fee by retaining
the amount of the fee from amounts collected pursuant to this
subsection. Agencies may agree to pay through a different
method, or to fund an activity from another account or from
revenue received from the procedure described under section
3720C of this title. Amounts charged under this subsection
concerning delinquent claims may be considered as costs
pursuant to section 3717(e) of this title.
``(7) Notwithstanding any other law concerning the
depositing and collection of Federal payments, including
section 3302(b) of this title, agencies collecting fees may
retain the fees from amounts collected. Any fee charged
pursuant to this subsection shall be deposited into an
account to be determined by the executive department or
agency operating the debt collection center charging the fee
(in this subsection referred to in this section as the
`Account'). Amounts deposited in the Account shall be
available until expended to cover costs associated with the
implementation and operation of Governmentwide debt
collection activities. Costs properly chargeable to the
Account include--
``(A) the costs of computer hardware and software, word
processing and telecommunications equipment, and other
equipment, supplies, and furniture;
``(B) personnel training and travel costs;
``(C) other personnel and administrative costs;
``(D) the costs of any contract for identification,
billing, or collection services; and
``(E) reasonable costs incurred by the Secretary of the
Treasury, including services and utilities provided by the
Secretary, and administration of the Account.
``(8) Not later than January 1, of each year, there shall
be deposited into the Treasury as miscellaneous receipts an
amount equal to the amount of unobligated balances remaining
in the Account at the close of business on September 30 of
the preceding year, minus any part of such balance that the
executive department or agency operating the debt collection
center determines is necessary to cover or defray the costs
under this subsection for the fiscal year in which the
deposit is made.
``(9) To carry out the purposes of this subsection, the
Secretary of the Treasury may prescribe such rules,
regulations, and procedures as the Secretary considers
necessary.
``(h)(1) The head of an executive, judicial, or legislative
agency acting under subsection (a)(1), (2), or (3) of this
section to collect a claim, compromise a claim, or terminate
collection action on a claim may obtain a consumer report (as
that term is defined in section 603 of the Fair Credit
Reporting Act (15 U.S.C. 1681a)) or comparable credit
information on any person who is liable for the claim.
``(2) The obtaining of a consumer report under this
subsection is deemed to be a circumstance or purpose
authorized or listed under section 604 of the Fair Credit
Reporting Act (15 U.S.C. 1681b).''.
Mr. JEFFORDS. Mr. President, I know that we have had a difficult day
today. We are having a difficult time trying to face the facts of life
that the bill we are amending is a very important one, one which I have
been an original cosponsor and one which part of the bill is mine. It
is something that I worked very hard on. I believe it is an excellent
job.
However, I also believe that it has a very serious flaw in it. Thus,
at the time the committee was meeting--and I want to point out that we
have already made an exception today--the Finance Committee came and
said, ``Hey, we have a bunch of amendments.'' Most of them have been
accepted. So we have already made several exceptions to the
nonamendment rule. I want to remind people of that.
Now, I submitted this amendment, which I have before this body, at
the committee. I am a member of the committee, ranking Republican on
the committee. At that time it was said, ``Hey, we want to get out of
here a unanimous bill. We may have problems.'' So I said, ``OK, I will
wait until the floor.'' So I come to the floor to offer an amendment,
which I think about everybody agrees ought to be on it, and they said,
``No. No amendments--except for the Finance Committee amendments.''
I understand that the ranking Republican and the chairman of the
committee are bound by their commitment to no amendments, but nobody
else is. Nobody else is in this body. So I hope Members would say he
deserves to be heard. He has told me I could raise this amendment on
the floor, and here it is.
Now we will talk about what the amendment is and why we are here. The
bill is one which provides, if a person is working for a business and
changing jobs, or whatever else, has a health problem, that they are
guaranteed an issuance of a policy or a continuance of a policy,
notwithstanding the fact that they are sick. That is very important.
This is an important breakthrough. That is why I supported the bill.
However, what we were not aware of at the time and I brought to the
committee's attention, but perhaps there was too little time to
consider it, is the fact that there is no requirement now under the
Federal law for any kind of a certain level of cap.
Now, what could happen to us is, OK, we require the insurance company
to take a sick person, but then the insurance company has the right to
change its benefits, or it can say, ``OK, we will lower the lifetime
cap. So when we take you on, as soon as we pay whatever level of funds
we reduce the limit to, you are gone, finished, you have no more
coverage.''
Well, this amendment would rectify that and say we have to put--as a
nationwide standard, with the exception, we admit it could cause some
problems with small businesses, so we exempt 25 and under. We say you
have to have $10 million of coverage. Why the $10 million? The $10
million lifetime cap is because the standard for the industry for many
years was a million dollars. But that wa
s 20 years ago. That million
dollars is worth about $100,000 now. So we say, let us go back to the
standard of 20 years ago and put on that cap.
I want to point out that when we do this, we are obviously going to
cause some costs. I will explain that later. But let us take a look at
who we are talking about when we are talking about those covered under
this provision. We are talking about those that are working for
businesses, as I say, that get sick. All of a sudden they have some
pretty big bills. Remember, some of the lifetime caps out there on
these insurance plans are $50,000. That is one day in a hospital
sometimes. So you go in there sick, and all of a sudden you have no
coverage. We are trying to correct that.
Now, let me point out to you, again, what we are talking about from a
national policy perspective. What happens now to that sick person? That
person is sick. They have been allowed to be covered and then chopped
off because they have reached the lifetime limit of, say, $50,000. What
happens? Under the law right now, in order for them to qualify for
Medicaid, they cannot have resources beyond a certain level. So what we
are talking about--and I will give some examples in a minute--is middle
income people, or even higher income people, who suddenly are placed in
Major Actions:
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HEALTH INSURANCE REFORM ACT
(Senate - April 18, 1996)
Text of this article available as:
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[Pages
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HEALTH INSURANCE REFORM ACT
The Senate continued with the consideration of the bill.
Mr. HATCH. Mr. President, I understand the pending business is the
Brown amendment. It is my understanding that he will make his arguments
and then withdraw the amendment; am I incorrect on that?
Mr. BROWN. Mr. President, the Senator is correct.
Mr. HATCH. I am correct.
Mr. SIMPSON. I yield the floor.
Mrs. KASSEBAUM addressed the Chair.
The PRESIDING OFFICER. The Senator from Kansas.
Mrs. KASSEBAUM. Mr. President, prior to returning to Senator Brown's
amendment, if I may propose a unanimous consent request on behalf of
Senator Dole.
Let me yield and say, evidently, this has not been cleared fully on
both sides, so we will return to Senator Brown's amendment.
Mr. KENNEDY addressed the Chair.
The PRESIDING OFFICER. The Senator from Massachusetts.
Mr. KENNEDY. Mr. President, we want to try and accommodate the
greatest number of Members. We have several Senators who are here with
their amendments ready to address them and ready to act on them. We
believe that if we are able to do that, we can afford, whoever wants to
speak, as much time as they want to speak on other kind of matters. But
we are here to deal with this legislation.
We have been urging Senators to come over here and offer their
amendments. They are here now, and we can either do this later--I plan
to stay here until it is done, but the greater numbers of Members would
like to have at least some finality to the legislation. I believe we
can do it. It is 6 o'clock now and we had the chance for general
discussion during the course of the day. Many of our colleagues have
come over here to address these issues and to vote on them, and they
have been waiting as well.
I hope we will urge our colleagues who are not going to talk on these
matter--we know they can; people can get up and address any other
matters--but out of consideration of other Members, please try and see
if we cannot focus on the matter that is at hand, and that is the
Kassebaum-Kennedy bill, which is of enormous importance to many
American families.
I see other Members here, and I am sure they will do what they have
to do, but we are trying to conclude this and then to let others speak
so that at least others will not be here tomorrow. We are going to end
up being here tomorrow as sure as I am standing here unless we are able
to make progress. That is fine with me, if that is what it is. But with
some cooperation of the Members, we have a very good chance of
finishing this. Otherwise, Members ought to understand we are going to
be here late tonight voting and end up starting the votes later this
evening and tomorrow.
We are just about to ask for the final list so that we can agree with
that. But in the meantime, we have the Senators who are here who are
prepared to move ahead. Senator Brown is here, and Senator Jeffords was
here just a few moments ago to deal with an extremely important measure
and has been here now for an hour and a half trying to gain the floor.
Mr. CHAFEE addressed the Chair.
The PRESIDING OFFICER. The Senator from Rhode Island.
Amendment No. 3678
Mr. CHAFEE. Mr. President, I am going to address the amendment that
is before us, the Brown amendment,
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but I say to the managers of the bill, I join with them in their
enthusiasm to finish it up. I do not see why we do not seek time
agreements, in case we get off on another Social Security argument,
whatever it might be. But that is up to the managers.
Mr. President, I have a statement that I wish to make that deals with
the subject Senator Brown has been addressing, and Senator Pryor,
likewise, and which I joined in the past.
All I can say, Mr. President, is I just wish we would address this
matter, both in the committee, and I understand Senator Brown has been
trying to achieve that, but also on the floor of the Senate. We have
had one vote. It was a one-vote margin difference. Perhaps people's
minds have been changed since then. Nonetheless, I support the efforts
of Senators Brown and Pryor.
Congress and the administration made a simple--but costly--error in
drafting the Uruguay Round Agreements Act of 1994. That inadvertent
error is costing consumers, State governments, and the Federal
Government millions of dollars, while providing an unintended windfall
to a handful of drug companies. I don't believe we should let that
error stand.
What happened? The facts of the case are straightforward. Back in
1994, Congress was drafting omnibus trade legislation designed to bring
the United States into conformity with the important new global trade
agreement known as the GATT. As part of our commitment to fulfill our
new GATT obligations, the United States pledged to increase patent
protection for future patents. In addition, the United States also
pledged to boot protection for patents already in existence--a key
point that goes to the heart of the issue before us today.
Accordingly, the trade bill that Congress wrote, boosted existing
patent terms by up to 3 years, giving current patentholders a valuable
extension on their patents. To be fair to generic manufacturers who had
been preparing to go to market on the old patent expiration date,
Congress fashioned a compromise: generic companies who had made a
substantial investment in preparing for market would be allowed to
proceed as planned, but would have to pay equitable remuneration--that
is, a royalty--during the extended term. This carefully balanced
compromise became law as part of the 1994 Uruguay Round Agreements Act.
However, in drafting this 653-page bill, Congress and the
administration made a small--but very costly--mistake. A simple
conforming amendment to an FDA statute was omitted. Yet the impact was
enormous: the omission singlehandedly prevented the generic drug
industry from going to market during the extended term. The result is
that a handful of brand-name drug companies have received a staggering
$4.3 billion windfall, at the expense of consumers, that Congress,
United States trade officials, and even the brand-name companies
themselves, neither intended nor expected.
The cost to consumers is enormous. The drugs that are covered by the
windfall are widely prescribed, and are used for everyday ailments that
affect millions of Americans. Keeping the generic version off the shelf
for up to 3 years means that Americans--including and especially older
Americans--are paying far more than was ever intended for their
medications.
Not only are consumers paying for this error, but so are State
governments and the Federal Government--in the form of higher
reimbursements for prescription drugs for the elderly, veterans, and
low-income Americans.
This is not right. We made a mistake. We should fix it. In this case,
the solution is obvious and easy: simply enact the missing conforming
amendment. That is exactly what Senator Pryor, Senator Brown, and I--
and many others--have been working to do.
Let me take a moment to put to rest a few red herrings. Our amendment
would not affect our GATT commitments or our efforts to promote patent
protection worldwide. Our amendment would not upset the balance in U.S.
drug patent laws, nor impede research and development of new drugs. If
any of these misrepresentations were true, we simply would not be
sponsoring this amendment. It is that simple.
It is time to correct this injustice--an injustice to consumers in
our Nation, an injustice to the Federal and State governemnts that are
paying extra and needless sums into Medicaid and Medicare and an
injustice to the generic manfuactures who made the investment in
reliance on the law as it was supposed to be.
It is time we fixed this unfairness.
Mr. BROWN addressed the Chair.
The PRESIDING OFFICER. The Senator from Colorado.
Mr. BROWN. Mr. President, it is my intention to try and expedite the
deliberations here tonight. In that regard, my thought would be to make
a statement, hopefully, shedding some light on this amendment. I know
Senator Pryor has worked so hard in this area. He wants to make a
statement, and then it will be my intention to withdraw the amendment.
I withdraw it reluctantly, because I think it needs to be considered
and dealt with as soon as possible. But I am persuaded that we will not
have some votes that we need to adopt it if we insist on attaching it
to this measure.
Having said that, let me simply outline the issue that is before us.
It is well described in a New York Times editorial of February 28. I
will quote a portion of that, because I think it is quite succinct and
to the point:
Congress finds it hard to remedy the simplest mistakes when
powerful corporate interests are at stake. In 1974, when
Congress approved a new trade pact with more than 100 other
countries, it unintentionally handed pharmaceutical drug
companies windfall profits. More than a year later, Congress
has yet to correct the error. The trade pact obliged the
United States to change its patent laws to conform with those
of the rest of the world. They had the effect of extending
some American patents for up to 20 months.
Mr. President, those are the opening lines of the editorial.
The simple fact is this. We had people research drugs and put the
investment into it and receive the full length of their exclusivity
that this Congress has supported and put into statute. The GATT
agreement gave a serendipitous extension to that. In other words, under
the GATT agreement and the conforming changes of law that this Congress
adopted, people who had invested in and relied on our laws got a longer
period of patent protection than they have ever planned for. But the
GATT agreement also had a provision, an exception for that extended
protection when someone had made a substantial investment in reliance
on our laws in providing competitive products.
In other words, what we propose in this amendment is nothing more
than absolutely the process that was contemplated and planned for under
GATT. And, I might mention, Mr. President, many countries have done
exactly the same thing. As a matter of fact, this country has done a
similar kind of thing with other products.
What this amendment simply suggests is that where we have given
someone an unexpected, unplanned extension in their patent protection,
that we make an exception for that extension where someone else has
made a substantial investment in producing and providing a competitive
product--in this case, a generic drug.
If we do not adopt this, we will have said to people who produce
products in reliance to our laws, ``After you have made the investment,
after you have put the money into it, after you have made under the
terms of what will be the statute a substantial investment on reliance
of our laws, we are going to pull the rug out from under you and change
the rules retroactively.''
Mr. President, that is not right. That is not honest. That is not
fair. That is not a good way to do business. We have talked about the
horrible damage--and it is enormous damage--done to consumers by this
unjustified quirk of the ratification document.
But I want to focus the Members' attention on what is unfair to
business. I believe it is unfair to business to say, ``Look, here are
the laws. Here is how long you have for patent protection. And by the
way, we're going to change the law retroactively, and even though you
made substantial investment in producing a competing product, we're not
going to let you compete.'' Now, that is what has happened.
If we do not pass this bill as it is in committee or the amendment as
we offer it on the floor, what you are going to do is not only impact
consumers to the tune of billions of dollars, but you are going to say
to businesses that have relied on the law, that it is tough luck, you
should not have believed us. You should not have relied on what we did.
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Why is it important to pass it on this bill or pass it quickly? I
think that is a fair question. I must tell the Members, I am
disappointed I have not been able to persuade all the other people who
support the concept that it is important to pass it on this measure.
It is important because the impact of this, if it goes uncorrected,
could be over $2 billion, according to the Washington Post. It is
important because this costs consumers up to $5 million a day while we
delay. Mr. President, let me repeat that because I am not sure people
have focused on the impact of delay. It costs up to $5 million a day to
consumers in this country if we do not act. Some estimates indicated it
may have cost consumers already $700 million.
Mr. President, this is not anything other than fairness. This is not
anything other than saying the patent protection that was planned in
the law ought to be delivered as it was planned in the law.
Mr. President, I will not prolong the argument. I know the
distinguished Senator from Arkansas has worked on this and has some
remarks, but I ask unanimous consent to have printed in the Record the
editorial from the Washington Post, a letter from The Seniors
Coalition, a letter from the National Committee to Preserve Social
Security and Medicare, a letter from the National Women's Health
Network, a letter from the Citizen Action, a letter from the Gray
Panthers, a letter from the Generic Drug Equity Coalition, a letter
from the Consumer Federation of America, and a letter from the Citizen
Advocacy Center, all pertaining to this subject and advocating the
position of this amendment. I ask unanimous consent that all of these
letters be printed in the Record.
There being no objection, the material was ordered to be printed in
the Record, as follows:
[From the Washington Post, Dec. 4, 1995]
The Zantac Windfall
All for lack of a technical conforming clause in a trade
bill, full patent protection for a drug called Zantac will
run 19 months beyond its original expiration date. Zantac,
used to treat ulcers, is the world's most widely prescribed
drug, and its sales in this country run to more than $2
billion a year. The patent extension postpones the date at
which generic products can begin to compete with it and pull
the price down. That provides a great windfall to Zantac's
maker, Glaxo Wellcome Inc.
It's a case study in legislation and high-powered lobbying.
When Congress enacted the big Uruguay Round trade bill a year
ago, it changes the terms of American patents to a new
worldwide standard. The effect was to lengthen existing
patents, usually by a year or two. But Congress had heard
from companies that were counting on the expiration of
competitors' patents. It responded by writing into the trade
bill a transitional provision. Any company that had already
invested in facilities to manufacture a knock-off, it said,
could pay a royalty to the patent-holder and go into
production on the patent's original expiration date.
But Congress neglected to add a clause amending a crucial
paragraph in the drug laws. The result is that the
transitional clause now applies to every industry but drugs.
That set off a huge lobbying and public relations war with
the generic manufacturers enlisting the support of consumers'
organizations and Glaxo Wellcome invoking the sacred
inviolability of an American patent.
Mickey Kantor, the president's trade representative, who
managed the trade bill for the administration, says that the
omission was an error, pure and simple. But it has created a
rich benefit for one company in particular. A small band of
senators led by David Pryor (D-Ark.) has been trying to right
this by enacting the missing clause, but so far it hasn't got
far. Glaxo Wellcome and the other defenders of drug patents
are winning. Other drugs are also involved, incidentally,
although Zantac is by far the most important in financial
terms.
Drug prices are a particularly sensitive area of health
economics because Medicare does not, in most cases, cover
drugs. The money spent on Zantac is only a small fraction of
the $80 billion a year that Americans spend on all
prescription drugs. Especially for the elderly, the cost of
drugs can be a terrifying burden. That makes it doubly
difficult to understand why the Senate refuses to do anything
about a windfall that, as far as the administration is
concerned, is based on nothing more than an error of
omission.
____
The Seniors Coalition, Protecting the Future You Have
Earned,
Washington, DC, April 17, 1996.
Hon. Hank Brown,
U.S. Senate,
Washington, DC.
Dear Senator Brown: The Seniors Coalition urges you to
support legislation offered by Senator Brown in the Judiciary
Committee to correct an egregious mistake made in the
implementation of the GATT treaty. This mistake has cost the
consumers, and primarily the elderly, of this nation millions
of dollars. This loophole has allowed a few drug companies to
take advantage of a situation that was unintended and to line
their pockets with unearned money from American citizens.
I ask you to read the article ``What you don't know about
brand name drugs is costing you millions'' (pp. 4-5) in our
latest edition of The Senior Class which outlines the problem
and then to vote to support the correction. Your support for
this effort is critical to the financial well being of
thousands of senior citizens.
I submitted testimony to the Senate Judiciary Committee on
this issue when the committee held hearings on this issue in
February. At that time I called for the Congress to correct
the mistake and reject the efforts of brand name companies to
thwart the correction. The so-called ``compromise'' that has
been drafted by Glaxo and may be offered by a member of the
Judiciary Committee is nothing more than a thinly veiled
effort to codify the mistake that was made. A careful reading
of the language will find that it does even more damage to
the ability of consumers, especially seniors, to find safe
and affordable pharmaceutical products in the marketplace.
Again, please support Senator Brown and his effort to
correct this mistake. Now is the time for the Congress to do
something for the American public.
Sincerely,
Thair Phillips,
CEO.
____
National Committee to Preserve Social Security and
Medicare,
Washington, DC, March 27, 1996.
Honorable Hank Brown,
Senate Judiciary Committee, U.S. Senate, Hart Senate Office
Building, Washington, DC.
Dear Senator Brown: We understand the Senate Judiciary
Committee plans to mark-up legislation addressing and General
Agreement of Tariff and Trade (GATT) patent pharmaceutical
issue tomorrow. We urge you to support legislation (
S. 1277)
sponsored by Senators Chafee, Pryor, and Brown to correct an
oversight in the GATT implementing legislation that will save
consumers and taxpayers billions of dollars in prescription
drug costs. We urge you to oppose any alternative measures
that would maintain this costly and unintended loophole under
GATT.
As you know, because of an oversight in patent changes
approved under the GATT treaty implementing legislation, the
availability of lower-priced generic versions of more than 25
widely-prescribed drugs must be delayed for up to an
additional three years. As a result, seniors and other
consumers will wait longer for access to less-costly generic
drugs.
Every day Congress delays in correcting this oversight
costs consumers $5 million dollars in additional prescription
drug costs. In fact, the delay has already cost consumers an
additional $500 million dollars. The biggest losers among
U.S. consumers are senior citizens, as older Americans
consume about one-third of the prescription drugs sold in the
United States. On fixed incomes and with no pharmaceutical
coverage under Medicare, three out of four seniors cite
prescription drugs as their largest out-of-pocket expense.
On behalf of our millions of members and supporters, the
National Committee to Preserve Social Security and Medicare
urges you to support and report out of Committee the Chafee/
Pryor/Brown generic drug legislation.
Sincerely,
Martha A. McSteen,
President.
____
National Women's Health Network,
Washington, DC, March 21, 1996.
Dear Judiciary Committee Member: In this time of federal,
state and local budget-cutting, threats to Medicare and
Medicaid, and continually rising medical costs, health care
savings are more important than ever to the American public.
Given the seriousness of skyrocketing health care costs, it
is unconscionable that Congress has so far failed to address
an error that needlessly increases the cost of health care
for millions of Americans, and unnecessarily boosts costs to
the federal government, as well.
More than a year ago, Congress discovered that the
legislation implementing the GATT Treaty contained an
unintended loophole for some pharmaceutical drug companies.
An error of omission granted the manufacturers of brand-name
drugs treatment unique in all of American industry.
By failing to include generic drugs in its rules concerning
transition to new patent terms under the GATT Treaty,
Congress has done a disservice to women's health,
specifically, and to consumers and taxpayers, generally.
While the mistake was unintentional, the consequences are
grave. Each day that passes without Congressional action to
correct this error costs millions of dollars; the total cost
is expected to exceed $2 billion.
The beneficiaries of the current situation are the handful
of giant pharmaceutical corporations that will enjoy windfall
profits for three additional years. Their glee at this
unanticipated windfall is evidenced by the fierceness with
which the lobbyists for these companies are fighting to
preserve their protected status.
The exemption of drug companies from the GATT transition
rules was a mistake. It
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would be intolerable to compound this mistake by failing to
correct it. Please support the solution proposed by Senators
Brown, Chafee and Pryor.
Sincerely,
Cynthia Pearson,
Program Director.
____
Citizen Action,
Washington, DC, March 26, 1996.
Dear Judiciary Committee Member: On behalf of Citizen
Action and our three million members, I would like to ask
your support for a proposal which will shortly be offered by
Senators Brown, Chafee and Pryor. This proposal would undo a
legislative error which, if not corrected, will cost U.S.
consumers hundreds of millions of dollars in unnecessary
prescription drug costs.
When Congress passed new patent terms under the GATT
Treaty, it failed to include prescription drugs under its
transition rules. GATT extends patent terms of U.S. products
from 17 to 20 years. Because many manufacturers had already
invested millions of dollars in competing products in
expectation of the 17-year limit, Congress adopted transition
rules to allow those companies to introduce generic
alternatives on the date that the 17-year patent would have
expired.
The omission of prescription drugs in the transition rule
means that makers of lower-cost generic drugs will be unable
to bring their products to market until the full 20-year term
of patent protection has expired. This loophole will allow a
few large pharmaceutical companies to reap more than $2
billion in windfall profits. Because lower-cost generics will
be kept off the market, consumers will be forced to pay
higher prices for more than a dozen drugs, including big-
sellers Zantac and Capoten.
Without a correction, taxpayer-funded federal and state
health programs, as well as individual purchasers of
prescription drugs, will be forced to pay higher than
necessary costs. The Department of Veterans Affairs estimates
that it alone will spend $211 million in additional costs
over the next three years.
The Judiciary Committee has an opportunity to correct a
provision that will have grave consequences for consumers.
Again, Citizen Action urges that you act now to remove this
unique loophole which rewards certain large pharmaceutical
companies at the expense of taxpayers and consumers.
Sincerely,
Cathy L. Hurwit,
Legislative Director.
____
Gray Panthers Project Fund,
Age and Youth in Action,
Washington, DC, February 29, 1996.
Hon. Hank Brown,
U.S. Senate, Senate Hart Office Building, Washington, DC.
Dear Senator Brown: Attached please find copies of
Tuesday's ABC World News Tonight news story focusing on the
negative impact that the GATT loophole will have on American
consumers like Eleanor Black and her mother Sally. In
addition, attached are copies of the testimony submitted to
the Judiciary Committee from Ms. Black and myself, as well as
Wednesday's New York Times editorial on the issue.
With the Senate Judiciary Committee hearings on GATT now
behind us, Senators Chafee, Brown, and Pryor have vowed to
introduce legislation within the next few weeks that will
correct this loophole and bring relief to millions of
consumers like the Blacks who rely on the savings that
generic pharmaceuticals offer.
In December, an effort to bring the Chafee-Brown-Pryor
amendment to the Senate floor was narrowly defeated by one
vote. When the Chafee-Brown-Pryor amendment is introduced in
the near future, I urge you and your colleagues to do the
right thing and correct this Congressional oversight and save
American taxpayers from a costly mistake.
Please support the Chafee-Brown-Pryor amendment and close
the GATT loophole.
Sincerely,
Dixie D. Horning,
Executive Director.
____
Generic Drug Equity Coalition,
Washington, DC, March 29, 1996.
To: Members, United States Senate
FR: Generic Drug Equity Coalition
RE: No More Delays, Pass Chafee/Pryor/Brown
When the Senate adjourns today for the Spring recess,
consumers and taxpayers will have paid $580 million more for
prescription drugs than they should have because of a mistake
Congress and the administration made in December 1994, $580
million. Everyday that passes costs consumers and taxpayers
$5 million more.
By the time you return in two weeks, the cost to consumers
and taxpayers will have reached $650 million.
Yet, despite written commitments to markup a bill to close
the GATT loophole in the Senate Judiciary Committee in March,
nothing has happened.
A few companies continue to reap unintended windfall
profits at the expense of American consumers, taxpayers and
generic drug manufacturers.
While you are away observing the Easter and Passover
Holidays be sure to think about Americans like 69-year old
Eleanor Black and her 89-year old mother Sally who spend $339
a month, one quarter of their monthly income, for Zantac
because of the GATT loophole.
The Generic Drug Equity Coalition urges you to support the
Chafee/Pryor/Brown proposal and close the GATT loophole.
The Judiciary Committee leadership has missed its own,
self-imposed deadline. It is time for a vote on the Senate
floor.
____
Consumer Federation of America,
Washington, DC, March 27, 1996.
Dear Senate Judiciary Committee Member: The Senate
Judiciary Committee plans this week to examine the loophole
in the General Agreement on Tariffs and Trade (GATT) which
exempts the pharmaceutical industry from patent transition
terms. We urge you at this time to support the efforts of
Senators Brown, Chafee, and Pryor to redress this unintended
and potentially costly, effect of the GATT Treaty.
As you know, an error of omission in the legislative
language implementing the GATT Treaty has exempted the
pharmaceutical industry from the patent transition terms. As
a result, the pharmaceutical drug industry--alone among all
industries--enjoys a 20-year patent term, and generic
manufacturers are unable to market long-planned products.
The unintended effects of the patent extension include
diminished market competition, an undeserved windfall to pre-
GATT patent holders, and further inflated costs to millions
of Americans. The Congressional Budget Office (CBO) has
estimated that this simple mistake will cost consumers and
taxpayers as much as $2 billion as drug companies reap
windfall profits in the absence of competition. This windfall
was not intended by Congress, nor envisioned in the GATT
treaty itself.
Senators, Brown, Chafee, and Pryor have proposed closing
the loophole, thereby protecting consumers' health and
taxpayers' wallets. This solution would not convey special
status on the generic drug industry; instead, this amendment
provides for equal treatment, and would compel brand-name
drug manufacturers to live under the same rules as every
other American industry.
In the interest of consumers, taxpayers and fairness, we
urge you to support the efforts Senators, Brown, Chafee, and
Pryor have made to redress this costly error.
Sincerely,
Mern Horan,
Legislative Representative,
Consumer Federation of America.
____
Citizen Advocacy Center,
Elmhurst, IL, March 25, 1996.
Dear Judiciary Committee Member: An oversight in the
legislation implementing the GATT Treaty has granted the
pharmaceutical industry a privileged status at the expense of
consumers and taxpayers. More than a year after the
implementing legislation was adopted, Congress has yet to
correct this windfall benefit. Now, Senators Brown, Chafee,
and Pryor have developed a solution that is fair and
reasonable and deserving of your support.
GATT is premised on opening world markets to competition.
Under our implementing legislation, however, manufacturers of
generic drugs, alone among all industries in the United
States, are prohibited from bringing products to market until
the full twenty-year patent term has expired for brand-name
drugs. This anticompetitive windfall is estimated to be worth
two billion dollars in profits. Health care consumers are
thus forced to pay higher costs, as will taxpayers, who fund
drug purchases through a number of government programs. The
City of Elmhurst has a high percentage of Senior Citizens, a
group that is disproportionately harmed by high health care
costs, and the adverse effects of the as yet uncorrected
legislation.
Congress did not intend to bestow this windfall on drug
companies when it adopted the transitional rules for GATT. We
urge you, in the interest of consumers, seniors, and
taxpayers, to correct this oversight and to not be lulled
into inaction by the multi-million dollar lobbying blitz of
the companies enjoying this windfall daily.
Senators Brown, Chafee and Pryor have proposed a simple
solution that would protect the balance of interest between
generic and brand-name manufacturers envisioned in the Hatch-
Waxman Act of 1984. It's time to support their proposal.
Very truly yours,
Theresa Amato,
Executive Director,
Citizen Advocacy Center.
Mr. PRYOR addressed the Chair.
The PRESIDING OFFICER. The Senator from Arkansas.
Mr. PRYOR. Mr. President, my apologies to the Senator from Colorado.
Has the Senator from Colorado finished his statement?
Mr. BROWN. Yes.
Mr. PRYOR. Mr. President, I will take but a few moments of the
Senate's time this evening. We need to move on. The distinguished
managers have requested that we move to final resolution of this very
important measure. But I would like to take, Mr. President, in opening,
a few moments to discuss our particular concerns over this uncorrected
error in our laws which has led to unnecessarily high drug prices.
I would like to quote from my good colleague who is departing the
Senate and is a great friend, Senator Paul Simon of Illinois. Senator
Simon recently spoke on the issue of correcting
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this problem in the GATT treaty. I quote from Senator Simon when he
said, ``This is a classic example of special interests versus the
public interest.''
Mr. President, that is what this debate, I am afraid, has boiled down
to. I know my friend from Colorado, Senator Brown, in his eloquent
statement has placed into the Record a recent editorial of December 4,
1995 from the Washington Post. I will read a paragraph from that
editorial:
All for lack of a technical conforming clause in a trade
bill, full patent protection for a drug called Zantac will
run 19 months beyond its original expiration date. Zantac,
used to treat ulcers, is the world's most widely prescribed
drug, and its sales in this country run to more than $2
billion a year.
I continue quoting from the Washington Post editorial:
The patent extension postpones the date at which generic
products can begin to compete with it and pull the price
down. That provides a great windfall to Zantac's maker, Glaxo
Wellcome, Inc.
That is the beginning paragraph, Mr. President, of the Washington
Post editorial. To conclude from that editorial, let me read:
That makes it doubly difficult to understand why the Senate
refuses to do anything about a windfall that, as far as the
administration is concerned, is based on nothing more than an
error of omission.
Well, once again, this issue is with us. We failed by one vote back
on December 7 to rectify this mistake. Since that time, a few companies
like Glaxo Wellcome have earned more than $600 million in extra
revenues because of a congressional error. It also means that the
Veterans Administration, the Medicaid programs, the consumers of
America, and especially the elderly of America are having to pay double
for Zantac than what they would be paying had we allowed a generic to
come into the marketplace and compete.
This is not fair, Mr. President. We know that this is not fair. The
Judiciary Committee this morning had scheduled a markup, one which has
already been delayed from last month. They continue to promise that
they are going to mark up
S. 1277, the measure offered by Senator Brown
and Senator Chafee and myself to correct this mistake in the GATT
treaty.
But, once again, this morning an unnamed Senator objected to the
Senate Judiciary Committee marking up this measure, and, once again, it
means more and more windfall profits for undeserving companies at the
expense of consumers. These delays are completely unacceptable and
unwarranted. The American public simply cannot abide further delays on
behalf of special interests.
What is at stake? Back on November 27, 1995, an editorial in the Des
Moines Register stated that:
A month's supply of Zantac ordinarily sells for around
$115; the generic price--meaning the same drug without the
Zantac label--would be around $35, the generic makers
contend.
Mr. President, I ask unanimous consent that a copy of that Des Moines
Register editorial be printed in the Record.
There being no objection, the editorial was ordered to be printed in
the Record, as follows:
[From the Des Moines Register, Nov. 27, 1995]
A Costly Oversight
fine print in gatt law could cost zantac users millions
The nation's prescription drug makers are at war again,
with a $1 billion-plus purse going to the winner. If the
brand-name drug manufacturers win, the losers will include
the millions of Americans who suffer from ulcers or
heartburn, and take the drug Zantac regularly to combat the
problem. It's going to cost each of them about $1,600.
Zantac is made by GlaxoWellcome, the biggest in the
business.
Here's what started the current war:
When a new prescription drug hits the market, generic drug
manufacturers await the patent expiration so they can enter
the market with the same drug. They offer it for sale without
the brand name, usually at a fraction of the brand-name
price.
The new international GATT treaty signed by the United
States and 122 other countries sets the life of a patent at
20 years from the date of application. Former U.S. law
provided patent protection for pharmaceuticals for 17 years
from the date of approval. Because the difference could have
a significant impact on the number of years a firm could
market its patented drug without competition. Congress made
special provisions for drugs under patent at the time GATT
was approved last summer.
But when the legal beagles got done reading all the fine
print, it turned out that Zantac was granted a 19-month
extension of its patent life--and it is such a hugely popular
drug that that translates into a multimillion-dollar
windfall.
Generic drug makers call the windfall a congressional
oversight, and estimate the difference is worth $2.2 billion
to Glaxo, because the generics can't enter the market for 19
more months. Glaxo counters that Congress made no mistake,
that the extension was part of the compromise with generics.
It won't wash. Nothing in the GATT treaty was intended to
further enrich the happy handful of brand-name drug makers
who hold lucrative patents--or to personalize the users of
the drugs.
A month's supply of Zantac ordinarily sells for around
$115; the generic price--meaning the same drug without the
Zantac label--would be around $35, the generic makers
contend. Unless Congress changes the wording of the law
regarding transition to GATT provisions, Zantac users will
pay the difference for 19 months longer.
Some generic drug manufacturers had already spent a bundle
preparing to enter the market before the GATT treaty took
effect. They lose. So do taxpayers, who pay for Medicaid
prescriptions. The Generic Drug Equity Coalition estimates
that the higher costs of Zantac and some other drugs affected
by the mistake (such as Capoten, for high blood pressure)
will cost Iowa Medicaid $3.5 million. Further, say the
generic drug makers, it will tack another $1.2 million onto
the cost of health-insurance premiums for Iowa state
employees.
Glaxo's political action committee has doubled its
contributions to Congress in recent months. Glaxo wants the
mistake to stay in the law. Generic drug manufacturers want
it out.
So should ulcer sufferers. So should taxpayers. So should
Congress.
Mr. PRYOR. Mr. President, finally, let me say we all know what this
issue is about. We have debated this issue to some extent on the floor
of the Senate and to a great extent in the Judiciary Committee. We
heard our U.S. Trade Representative, Ambassador Kantor conclusively
explain the situation, and I quote:
The provision was written neutrally because it was intended
to apply to all types of patentable subject matter, including
pharmaceutical products. Conforming amendments should have
been made to the Federal Food, Drug and Cosmetic Act and
section 271 of the U.S. Patent Act, but were inadvertently
overlooked.
One other quote from Ambassador Kantor:
We intended to apply this grandfather provision to the
pharmaceutical area.
S. 1277 would result in a level of
protection that is consistent with our original intent.
Mr. President, let me say, Senator Brown, Senator Chafee and myself
have tried to proceed in good faith. There are Members on each side of
the aisle that have stated their concern about, and in some cases their
objection to, certain language that we had in this legislation. We have
attempted to meet with them. We have attempted to compromise. We have
certainly gone to the negotiating table and attempted to bargain in
good faith and see what their concerns are.
Truly, Mr. President, I believe that we now have come together and
crafted an amendment that is acceptable to all those concerned with
doing what is right for consumers, businesses which have relied upon
the law in good faith and for our compliance with a very important
treaty. The amendment represents the simplest and best means for us to
correct the egregious flaw that persists today because of
unconscionable delays and the efforts of special interests.
Mr. President, I want to say in conclusion that I have thoroughly
enjoyed working with Senator Brown of Colorado and Senator Chafee of
Rhode Island, my colleagues on the other side of the aisle. I hope we
can bring this matter to a resolution in the very near future.
The PRESIDING OFFICER (Mr. Gorton). The Senator from Colorado.
Mr. BROWN. Mr. President, the vote on this measure was close, as has
been noted. Since that time, I believe we have persuaded others to join
us in advocating this amendment. The amendment has been compromised to
the point that specifically we have spelled out in the compromise
version that is before the Senate right now a very clear, bright-line
test of what substantial investment is. It is easy and clear to work
with. I think we have addressed the problems. I am confident we have
the votes.
However, because of the urgency of the particular underlying measure
that is here, some Members whose votes we need and count on are unable
to support this amendment because they fear
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it would bring controversy to the bill. It is, therefore, necessary for
me to reluctantly withdraw this measure.
I must mention, Mr. President, it does seem to me this is the
appropriate kind of thing that ought to be considered on a prompt
basis. Literally, to fail to act costs consumers $5 million or more a
day, and literally if we fail to act very promptly, the issue becomes
moot because the time simply runs out. I believe in fairness to
companies that have reinvested, and, in fairness to consumers, we
should and must act quickly.
I simply want to serve notice that we will be looking for other
vehicles to offer on this floor in a rather prompt fashion.
With that, I reluctantly withdraw the amendment.
The PRESIDING OFFICER. The Senator has the right to withdraw the
amendment.
So the amendment (No. 3678) is withdrawn.
Mrs. KASSEBAUM. Mr. President, I very much appreciate the sponsors of
the amendment withdrawing it. Senator Brown and Senator Pryor are very
persuasive in their arguments, as Senator Chafee was as well. I am
sympathetic to the purpose of the amendment.
As was noted by the sponsors, it is controversial. For that reason,
we would have to oppose it on the health insurance reform bill. I
appreciate the thoughtfulness in their withdrawal.
Unanimous-Consent Agreement
Mrs. KASSEBAUM. Mr. President, I put forward on behalf of the
majority leader a unanimous-consent agreement.
I ask unanimous consent during the remainder of the Senate's
consideration of
S. 1028, the following amendments be the only first-
degree amendments in order, that they may be subject to relevant
second-degree amendments, and following the disposition of the listed
amendments and the committee substitute, the bill be advanced to third
reading, and the Senate then proceed to the House companion bill, that
all after the enacting bill be stricken, the text of the Senate bill be
inserted, the bill be advanced to third reading and the Senate proceed
to vote on passage of
H.R. 3103, as amended, without any intervening
action or debate.
The list that I have of the amendments would be: Nickles, relevant;
Jeffords, lifetime caps; Thomas, rural health; McCain, biological
medical devices; Gramm, relevant; Coats, medical volunteer liability
coverage; Domenici, mental health; Specter, public health; pecter,
public health; Specter, public health; Gregg, choice care; Helms, study
of access by HHS; Senator Brown has withdrawn his amendment; McConnell,
medical malpractice; Bond, administration simplification; Pressler,
CRNAS; D'Amato, fair tax treatment; Kassebaum, relevant; Dole,
relevant; Roth, relevant; Simpson, commission; Bennett relevant; Burns,
telemedicine; Boxer, ban HMO gag rules; Conrad, nurse practitioner,
nurse anesthetists, advance nurse practitioner; Feinstein, nonprofit
insurance; Graham-Baucus, Medicare fraud; Harkin, fraud and abuse;
Harkin, fraud and abuse; Kennedy, relevant; Pryor relevant; Wellstone,
two domestic violence; Simon is a sense-of-the-Senate resolution;
Dorgan, organ donations; Lieberman, MM data banks; Kennedy, nursing
care; Daschle, relevant; Boxer, biomed devices.
Mr. KENNEDY. Would the Senator add Wellstone, relevant, sense of the
Senate.
The PRESIDING OFFICER. Is there objection to the unanimous consent
request?
Without objection, it is so ordered.
Mrs. KASSEBAUM. Mr. President, I believe Senator Jeffords has been
waiting, and I believe he is next to be recognized.
Mr. JEFFORDS. Mr. President, I yield to the Senator from Arkansas.
Mr. PRYOR. Mr. President, if we could ask a question, Mr. President,
while the two distinguished managers are on the floor. It is 6:15; I
did not realize there were quite as many amendments.
Mrs. KASSEBAUM. Neither did we.
Mr. PRYOR. Are we planning to go on into the evening?
Mrs. KASSEBAUM. Yes, Mr. President, I say to the Senator from
Arkansas, I think it is the hope not only of the managers but also of
the minority leader and the majority leader that we finish tonight.
Mr. PRYOR. Good night, Mr. President, thank you.
Amendment No. 3679
(Purpose: To establish a minimum amount that may be applied as an
aggregate lifetime limit with respect to coverage under an employee
health benefit plan or a group health plan)
Mr. JEFFORDS. Mr. President, I have an amendment at the desk.
The PRESIDING OFFICER. The clerk will report.
The legislative clerk read as follows:
The Senator from Vermont [Mr. Jeffords] proposes an
amendment numbered 3679.
Mr. JEFFORDS. Mr. President, I ask unanimous consent reading of the
amendment be dispensed with.
The PRESIDING OFFICER. Without objection, it is so ordered.
At the end of section 103, add the following new
subsection:
(g) Limitation on Lifetime Aggregate Limits.--
(1) In general.--Except as provided in paragraph (2), an
employee health benefit plan or a health plan issuer offering
a group health plan may not impose an aggregate dollar
lifetime limit of less than $10,000,000 (such amount to be
adjusted for inflation in fiscal years subsequent to the
fiscal year in which this subsection becomes effective) with
respect to coverage under the plan.
(2) Small employers.--Paragraph (1) shall not apply to a
group health plan offered to or maintained for employees of a
single employer that employ
s 25 or fewer employees.
(3) Rule of construction.--Paragraph (1) shall not be
construed as prohibiting the application by an employee
health benefit plan or a health plan issuer offering a group
health plan of any limits, exclusions, or other forms of cost
containment mechanisms with respect to coverage under the
plan other than the aggregate limit permitted under paragraph
(1).
(4) Disclosure.--Any limits, exclusions, or other cost
containment mechanisms permitted under paragraph (3) shall be
disclosed as provided for in section 105(c).
(5) Application of subsection.--This subsection shall not
apply to a health maintenance organization that meets the
requirements of title XIV of the Public Health Service Act.
(6) Effective date.--This paragraph shall become effective
with respect to health plans on the date that i
s 2 years
after the date of enactment of this Act.
At the end of section 105, add the following new
subsection:
(c) Disclosure of Limits and Exclusions.--An employee
health benefit plan or a health plan issuer offering a group
health plan shall disclose, as part of its solicitation and
sales materials and in a form and manner that is conspicuous
and understandable to a reasonable individual, any limits,
exclusions, or cost containment mechanisms with respect to
coverage provided under the plan.
Section 3711 of title 31, United States Code, is amended by
adding at the end the following new subsections:
``(g)(1) If a nontax debt or claim owed to the United
States has been delinquent for a period of 180 days--
``(A) the head of the executive, judicial, or legislative
agency that administers the program that gave rise to the
debt or claim shall transfer the debt or claim to the
Secretary of the Treasury; and
``(B) upon such transfer the Secretary of the Treasury
shall take appropriate action to collect or terminate
collection actions on the debt or claim.
``(2) Paragraph (1) shall not apply--
``(A) to any debt or claim that--
``(i) is in litigation or forelosure;
``(ii) will be disposed of under an asset sales program
within 1 year after the date the debt or claim is first
delinquent, or a greater period of time if a delay would be
in the best interests of the United States, as determined by
the Secretary of the Treasury;
``(iii) has been referred to a private collection
contractor for collection for a period of time determined by
the Secretary of the Treasury;
``(iv) has been referred by, or with the consent of, the
Secretary of the Treasury to a debt collection center for a
period of time determined by the Secretary of the Treasury;
or
``(v) will be collected under internal offset, if such
offset is sufficient to collect the claim within 3 years
after the date the debt or claim is first delinquent; and
``(B) to any other specific class of debt or claim, as
determined by the Secretary of the Treasury at the request of
the head of an executive, judicial, or legislative agency or
otherwise.
``(3) For purposes of this section, the Secretary of the
Treasury may designate, and withdraw such designation of debt
collection centers operated by other Federal agencies. The
Secretary of the Treasury shall designate such centers on the
basis of their performance in collecting delinquent claims
owed to the Government.
``(4) At the discretion of the Secretary of the Treasury,
referral of a nontax claim may be made to--
``(A) any executive department or agency operating a debt
collection center for servicing, collection, compromise, or
suspension or termination of collection action;
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S3584]]
``(B) a contractor operating under a contract for servicing
or collection action; or
``(C) the Department of Justice for litigation.
``(5) nontax claims referred or transferred under this
section shall be serviced, collected, or compromised, or
collection action thereon suspended or terminated, in
accordance with otherwise applicable statutory requirements
and authorities. Executive departments and agencies operating
debt collection centers may enter into agreements with the
Secretary of the Treasury to carry out the purposes of this
subsection. The Secretary of the Treasury shall--
``(A) maintain competition in carrying out this subsection;
``(B) maximize collections of delinquent debts by placing
delinquent debts quickly;
``(C) maintain a schedule of contractors and debt
collection centers eligible for referral or claims; and
``(D) refer delinquent debts to the person most appropriate
to collect the type or amount of claim involved.
``(6) Any agency operating a debt collection center to
which nontax claims are referred or transferred under this
subsection may charge a fee sufficient to cover the full cost
of implementing this subsection. The agency transferring or
referring the nontax claim shall be charged the fee, and the
agency charging the fee shall collect such fee by retaining
the amount of the fee from amounts collected pursuant to this
subsection. Agencies may agree to pay through a different
method, or to fund an activity from another account or from
revenue received from the procedure described under section
3720C of this title. Amounts charged under this subsection
concerning delinquent claims may be considered as costs
pursuant to section 3717(e) of this title.
``(7) Notwithstanding any other law concerning the
depositing and collection of Federal payments, including
section 3302(b) of this title, agencies collecting fees may
retain the fees from amounts collected. Any fee charged
pursuant to this subsection shall be deposited into an
account to be determined by the executive department or
agency operating the debt collection center charging the fee
(in this subsection referred to in this section as the
`Account'). Amounts deposited in the Account shall be
available until expended to cover costs associated with the
implementation and operation of Governmentwide debt
collection activities. Costs properly chargeable to the
Account include--
``(A) the costs of computer hardware and software, word
processing and telecommunications equipment, and other
equipment, supplies, and furniture;
``(B) personnel training and travel costs;
``(C) other personnel and administrative costs;
``(D) the costs of any contract for identification,
billing, or collection services; and
``(E) reasonable costs incurred by the Secretary of the
Treasury, including services and utilities provided by the
Secretary, and administration of the Account.
``(8) Not later than January 1, of each year, there shall
be deposited into the Treasury as miscellaneous receipts an
amount equal to the amount of unobligated balances remaining
in the Account at the close of business on September 30 of
the preceding year, minus any part of such balance that the
executive department or agency operating the debt collection
center determines is necessary to cover or defray the costs
under this subsection for the fiscal year in which the
deposit is made.
``(9) To carry out the purposes of this subsection, the
Secretary of the Treasury may prescribe such rules,
regulations, and procedures as the Secretary considers
necessary.
``(h)(1) The head of an executive, judicial, or legislative
agency acting under subsection (a)(1), (2), or (3) of this
section to collect a claim, compromise a claim, or terminate
collection action on a claim may obtain a consumer report (as
that term is defined in section 603 of the Fair Credit
Reporting Act (15 U.S.C. 1681a)) or comparable credit
information on any person who is liable for the claim.
``(2) The obtaining of a consumer report under this
subsection is deemed to be a circumstance or purpose
authorized or listed under section 604 of the Fair Credit
Reporting Act (15 U.S.C. 1681b).''.
Mr. JEFFORDS. Mr. President, I know that we have had a difficult day
today. We are having a difficult time trying to face the facts of life
that the bill we are amending is a very important one, one which I have
been an original cosponsor and one which part of the bill is mine. It
is something that I worked very hard on. I believe it is an excellent
job.
However, I also believe that it has a very serious flaw in it. Thus,
at the time the committee was meeting--and I want to point out that we
have already made an exception today--the Finance Committee came and
said, ``Hey, we have a bunch of amendments.'' Most of them have been
accepted. So we have already made several exceptions to the
nonamendment rule. I want to remind people of that.
Now, I submitted this amendment, which I have before this body, at
the committee. I am a member of the committee, ranking Republican on
the committee. At that time it was said, ``Hey, we want to get out of
here a unanimous bill. We may have problems.'' So I said, ``OK, I will
wait until the floor.'' So I come to the floor to offer an amendment,
which I think about everybody agrees ought to be on it, and they said,
``No. No amendments--except for the Finance Committee amendments.''
I understand that the ranking Republican and the chairman of the
committee are bound by their commitment to no amendments, but nobody
else is. Nobody else is in this body. So I hope Members would say he
deserves to be heard. He has told me I could raise this amendment on
the floor, and here it is.
Now we will talk about what the amendment is and why we are here. The
bill is one which provides, if a person is working for a business and
changing jobs, or whatever else, has a health problem, that they are
guaranteed an issuance of a policy or a continuance of a policy,
notwithstanding the fact that they are sick. That is very important.
This is an important breakthrough. That is why I supported the bill.
However, what we were not aware of at the time and I brought to the
committee's attention, but perhaps there was too little time to
consider it, is the fact that there is no requirement now under the
Federal law for any kind of a certain level of cap.
Now, what could happen to us is, OK, we require the insurance company
to take a sick person, but then the insurance company has the right to
change its benefits, or it can say, ``OK, we will lower the lifetime
cap. So when we take you on, as soon as we pay whatever level of funds
we reduce the limit to, you are gone, finished, you have no more
coverage.''
Well, this amendment would rectify that and say we have to put--as a
nationwide standard, with the exception, we admit it could cause some
problems with small businesses, so we exempt 25 and under. We say you
have to have $10 million of coverage. Why the $10 million? The $10
million lifetime cap is because the standard for the industry for many
years was a million dollars. But that wa
s 20 years ago. That million
dollars is worth about $100,000 now. So we say, let us go back to the
standard of 20 years ago and put on that cap.
I want to point out that when we do this, we are obviously going to
cause some costs. I will explain that later. But let us take a look at
who we are talking about when we are talking about those covered under
this provision. We are talking about those that are working for
businesses, as I say, that get sick. All of a sudden they have some
pretty big bills. Remember, some of the lifetime caps out there on
these insurance plans are $50,000. That is one day in a hospital
sometimes. So you go in there sick, and all of a sudden you have no
coverage. We are trying to correct that.
Now, let me point out to you, again, what we are talking about from a
national policy perspective. What happens now to that sick person? That
person is sick. They have been allowed to be covered and then chopped
off because they have reached the lifetime limit of, say, $50,000. What
happens? Under the law right now, in order for them to qualify for
Medicaid, they cannot have resources beyond a certain level. So what we
are talking about--and I will give some examples in a minute--is middle
income people, or even higher income people, who suddenly are
Amendments:
Cosponsors:
HEALTH INSURANCE REFORM ACT
Sponsor:
Summary:
All articles in Senate section
HEALTH INSURANCE REFORM ACT
(Senate - April 18, 1996)
Text of this article available as:
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[Pages
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HEALTH INSURANCE REFORM ACT
The Senate continued with the consideration of the bill.
Mr. HATCH. Mr. President, I understand the pending business is the
Brown amendment. It is my understanding that he will make his arguments
and then withdraw the amendment; am I incorrect on that?
Mr. BROWN. Mr. President, the Senator is correct.
Mr. HATCH. I am correct.
Mr. SIMPSON. I yield the floor.
Mrs. KASSEBAUM addressed the Chair.
The PRESIDING OFFICER. The Senator from Kansas.
Mrs. KASSEBAUM. Mr. President, prior to returning to Senator Brown's
amendment, if I may propose a unanimous consent request on behalf of
Senator Dole.
Let me yield and say, evidently, this has not been cleared fully on
both sides, so we will return to Senator Brown's amendment.
Mr. KENNEDY addressed the Chair.
The PRESIDING OFFICER. The Senator from Massachusetts.
Mr. KENNEDY. Mr. President, we want to try and accommodate the
greatest number of Members. We have several Senators who are here with
their amendments ready to address them and ready to act on them. We
believe that if we are able to do that, we can afford, whoever wants to
speak, as much time as they want to speak on other kind of matters. But
we are here to deal with this legislation.
We have been urging Senators to come over here and offer their
amendments. They are here now, and we can either do this later--I plan
to stay here until it is done, but the greater numbers of Members would
like to have at least some finality to the legislation. I believe we
can do it. It is 6 o'clock now and we had the chance for general
discussion during the course of the day. Many of our colleagues have
come over here to address these issues and to vote on them, and they
have been waiting as well.
I hope we will urge our colleagues who are not going to talk on these
matter--we know they can; people can get up and address any other
matters--but out of consideration of other Members, please try and see
if we cannot focus on the matter that is at hand, and that is the
Kassebaum-Kennedy bill, which is of enormous importance to many
American families.
I see other Members here, and I am sure they will do what they have
to do, but we are trying to conclude this and then to let others speak
so that at least others will not be here tomorrow. We are going to end
up being here tomorrow as sure as I am standing here unless we are able
to make progress. That is fine with me, if that is what it is. But with
some cooperation of the Members, we have a very good chance of
finishing this. Otherwise, Members ought to understand we are going to
be here late tonight voting and end up starting the votes later this
evening and tomorrow.
We are just about to ask for the final list so that we can agree with
that. But in the meantime, we have the Senators who are here who are
prepared to move ahead. Senator Brown is here, and Senator Jeffords was
here just a few moments ago to deal with an extremely important measure
and has been here now for an hour and a half trying to gain the floor.
Mr. CHAFEE addressed the Chair.
The PRESIDING OFFICER. The Senator from Rhode Island.
Amendment No. 3678
Mr. CHAFEE. Mr. President, I am going to address the amendment that
is before us, the Brown amendment,
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but I say to the managers of the bill, I join with them in their
enthusiasm to finish it up. I do not see why we do not seek time
agreements, in case we get off on another Social Security argument,
whatever it might be. But that is up to the managers.
Mr. President, I have a statement that I wish to make that deals with
the subject Senator Brown has been addressing, and Senator Pryor,
likewise, and which I joined in the past.
All I can say, Mr. President, is I just wish we would address this
matter, both in the committee, and I understand Senator Brown has been
trying to achieve that, but also on the floor of the Senate. We have
had one vote. It was a one-vote margin difference. Perhaps people's
minds have been changed since then. Nonetheless, I support the efforts
of Senators Brown and Pryor.
Congress and the administration made a simple--but costly--error in
drafting the Uruguay Round Agreements Act of 1994. That inadvertent
error is costing consumers, State governments, and the Federal
Government millions of dollars, while providing an unintended windfall
to a handful of drug companies. I don't believe we should let that
error stand.
What happened? The facts of the case are straightforward. Back in
1994, Congress was drafting omnibus trade legislation designed to bring
the United States into conformity with the important new global trade
agreement known as the GATT. As part of our commitment to fulfill our
new GATT obligations, the United States pledged to increase patent
protection for future patents. In addition, the United States also
pledged to boot protection for patents already in existence--a key
point that goes to the heart of the issue before us today.
Accordingly, the trade bill that Congress wrote, boosted existing
patent terms by up to 3 years, giving current patentholders a valuable
extension on their patents. To be fair to generic manufacturers who had
been preparing to go to market on the old patent expiration date,
Congress fashioned a compromise: generic companies who had made a
substantial investment in preparing for market would be allowed to
proceed as planned, but would have to pay equitable remuneration--that
is, a royalty--during the extended term. This carefully balanced
compromise became law as part of the 1994 Uruguay Round Agreements Act.
However, in drafting this 653-page bill, Congress and the
administration made a small--but very costly--mistake. A simple
conforming amendment to an FDA statute was omitted. Yet the impact was
enormous: the omission singlehandedly prevented the generic drug
industry from going to market during the extended term. The result is
that a handful of brand-name drug companies have received a staggering
$4.3 billion windfall, at the expense of consumers, that Congress,
United States trade officials, and even the brand-name companies
themselves, neither intended nor expected.
The cost to consumers is enormous. The drugs that are covered by the
windfall are widely prescribed, and are used for everyday ailments that
affect millions of Americans. Keeping the generic version off the shelf
for up to 3 years means that Americans--including and especially older
Americans--are paying far more than was ever intended for their
medications.
Not only are consumers paying for this error, but so are State
governments and the Federal Government--in the form of higher
reimbursements for prescription drugs for the elderly, veterans, and
low-income Americans.
This is not right. We made a mistake. We should fix it. In this case,
the solution is obvious and easy: simply enact the missing conforming
amendment. That is exactly what Senator Pryor, Senator Brown, and I--
and many others--have been working to do.
Let me take a moment to put to rest a few red herrings. Our amendment
would not affect our GATT commitments or our efforts to promote patent
protection worldwide. Our amendment would not upset the balance in U.S.
drug patent laws, nor impede research and development of new drugs. If
any of these misrepresentations were true, we simply would not be
sponsoring this amendment. It is that simple.
It is time to correct this injustice--an injustice to consumers in
our Nation, an injustice to the Federal and State governemnts that are
paying extra and needless sums into Medicaid and Medicare and an
injustice to the generic manfuactures who made the investment in
reliance on the law as it was supposed to be.
It is time we fixed this unfairness.
Mr. BROWN addressed the Chair.
The PRESIDING OFFICER. The Senator from Colorado.
Mr. BROWN. Mr. President, it is my intention to try and expedite the
deliberations here tonight. In that regard, my thought would be to make
a statement, hopefully, shedding some light on this amendment. I know
Senator Pryor has worked so hard in this area. He wants to make a
statement, and then it will be my intention to withdraw the amendment.
I withdraw it reluctantly, because I think it needs to be considered
and dealt with as soon as possible. But I am persuaded that we will not
have some votes that we need to adopt it if we insist on attaching it
to this measure.
Having said that, let me simply outline the issue that is before us.
It is well described in a New York Times editorial of February 28. I
will quote a portion of that, because I think it is quite succinct and
to the point:
Congress finds it hard to remedy the simplest mistakes when
powerful corporate interests are at stake. In 1974, when
Congress approved a new trade pact with more than 100 other
countries, it unintentionally handed pharmaceutical drug
companies windfall profits. More than a year later, Congress
has yet to correct the error. The trade pact obliged the
United States to change its patent laws to conform with those
of the rest of the world. They had the effect of extending
some American patents for up to 20 months.
Mr. President, those are the opening lines of the editorial.
The simple fact is this. We had people research drugs and put the
investment into it and receive the full length of their exclusivity
that this Congress has supported and put into statute. The GATT
agreement gave a serendipitous extension to that. In other words, under
the GATT agreement and the conforming changes of law that this Congress
adopted, people who had invested in and relied on our laws got a longer
period of patent protection than they have ever planned for. But the
GATT agreement also had a provision, an exception for that extended
protection when someone had made a substantial investment in reliance
on our laws in providing competitive products.
In other words, what we propose in this amendment is nothing more
than absolutely the process that was contemplated and planned for under
GATT. And, I might mention, Mr. President, many countries have done
exactly the same thing. As a matter of fact, this country has done a
similar kind of thing with other products.
What this amendment simply suggests is that where we have given
someone an unexpected, unplanned extension in their patent protection,
that we make an exception for that extension where someone else has
made a substantial investment in producing and providing a competitive
product--in this case, a generic drug.
If we do not adopt this, we will have said to people who produce
products in reliance to our laws, ``After you have made the investment,
after you have put the money into it, after you have made under the
terms of what will be the statute a substantial investment on reliance
of our laws, we are going to pull the rug out from under you and change
the rules retroactively.''
Mr. President, that is not right. That is not honest. That is not
fair. That is not a good way to do business. We have talked about the
horrible damage--and it is enormous damage--done to consumers by this
unjustified quirk of the ratification document.
But I want to focus the Members' attention on what is unfair to
business. I believe it is unfair to business to say, ``Look, here are
the laws. Here is how long you have for patent protection. And by the
way, we're going to change the law retroactively, and even though you
made substantial investment in producing a competing product, we're not
going to let you compete.'' Now, that is what has happened.
If we do not pass this bill as it is in committee or the amendment as
we offer it on the floor, what you are going to do is not only impact
consumers to the tune of billions of dollars, but you are going to say
to businesses that have relied on the law, that it is tough luck, you
should not have believed us. You should not have relied on what we did.
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Why is it important to pass it on this bill or pass it quickly? I
think that is a fair question. I must tell the Members, I am
disappointed I have not been able to persuade all the other people who
support the concept that it is important to pass it on this measure.
It is important because the impact of this, if it goes uncorrected,
could be over $2 billion, according to the Washington Post. It is
important because this costs consumers up to $5 million a day while we
delay. Mr. President, let me repeat that because I am not sure people
have focused on the impact of delay. It costs up to $5 million a day to
consumers in this country if we do not act. Some estimates indicated it
may have cost consumers already $700 million.
Mr. President, this is not anything other than fairness. This is not
anything other than saying the patent protection that was planned in
the law ought to be delivered as it was planned in the law.
Mr. President, I will not prolong the argument. I know the
distinguished Senator from Arkansas has worked on this and has some
remarks, but I ask unanimous consent to have printed in the Record the
editorial from the Washington Post, a letter from The Seniors
Coalition, a letter from the National Committee to Preserve Social
Security and Medicare, a letter from the National Women's Health
Network, a letter from the Citizen Action, a letter from the Gray
Panthers, a letter from the Generic Drug Equity Coalition, a letter
from the Consumer Federation of America, and a letter from the Citizen
Advocacy Center, all pertaining to this subject and advocating the
position of this amendment. I ask unanimous consent that all of these
letters be printed in the Record.
There being no objection, the material was ordered to be printed in
the Record, as follows:
[From the Washington Post, Dec. 4, 1995]
The Zantac Windfall
All for lack of a technical conforming clause in a trade
bill, full patent protection for a drug called Zantac will
run 19 months beyond its original expiration date. Zantac,
used to treat ulcers, is the world's most widely prescribed
drug, and its sales in this country run to more than $2
billion a year. The patent extension postpones the date at
which generic products can begin to compete with it and pull
the price down. That provides a great windfall to Zantac's
maker, Glaxo Wellcome Inc.
It's a case study in legislation and high-powered lobbying.
When Congress enacted the big Uruguay Round trade bill a year
ago, it changes the terms of American patents to a new
worldwide standard. The effect was to lengthen existing
patents, usually by a year or two. But Congress had heard
from companies that were counting on the expiration of
competitors' patents. It responded by writing into the trade
bill a transitional provision. Any company that had already
invested in facilities to manufacture a knock-off, it said,
could pay a royalty to the patent-holder and go into
production on the patent's original expiration date.
But Congress neglected to add a clause amending a crucial
paragraph in the drug laws. The result is that the
transitional clause now applies to every industry but drugs.
That set off a huge lobbying and public relations war with
the generic manufacturers enlisting the support of consumers'
organizations and Glaxo Wellcome invoking the sacred
inviolability of an American patent.
Mickey Kantor, the president's trade representative, who
managed the trade bill for the administration, says that the
omission was an error, pure and simple. But it has created a
rich benefit for one company in particular. A small band of
senators led by David Pryor (D-Ark.) has been trying to right
this by enacting the missing clause, but so far it hasn't got
far. Glaxo Wellcome and the other defenders of drug patents
are winning. Other drugs are also involved, incidentally,
although Zantac is by far the most important in financial
terms.
Drug prices are a particularly sensitive area of health
economics because Medicare does not, in most cases, cover
drugs. The money spent on Zantac is only a small fraction of
the $80 billion a year that Americans spend on all
prescription drugs. Especially for the elderly, the cost of
drugs can be a terrifying burden. That makes it doubly
difficult to understand why the Senate refuses to do anything
about a windfall that, as far as the administration is
concerned, is based on nothing more than an error of
omission.
____
The Seniors Coalition, Protecting the Future You Have
Earned,
Washington, DC, April 17, 1996.
Hon. Hank Brown,
U.S. Senate,
Washington, DC.
Dear Senator Brown: The Seniors Coalition urges you to
support legislation offered by Senator Brown in the Judiciary
Committee to correct an egregious mistake made in the
implementation of the GATT treaty. This mistake has cost the
consumers, and primarily the elderly, of this nation millions
of dollars. This loophole has allowed a few drug companies to
take advantage of a situation that was unintended and to line
their pockets with unearned money from American citizens.
I ask you to read the article ``What you don't know about
brand name drugs is costing you millions'' (pp. 4-5) in our
latest edition of The Senior Class which outlines the problem
and then to vote to support the correction. Your support for
this effort is critical to the financial well being of
thousands of senior citizens.
I submitted testimony to the Senate Judiciary Committee on
this issue when the committee held hearings on this issue in
February. At that time I called for the Congress to correct
the mistake and reject the efforts of brand name companies to
thwart the correction. The so-called ``compromise'' that has
been drafted by Glaxo and may be offered by a member of the
Judiciary Committee is nothing more than a thinly veiled
effort to codify the mistake that was made. A careful reading
of the language will find that it does even more damage to
the ability of consumers, especially seniors, to find safe
and affordable pharmaceutical products in the marketplace.
Again, please support Senator Brown and his effort to
correct this mistake. Now is the time for the Congress to do
something for the American public.
Sincerely,
Thair Phillips,
CEO.
____
National Committee to Preserve Social Security and
Medicare,
Washington, DC, March 27, 1996.
Honorable Hank Brown,
Senate Judiciary Committee, U.S. Senate, Hart Senate Office
Building, Washington, DC.
Dear Senator Brown: We understand the Senate Judiciary
Committee plans to mark-up legislation addressing and General
Agreement of Tariff and Trade (GATT) patent pharmaceutical
issue tomorrow. We urge you to support legislation (
S. 1277)
sponsored by Senators Chafee, Pryor, and Brown to correct an
oversight in the GATT implementing legislation that will save
consumers and taxpayers billions of dollars in prescription
drug costs. We urge you to oppose any alternative measures
that would maintain this costly and unintended loophole under
GATT.
As you know, because of an oversight in patent changes
approved under the GATT treaty implementing legislation, the
availability of lower-priced generic versions of more than 25
widely-prescribed drugs must be delayed for up to an
additional three years. As a result, seniors and other
consumers will wait longer for access to less-costly generic
drugs.
Every day Congress delays in correcting this oversight
costs consumers $5 million dollars in additional prescription
drug costs. In fact, the delay has already cost consumers an
additional $500 million dollars. The biggest losers among
U.S. consumers are senior citizens, as older Americans
consume about one-third of the prescription drugs sold in the
United States. On fixed incomes and with no pharmaceutical
coverage under Medicare, three out of four seniors cite
prescription drugs as their largest out-of-pocket expense.
On behalf of our millions of members and supporters, the
National Committee to Preserve Social Security and Medicare
urges you to support and report out of Committee the Chafee/
Pryor/Brown generic drug legislation.
Sincerely,
Martha A. McSteen,
President.
____
National Women's Health Network,
Washington, DC, March 21, 1996.
Dear Judiciary Committee Member: In this time of federal,
state and local budget-cutting, threats to Medicare and
Medicaid, and continually rising medical costs, health care
savings are more important than ever to the American public.
Given the seriousness of skyrocketing health care costs, it
is unconscionable that Congress has so far failed to address
an error that needlessly increases the cost of health care
for millions of Americans, and unnecessarily boosts costs to
the federal government, as well.
More than a year ago, Congress discovered that the
legislation implementing the GATT Treaty contained an
unintended loophole for some pharmaceutical drug companies.
An error of omission granted the manufacturers of brand-name
drugs treatment unique in all of American industry.
By failing to include generic drugs in its rules concerning
transition to new patent terms under the GATT Treaty,
Congress has done a disservice to women's health,
specifically, and to consumers and taxpayers, generally.
While the mistake was unintentional, the consequences are
grave. Each day that passes without Congressional action to
correct this error costs millions of dollars; the total cost
is expected to exceed $2 billion.
The beneficiaries of the current situation are the handful
of giant pharmaceutical corporations that will enjoy windfall
profits for three additional years. Their glee at this
unanticipated windfall is evidenced by the fierceness with
which the lobbyists for these companies are fighting to
preserve their protected status.
The exemption of drug companies from the GATT transition
rules was a mistake. It
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would be intolerable to compound this mistake by failing to
correct it. Please support the solution proposed by Senators
Brown, Chafee and Pryor.
Sincerely,
Cynthia Pearson,
Program Director.
____
Citizen Action,
Washington, DC, March 26, 1996.
Dear Judiciary Committee Member: On behalf of Citizen
Action and our three million members, I would like to ask
your support for a proposal which will shortly be offered by
Senators Brown, Chafee and Pryor. This proposal would undo a
legislative error which, if not corrected, will cost U.S.
consumers hundreds of millions of dollars in unnecessary
prescription drug costs.
When Congress passed new patent terms under the GATT
Treaty, it failed to include prescription drugs under its
transition rules. GATT extends patent terms of U.S. products
from 17 to 20 years. Because many manufacturers had already
invested millions of dollars in competing products in
expectation of the 17-year limit, Congress adopted transition
rules to allow those companies to introduce generic
alternatives on the date that the 17-year patent would have
expired.
The omission of prescription drugs in the transition rule
means that makers of lower-cost generic drugs will be unable
to bring their products to market until the full 20-year term
of patent protection has expired. This loophole will allow a
few large pharmaceutical companies to reap more than $2
billion in windfall profits. Because lower-cost generics will
be kept off the market, consumers will be forced to pay
higher prices for more than a dozen drugs, including big-
sellers Zantac and Capoten.
Without a correction, taxpayer-funded federal and state
health programs, as well as individual purchasers of
prescription drugs, will be forced to pay higher than
necessary costs. The Department of Veterans Affairs estimates
that it alone will spend $211 million in additional costs
over the next three years.
The Judiciary Committee has an opportunity to correct a
provision that will have grave consequences for consumers.
Again, Citizen Action urges that you act now to remove this
unique loophole which rewards certain large pharmaceutical
companies at the expense of taxpayers and consumers.
Sincerely,
Cathy L. Hurwit,
Legislative Director.
____
Gray Panthers Project Fund,
Age and Youth in Action,
Washington, DC, February 29, 1996.
Hon. Hank Brown,
U.S. Senate, Senate Hart Office Building, Washington, DC.
Dear Senator Brown: Attached please find copies of
Tuesday's ABC World News Tonight news story focusing on the
negative impact that the GATT loophole will have on American
consumers like Eleanor Black and her mother Sally. In
addition, attached are copies of the testimony submitted to
the Judiciary Committee from Ms. Black and myself, as well as
Wednesday's New York Times editorial on the issue.
With the Senate Judiciary Committee hearings on GATT now
behind us, Senators Chafee, Brown, and Pryor have vowed to
introduce legislation within the next few weeks that will
correct this loophole and bring relief to millions of
consumers like the Blacks who rely on the savings that
generic pharmaceuticals offer.
In December, an effort to bring the Chafee-Brown-Pryor
amendment to the Senate floor was narrowly defeated by one
vote. When the Chafee-Brown-Pryor amendment is introduced in
the near future, I urge you and your colleagues to do the
right thing and correct this Congressional oversight and save
American taxpayers from a costly mistake.
Please support the Chafee-Brown-Pryor amendment and close
the GATT loophole.
Sincerely,
Dixie D. Horning,
Executive Director.
____
Generic Drug Equity Coalition,
Washington, DC, March 29, 1996.
To: Members, United States Senate
FR: Generic Drug Equity Coalition
RE: No More Delays, Pass Chafee/Pryor/Brown
When the Senate adjourns today for the Spring recess,
consumers and taxpayers will have paid $580 million more for
prescription drugs than they should have because of a mistake
Congress and the administration made in December 1994, $580
million. Everyday that passes costs consumers and taxpayers
$5 million more.
By the time you return in two weeks, the cost to consumers
and taxpayers will have reached $650 million.
Yet, despite written commitments to markup a bill to close
the GATT loophole in the Senate Judiciary Committee in March,
nothing has happened.
A few companies continue to reap unintended windfall
profits at the expense of American consumers, taxpayers and
generic drug manufacturers.
While you are away observing the Easter and Passover
Holidays be sure to think about Americans like 69-year old
Eleanor Black and her 89-year old mother Sally who spend $339
a month, one quarter of their monthly income, for Zantac
because of the GATT loophole.
The Generic Drug Equity Coalition urges you to support the
Chafee/Pryor/Brown proposal and close the GATT loophole.
The Judiciary Committee leadership has missed its own,
self-imposed deadline. It is time for a vote on the Senate
floor.
____
Consumer Federation of America,
Washington, DC, March 27, 1996.
Dear Senate Judiciary Committee Member: The Senate
Judiciary Committee plans this week to examine the loophole
in the General Agreement on Tariffs and Trade (GATT) which
exempts the pharmaceutical industry from patent transition
terms. We urge you at this time to support the efforts of
Senators Brown, Chafee, and Pryor to redress this unintended
and potentially costly, effect of the GATT Treaty.
As you know, an error of omission in the legislative
language implementing the GATT Treaty has exempted the
pharmaceutical industry from the patent transition terms. As
a result, the pharmaceutical drug industry--alone among all
industries--enjoys a 20-year patent term, and generic
manufacturers are unable to market long-planned products.
The unintended effects of the patent extension include
diminished market competition, an undeserved windfall to pre-
GATT patent holders, and further inflated costs to millions
of Americans. The Congressional Budget Office (CBO) has
estimated that this simple mistake will cost consumers and
taxpayers as much as $2 billion as drug companies reap
windfall profits in the absence of competition. This windfall
was not intended by Congress, nor envisioned in the GATT
treaty itself.
Senators, Brown, Chafee, and Pryor have proposed closing
the loophole, thereby protecting consumers' health and
taxpayers' wallets. This solution would not convey special
status on the generic drug industry; instead, this amendment
provides for equal treatment, and would compel brand-name
drug manufacturers to live under the same rules as every
other American industry.
In the interest of consumers, taxpayers and fairness, we
urge you to support the efforts Senators, Brown, Chafee, and
Pryor have made to redress this costly error.
Sincerely,
Mern Horan,
Legislative Representative,
Consumer Federation of America.
____
Citizen Advocacy Center,
Elmhurst, IL, March 25, 1996.
Dear Judiciary Committee Member: An oversight in the
legislation implementing the GATT Treaty has granted the
pharmaceutical industry a privileged status at the expense of
consumers and taxpayers. More than a year after the
implementing legislation was adopted, Congress has yet to
correct this windfall benefit. Now, Senators Brown, Chafee,
and Pryor have developed a solution that is fair and
reasonable and deserving of your support.
GATT is premised on opening world markets to competition.
Under our implementing legislation, however, manufacturers of
generic drugs, alone among all industries in the United
States, are prohibited from bringing products to market until
the full twenty-year patent term has expired for brand-name
drugs. This anticompetitive windfall is estimated to be worth
two billion dollars in profits. Health care consumers are
thus forced to pay higher costs, as will taxpayers, who fund
drug purchases through a number of government programs. The
City of Elmhurst has a high percentage of Senior Citizens, a
group that is disproportionately harmed by high health care
costs, and the adverse effects of the as yet uncorrected
legislation.
Congress did not intend to bestow this windfall on drug
companies when it adopted the transitional rules for GATT. We
urge you, in the interest of consumers, seniors, and
taxpayers, to correct this oversight and to not be lulled
into inaction by the multi-million dollar lobbying blitz of
the companies enjoying this windfall daily.
Senators Brown, Chafee and Pryor have proposed a simple
solution that would protect the balance of interest between
generic and brand-name manufacturers envisioned in the Hatch-
Waxman Act of 1984. It's time to support their proposal.
Very truly yours,
Theresa Amato,
Executive Director,
Citizen Advocacy Center.
Mr. PRYOR addressed the Chair.
The PRESIDING OFFICER. The Senator from Arkansas.
Mr. PRYOR. Mr. President, my apologies to the Senator from Colorado.
Has the Senator from Colorado finished his statement?
Mr. BROWN. Yes.
Mr. PRYOR. Mr. President, I will take but a few moments of the
Senate's time this evening. We need to move on. The distinguished
managers have requested that we move to final resolution of this very
important measure. But I would like to take, Mr. President, in opening,
a few moments to discuss our particular concerns over this uncorrected
error in our laws which has led to unnecessarily high drug prices.
I would like to quote from my good colleague who is departing the
Senate and is a great friend, Senator Paul Simon of Illinois. Senator
Simon recently spoke on the issue of correcting
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this problem in the GATT treaty. I quote from Senator Simon when he
said, ``This is a classic example of special interests versus the
public interest.''
Mr. President, that is what this debate, I am afraid, has boiled down
to. I know my friend from Colorado, Senator Brown, in his eloquent
statement has placed into the Record a recent editorial of December 4,
1995 from the Washington Post. I will read a paragraph from that
editorial:
All for lack of a technical conforming clause in a trade
bill, full patent protection for a drug called Zantac will
run 19 months beyond its original expiration date. Zantac,
used to treat ulcers, is the world's most widely prescribed
drug, and its sales in this country run to more than $2
billion a year.
I continue quoting from the Washington Post editorial:
The patent extension postpones the date at which generic
products can begin to compete with it and pull the price
down. That provides a great windfall to Zantac's maker, Glaxo
Wellcome, Inc.
That is the beginning paragraph, Mr. President, of the Washington
Post editorial. To conclude from that editorial, let me read:
That makes it doubly difficult to understand why the Senate
refuses to do anything about a windfall that, as far as the
administration is concerned, is based on nothing more than an
error of omission.
Well, once again, this issue is with us. We failed by one vote back
on December 7 to rectify this mistake. Since that time, a few companies
like Glaxo Wellcome have earned more than $600 million in extra
revenues because of a congressional error. It also means that the
Veterans Administration, the Medicaid programs, the consumers of
America, and especially the elderly of America are having to pay double
for Zantac than what they would be paying had we allowed a generic to
come into the marketplace and compete.
This is not fair, Mr. President. We know that this is not fair. The
Judiciary Committee this morning had scheduled a markup, one which has
already been delayed from last month. They continue to promise that
they are going to mark up
S. 1277, the measure offered by Senator Brown
and Senator Chafee and myself to correct this mistake in the GATT
treaty.
But, once again, this morning an unnamed Senator objected to the
Senate Judiciary Committee marking up this measure, and, once again, it
means more and more windfall profits for undeserving companies at the
expense of consumers. These delays are completely unacceptable and
unwarranted. The American public simply cannot abide further delays on
behalf of special interests.
What is at stake? Back on November 27, 1995, an editorial in the Des
Moines Register stated that:
A month's supply of Zantac ordinarily sells for around
$115; the generic price--meaning the same drug without the
Zantac label--would be around $35, the generic makers
contend.
Mr. President, I ask unanimous consent that a copy of that Des Moines
Register editorial be printed in the Record.
There being no objection, the editorial was ordered to be printed in
the Record, as follows:
[From the Des Moines Register, Nov. 27, 1995]
A Costly Oversight
fine print in gatt law could cost zantac users millions
The nation's prescription drug makers are at war again,
with a $1 billion-plus purse going to the winner. If the
brand-name drug manufacturers win, the losers will include
the millions of Americans who suffer from ulcers or
heartburn, and take the drug Zantac regularly to combat the
problem. It's going to cost each of them about $1,600.
Zantac is made by GlaxoWellcome, the biggest in the
business.
Here's what started the current war:
When a new prescription drug hits the market, generic drug
manufacturers await the patent expiration so they can enter
the market with the same drug. They offer it for sale without
the brand name, usually at a fraction of the brand-name
price.
The new international GATT treaty signed by the United
States and 122 other countries sets the life of a patent at
20 years from the date of application. Former U.S. law
provided patent protection for pharmaceuticals for 17 years
from the date of approval. Because the difference could have
a significant impact on the number of years a firm could
market its patented drug without competition. Congress made
special provisions for drugs under patent at the time GATT
was approved last summer.
But when the legal beagles got done reading all the fine
print, it turned out that Zantac was granted a 19-month
extension of its patent life--and it is such a hugely popular
drug that that translates into a multimillion-dollar
windfall.
Generic drug makers call the windfall a congressional
oversight, and estimate the difference is worth $2.2 billion
to Glaxo, because the generics can't enter the market for 19
more months. Glaxo counters that Congress made no mistake,
that the extension was part of the compromise with generics.
It won't wash. Nothing in the GATT treaty was intended to
further enrich the happy handful of brand-name drug makers
who hold lucrative patents--or to personalize the users of
the drugs.
A month's supply of Zantac ordinarily sells for around
$115; the generic price--meaning the same drug without the
Zantac label--would be around $35, the generic makers
contend. Unless Congress changes the wording of the law
regarding transition to GATT provisions, Zantac users will
pay the difference for 19 months longer.
Some generic drug manufacturers had already spent a bundle
preparing to enter the market before the GATT treaty took
effect. They lose. So do taxpayers, who pay for Medicaid
prescriptions. The Generic Drug Equity Coalition estimates
that the higher costs of Zantac and some other drugs affected
by the mistake (such as Capoten, for high blood pressure)
will cost Iowa Medicaid $3.5 million. Further, say the
generic drug makers, it will tack another $1.2 million onto
the cost of health-insurance premiums for Iowa state
employees.
Glaxo's political action committee has doubled its
contributions to Congress in recent months. Glaxo wants the
mistake to stay in the law. Generic drug manufacturers want
it out.
So should ulcer sufferers. So should taxpayers. So should
Congress.
Mr. PRYOR. Mr. President, finally, let me say we all know what this
issue is about. We have debated this issue to some extent on the floor
of the Senate and to a great extent in the Judiciary Committee. We
heard our U.S. Trade Representative, Ambassador Kantor conclusively
explain the situation, and I quote:
The provision was written neutrally because it was intended
to apply to all types of patentable subject matter, including
pharmaceutical products. Conforming amendments should have
been made to the Federal Food, Drug and Cosmetic Act and
section 271 of the U.S. Patent Act, but were inadvertently
overlooked.
One other quote from Ambassador Kantor:
We intended to apply this grandfather provision to the
pharmaceutical area.
S. 1277 would result in a level of
protection that is consistent with our original intent.
Mr. President, let me say, Senator Brown, Senator Chafee and myself
have tried to proceed in good faith. There are Members on each side of
the aisle that have stated their concern about, and in some cases their
objection to, certain language that we had in this legislation. We have
attempted to meet with them. We have attempted to compromise. We have
certainly gone to the negotiating table and attempted to bargain in
good faith and see what their concerns are.
Truly, Mr. President, I believe that we now have come together and
crafted an amendment that is acceptable to all those concerned with
doing what is right for consumers, businesses which have relied upon
the law in good faith and for our compliance with a very important
treaty. The amendment represents the simplest and best means for us to
correct the egregious flaw that persists today because of
unconscionable delays and the efforts of special interests.
Mr. President, I want to say in conclusion that I have thoroughly
enjoyed working with Senator Brown of Colorado and Senator Chafee of
Rhode Island, my colleagues on the other side of the aisle. I hope we
can bring this matter to a resolution in the very near future.
The PRESIDING OFFICER (Mr. Gorton). The Senator from Colorado.
Mr. BROWN. Mr. President, the vote on this measure was close, as has
been noted. Since that time, I believe we have persuaded others to join
us in advocating this amendment. The amendment has been compromised to
the point that specifically we have spelled out in the compromise
version that is before the Senate right now a very clear, bright-line
test of what substantial investment is. It is easy and clear to work
with. I think we have addressed the problems. I am confident we have
the votes.
However, because of the urgency of the particular underlying measure
that is here, some Members whose votes we need and count on are unable
to support this amendment because they fear
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it would bring controversy to the bill. It is, therefore, necessary for
me to reluctantly withdraw this measure.
I must mention, Mr. President, it does seem to me this is the
appropriate kind of thing that ought to be considered on a prompt
basis. Literally, to fail to act costs consumers $5 million or more a
day, and literally if we fail to act very promptly, the issue becomes
moot because the time simply runs out. I believe in fairness to
companies that have reinvested, and, in fairness to consumers, we
should and must act quickly.
I simply want to serve notice that we will be looking for other
vehicles to offer on this floor in a rather prompt fashion.
With that, I reluctantly withdraw the amendment.
The PRESIDING OFFICER. The Senator has the right to withdraw the
amendment.
So the amendment (No. 3678) is withdrawn.
Mrs. KASSEBAUM. Mr. President, I very much appreciate the sponsors of
the amendment withdrawing it. Senator Brown and Senator Pryor are very
persuasive in their arguments, as Senator Chafee was as well. I am
sympathetic to the purpose of the amendment.
As was noted by the sponsors, it is controversial. For that reason,
we would have to oppose it on the health insurance reform bill. I
appreciate the thoughtfulness in their withdrawal.
Unanimous-Consent Agreement
Mrs. KASSEBAUM. Mr. President, I put forward on behalf of the
majority leader a unanimous-consent agreement.
I ask unanimous consent during the remainder of the Senate's
consideration of
S. 1028, the following amendments be the only first-
degree amendments in order, that they may be subject to relevant
second-degree amendments, and following the disposition of the listed
amendments and the committee substitute, the bill be advanced to third
reading, and the Senate then proceed to the House companion bill, that
all after the enacting bill be stricken, the text of the Senate bill be
inserted, the bill be advanced to third reading and the Senate proceed
to vote on passage of
H.R. 3103, as amended, without any intervening
action or debate.
The list that I have of the amendments would be: Nickles, relevant;
Jeffords, lifetime caps; Thomas, rural health; McCain, biological
medical devices; Gramm, relevant; Coats, medical volunteer liability
coverage; Domenici, mental health; Specter, public health; pecter,
public health; Specter, public health; Gregg, choice care; Helms, study
of access by HHS; Senator Brown has withdrawn his amendment; McConnell,
medical malpractice; Bond, administration simplification; Pressler,
CRNAS; D'Amato, fair tax treatment; Kassebaum, relevant; Dole,
relevant; Roth, relevant; Simpson, commission; Bennett relevant; Burns,
telemedicine; Boxer, ban HMO gag rules; Conrad, nurse practitioner,
nurse anesthetists, advance nurse practitioner; Feinstein, nonprofit
insurance; Graham-Baucus, Medicare fraud; Harkin, fraud and abuse;
Harkin, fraud and abuse; Kennedy, relevant; Pryor relevant; Wellstone,
two domestic violence; Simon is a sense-of-the-Senate resolution;
Dorgan, organ donations; Lieberman, MM data banks; Kennedy, nursing
care; Daschle, relevant; Boxer, biomed devices.
Mr. KENNEDY. Would the Senator add Wellstone, relevant, sense of the
Senate.
The PRESIDING OFFICER. Is there objection to the unanimous consent
request?
Without objection, it is so ordered.
Mrs. KASSEBAUM. Mr. President, I believe Senator Jeffords has been
waiting, and I believe he is next to be recognized.
Mr. JEFFORDS. Mr. President, I yield to the Senator from Arkansas.
Mr. PRYOR. Mr. President, if we could ask a question, Mr. President,
while the two distinguished managers are on the floor. It is 6:15; I
did not realize there were quite as many amendments.
Mrs. KASSEBAUM. Neither did we.
Mr. PRYOR. Are we planning to go on into the evening?
Mrs. KASSEBAUM. Yes, Mr. President, I say to the Senator from
Arkansas, I think it is the hope not only of the managers but also of
the minority leader and the majority leader that we finish tonight.
Mr. PRYOR. Good night, Mr. President, thank you.
Amendment No. 3679
(Purpose: To establish a minimum amount that may be applied as an
aggregate lifetime limit with respect to coverage under an employee
health benefit plan or a group health plan)
Mr. JEFFORDS. Mr. President, I have an amendment at the desk.
The PRESIDING OFFICER. The clerk will report.
The legislative clerk read as follows:
The Senator from Vermont [Mr. Jeffords] proposes an
amendment numbered 3679.
Mr. JEFFORDS. Mr. President, I ask unanimous consent reading of the
amendment be dispensed with.
The PRESIDING OFFICER. Without objection, it is so ordered.
At the end of section 103, add the following new
subsection:
(g) Limitation on Lifetime Aggregate Limits.--
(1) In general.--Except as provided in paragraph (2), an
employee health benefit plan or a health plan issuer offering
a group health plan may not impose an aggregate dollar
lifetime limit of less than $10,000,000 (such amount to be
adjusted for inflation in fiscal years subsequent to the
fiscal year in which this subsection becomes effective) with
respect to coverage under the plan.
(2) Small employers.--Paragraph (1) shall not apply to a
group health plan offered to or maintained for employees of a
single employer that employ
s 25 or fewer employees.
(3) Rule of construction.--Paragraph (1) shall not be
construed as prohibiting the application by an employee
health benefit plan or a health plan issuer offering a group
health plan of any limits, exclusions, or other forms of cost
containment mechanisms with respect to coverage under the
plan other than the aggregate limit permitted under paragraph
(1).
(4) Disclosure.--Any limits, exclusions, or other cost
containment mechanisms permitted under paragraph (3) shall be
disclosed as provided for in section 105(c).
(5) Application of subsection.--This subsection shall not
apply to a health maintenance organization that meets the
requirements of title XIV of the Public Health Service Act.
(6) Effective date.--This paragraph shall become effective
with respect to health plans on the date that i
s 2 years
after the date of enactment of this Act.
At the end of section 105, add the following new
subsection:
(c) Disclosure of Limits and Exclusions.--An employee
health benefit plan or a health plan issuer offering a group
health plan shall disclose, as part of its solicitation and
sales materials and in a form and manner that is conspicuous
and understandable to a reasonable individual, any limits,
exclusions, or cost containment mechanisms with respect to
coverage provided under the plan.
Section 3711 of title 31, United States Code, is amended by
adding at the end the following new subsections:
``(g)(1) If a nontax debt or claim owed to the United
States has been delinquent for a period of 180 days--
``(A) the head of the executive, judicial, or legislative
agency that administers the program that gave rise to the
debt or claim shall transfer the debt or claim to the
Secretary of the Treasury; and
``(B) upon such transfer the Secretary of the Treasury
shall take appropriate action to collect or terminate
collection actions on the debt or claim.
``(2) Paragraph (1) shall not apply--
``(A) to any debt or claim that--
``(i) is in litigation or forelosure;
``(ii) will be disposed of under an asset sales program
within 1 year after the date the debt or claim is first
delinquent, or a greater period of time if a delay would be
in the best interests of the United States, as determined by
the Secretary of the Treasury;
``(iii) has been referred to a private collection
contractor for collection for a period of time determined by
the Secretary of the Treasury;
``(iv) has been referred by, or with the consent of, the
Secretary of the Treasury to a debt collection center for a
period of time determined by the Secretary of the Treasury;
or
``(v) will be collected under internal offset, if such
offset is sufficient to collect the claim within 3 years
after the date the debt or claim is first delinquent; and
``(B) to any other specific class of debt or claim, as
determined by the Secretary of the Treasury at the request of
the head of an executive, judicial, or legislative agency or
otherwise.
``(3) For purposes of this section, the Secretary of the
Treasury may designate, and withdraw such designation of debt
collection centers operated by other Federal agencies. The
Secretary of the Treasury shall designate such centers on the
basis of their performance in collecting delinquent claims
owed to the Government.
``(4) At the discretion of the Secretary of the Treasury,
referral of a nontax claim may be made to--
``(A) any executive department or agency operating a debt
collection center for servicing, collection, compromise, or
suspension or termination of collection action;
[[Page
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``(B) a contractor operating under a contract for servicing
or collection action; or
``(C) the Department of Justice for litigation.
``(5) nontax claims referred or transferred under this
section shall be serviced, collected, or compromised, or
collection action thereon suspended or terminated, in
accordance with otherwise applicable statutory requirements
and authorities. Executive departments and agencies operating
debt collection centers may enter into agreements with the
Secretary of the Treasury to carry out the purposes of this
subsection. The Secretary of the Treasury shall--
``(A) maintain competition in carrying out this subsection;
``(B) maximize collections of delinquent debts by placing
delinquent debts quickly;
``(C) maintain a schedule of contractors and debt
collection centers eligible for referral or claims; and
``(D) refer delinquent debts to the person most appropriate
to collect the type or amount of claim involved.
``(6) Any agency operating a debt collection center to
which nontax claims are referred or transferred under this
subsection may charge a fee sufficient to cover the full cost
of implementing this subsection. The agency transferring or
referring the nontax claim shall be charged the fee, and the
agency charging the fee shall collect such fee by retaining
the amount of the fee from amounts collected pursuant to this
subsection. Agencies may agree to pay through a different
method, or to fund an activity from another account or from
revenue received from the procedure described under section
3720C of this title. Amounts charged under this subsection
concerning delinquent claims may be considered as costs
pursuant to section 3717(e) of this title.
``(7) Notwithstanding any other law concerning the
depositing and collection of Federal payments, including
section 3302(b) of this title, agencies collecting fees may
retain the fees from amounts collected. Any fee charged
pursuant to this subsection shall be deposited into an
account to be determined by the executive department or
agency operating the debt collection center charging the fee
(in this subsection referred to in this section as the
`Account'). Amounts deposited in the Account shall be
available until expended to cover costs associated with the
implementation and operation of Governmentwide debt
collection activities. Costs properly chargeable to the
Account include--
``(A) the costs of computer hardware and software, word
processing and telecommunications equipment, and other
equipment, supplies, and furniture;
``(B) personnel training and travel costs;
``(C) other personnel and administrative costs;
``(D) the costs of any contract for identification,
billing, or collection services; and
``(E) reasonable costs incurred by the Secretary of the
Treasury, including services and utilities provided by the
Secretary, and administration of the Account.
``(8) Not later than January 1, of each year, there shall
be deposited into the Treasury as miscellaneous receipts an
amount equal to the amount of unobligated balances remaining
in the Account at the close of business on September 30 of
the preceding year, minus any part of such balance that the
executive department or agency operating the debt collection
center determines is necessary to cover or defray the costs
under this subsection for the fiscal year in which the
deposit is made.
``(9) To carry out the purposes of this subsection, the
Secretary of the Treasury may prescribe such rules,
regulations, and procedures as the Secretary considers
necessary.
``(h)(1) The head of an executive, judicial, or legislative
agency acting under subsection (a)(1), (2), or (3) of this
section to collect a claim, compromise a claim, or terminate
collection action on a claim may obtain a consumer report (as
that term is defined in section 603 of the Fair Credit
Reporting Act (15 U.S.C. 1681a)) or comparable credit
information on any person who is liable for the claim.
``(2) The obtaining of a consumer report under this
subsection is deemed to be a circumstance or purpose
authorized or listed under section 604 of the Fair Credit
Reporting Act (15 U.S.C. 1681b).''.
Mr. JEFFORDS. Mr. President, I know that we have had a difficult day
today. We are having a difficult time trying to face the facts of life
that the bill we are amending is a very important one, one which I have
been an original cosponsor and one which part of the bill is mine. It
is something that I worked very hard on. I believe it is an excellent
job.
However, I also believe that it has a very serious flaw in it. Thus,
at the time the committee was meeting--and I want to point out that we
have already made an exception today--the Finance Committee came and
said, ``Hey, we have a bunch of amendments.'' Most of them have been
accepted. So we have already made several exceptions to the
nonamendment rule. I want to remind people of that.
Now, I submitted this amendment, which I have before this body, at
the committee. I am a member of the committee, ranking Republican on
the committee. At that time it was said, ``Hey, we want to get out of
here a unanimous bill. We may have problems.'' So I said, ``OK, I will
wait until the floor.'' So I come to the floor to offer an amendment,
which I think about everybody agrees ought to be on it, and they said,
``No. No amendments--except for the Finance Committee amendments.''
I understand that the ranking Republican and the chairman of the
committee are bound by their commitment to no amendments, but nobody
else is. Nobody else is in this body. So I hope Members would say he
deserves to be heard. He has told me I could raise this amendment on
the floor, and here it is.
Now we will talk about what the amendment is and why we are here. The
bill is one which provides, if a person is working for a business and
changing jobs, or whatever else, has a health problem, that they are
guaranteed an issuance of a policy or a continuance of a policy,
notwithstanding the fact that they are sick. That is very important.
This is an important breakthrough. That is why I supported the bill.
However, what we were not aware of at the time and I brought to the
committee's attention, but perhaps there was too little time to
consider it, is the fact that there is no requirement now under the
Federal law for any kind of a certain level of cap.
Now, what could happen to us is, OK, we require the insurance company
to take a sick person, but then the insurance company has the right to
change its benefits, or it can say, ``OK, we will lower the lifetime
cap. So when we take you on, as soon as we pay whatever level of funds
we reduce the limit to, you are gone, finished, you have no more
coverage.''
Well, this amendment would rectify that and say we have to put--as a
nationwide standard, with the exception, we admit it could cause some
problems with small businesses, so we exempt 25 and under. We say you
have to have $10 million of coverage. Why the $10 million? The $10
million lifetime cap is because the standard for the industry for many
years was a million dollars. But that wa
s 20 years ago. That million
dollars is worth about $100,000 now. So we say, let us go back to the
standard of 20 years ago and put on that cap.
I want to point out that when we do this, we are obviously going to
cause some costs. I will explain that later. But let us take a look at
who we are talking about when we are talking about those covered under
this provision. We are talking about those that are working for
businesses, as I say, that get sick. All of a sudden they have some
pretty big bills. Remember, some of the lifetime caps out there on
these insurance plans are $50,000. That is one day in a hospital
sometimes. So you go in there sick, and all of a sudden you have no
coverage. We are trying to correct that.
Now, let me point out to you, again, what we are talking about from a
national policy perspective. What happens now to that sick person? That
person is sick. They have been allowed to be covered and then chopped
off because they have reached the lifetime limit of, say, $50,000. What
happens? Under the law right now, in order for them to qualify for
Medicaid, they cannot have resources beyond a certain level. So what we
are talking about--and I will give some examples in a minute--is middle
income people, or even higher income people, who suddenly are placed in
Major Actions:
All articles in Senate section
HEALTH INSURANCE REFORM ACT
(Senate - April 18, 1996)
Text of this article available as:
TXT
PDF
[Pages
S3578-S3609]
HEALTH INSURANCE REFORM ACT
The Senate continued with the consideration of the bill.
Mr. HATCH. Mr. President, I understand the pending business is the
Brown amendment. It is my understanding that he will make his arguments
and then withdraw the amendment; am I incorrect on that?
Mr. BROWN. Mr. President, the Senator is correct.
Mr. HATCH. I am correct.
Mr. SIMPSON. I yield the floor.
Mrs. KASSEBAUM addressed the Chair.
The PRESIDING OFFICER. The Senator from Kansas.
Mrs. KASSEBAUM. Mr. President, prior to returning to Senator Brown's
amendment, if I may propose a unanimous consent request on behalf of
Senator Dole.
Let me yield and say, evidently, this has not been cleared fully on
both sides, so we will return to Senator Brown's amendment.
Mr. KENNEDY addressed the Chair.
The PRESIDING OFFICER. The Senator from Massachusetts.
Mr. KENNEDY. Mr. President, we want to try and accommodate the
greatest number of Members. We have several Senators who are here with
their amendments ready to address them and ready to act on them. We
believe that if we are able to do that, we can afford, whoever wants to
speak, as much time as they want to speak on other kind of matters. But
we are here to deal with this legislation.
We have been urging Senators to come over here and offer their
amendments. They are here now, and we can either do this later--I plan
to stay here until it is done, but the greater numbers of Members would
like to have at least some finality to the legislation. I believe we
can do it. It is 6 o'clock now and we had the chance for general
discussion during the course of the day. Many of our colleagues have
come over here to address these issues and to vote on them, and they
have been waiting as well.
I hope we will urge our colleagues who are not going to talk on these
matter--we know they can; people can get up and address any other
matters--but out of consideration of other Members, please try and see
if we cannot focus on the matter that is at hand, and that is the
Kassebaum-Kennedy bill, which is of enormous importance to many
American families.
I see other Members here, and I am sure they will do what they have
to do, but we are trying to conclude this and then to let others speak
so that at least others will not be here tomorrow. We are going to end
up being here tomorrow as sure as I am standing here unless we are able
to make progress. That is fine with me, if that is what it is. But with
some cooperation of the Members, we have a very good chance of
finishing this. Otherwise, Members ought to understand we are going to
be here late tonight voting and end up starting the votes later this
evening and tomorrow.
We are just about to ask for the final list so that we can agree with
that. But in the meantime, we have the Senators who are here who are
prepared to move ahead. Senator Brown is here, and Senator Jeffords was
here just a few moments ago to deal with an extremely important measure
and has been here now for an hour and a half trying to gain the floor.
Mr. CHAFEE addressed the Chair.
The PRESIDING OFFICER. The Senator from Rhode Island.
Amendment No. 3678
Mr. CHAFEE. Mr. President, I am going to address the amendment that
is before us, the Brown amendment,
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but I say to the managers of the bill, I join with them in their
enthusiasm to finish it up. I do not see why we do not seek time
agreements, in case we get off on another Social Security argument,
whatever it might be. But that is up to the managers.
Mr. President, I have a statement that I wish to make that deals with
the subject Senator Brown has been addressing, and Senator Pryor,
likewise, and which I joined in the past.
All I can say, Mr. President, is I just wish we would address this
matter, both in the committee, and I understand Senator Brown has been
trying to achieve that, but also on the floor of the Senate. We have
had one vote. It was a one-vote margin difference. Perhaps people's
minds have been changed since then. Nonetheless, I support the efforts
of Senators Brown and Pryor.
Congress and the administration made a simple--but costly--error in
drafting the Uruguay Round Agreements Act of 1994. That inadvertent
error is costing consumers, State governments, and the Federal
Government millions of dollars, while providing an unintended windfall
to a handful of drug companies. I don't believe we should let that
error stand.
What happened? The facts of the case are straightforward. Back in
1994, Congress was drafting omnibus trade legislation designed to bring
the United States into conformity with the important new global trade
agreement known as the GATT. As part of our commitment to fulfill our
new GATT obligations, the United States pledged to increase patent
protection for future patents. In addition, the United States also
pledged to boot protection for patents already in existence--a key
point that goes to the heart of the issue before us today.
Accordingly, the trade bill that Congress wrote, boosted existing
patent terms by up to 3 years, giving current patentholders a valuable
extension on their patents. To be fair to generic manufacturers who had
been preparing to go to market on the old patent expiration date,
Congress fashioned a compromise: generic companies who had made a
substantial investment in preparing for market would be allowed to
proceed as planned, but would have to pay equitable remuneration--that
is, a royalty--during the extended term. This carefully balanced
compromise became law as part of the 1994 Uruguay Round Agreements Act.
However, in drafting this 653-page bill, Congress and the
administration made a small--but very costly--mistake. A simple
conforming amendment to an FDA statute was omitted. Yet the impact was
enormous: the omission singlehandedly prevented the generic drug
industry from going to market during the extended term. The result is
that a handful of brand-name drug companies have received a staggering
$4.3 billion windfall, at the expense of consumers, that Congress,
United States trade officials, and even the brand-name companies
themselves, neither intended nor expected.
The cost to consumers is enormous. The drugs that are covered by the
windfall are widely prescribed, and are used for everyday ailments that
affect millions of Americans. Keeping the generic version off the shelf
for up to 3 years means that Americans--including and especially older
Americans--are paying far more than was ever intended for their
medications.
Not only are consumers paying for this error, but so are State
governments and the Federal Government--in the form of higher
reimbursements for prescription drugs for the elderly, veterans, and
low-income Americans.
This is not right. We made a mistake. We should fix it. In this case,
the solution is obvious and easy: simply enact the missing conforming
amendment. That is exactly what Senator Pryor, Senator Brown, and I--
and many others--have been working to do.
Let me take a moment to put to rest a few red herrings. Our amendment
would not affect our GATT commitments or our efforts to promote patent
protection worldwide. Our amendment would not upset the balance in U.S.
drug patent laws, nor impede research and development of new drugs. If
any of these misrepresentations were true, we simply would not be
sponsoring this amendment. It is that simple.
It is time to correct this injustice--an injustice to consumers in
our Nation, an injustice to the Federal and State governemnts that are
paying extra and needless sums into Medicaid and Medicare and an
injustice to the generic manfuactures who made the investment in
reliance on the law as it was supposed to be.
It is time we fixed this unfairness.
Mr. BROWN addressed the Chair.
The PRESIDING OFFICER. The Senator from Colorado.
Mr. BROWN. Mr. President, it is my intention to try and expedite the
deliberations here tonight. In that regard, my thought would be to make
a statement, hopefully, shedding some light on this amendment. I know
Senator Pryor has worked so hard in this area. He wants to make a
statement, and then it will be my intention to withdraw the amendment.
I withdraw it reluctantly, because I think it needs to be considered
and dealt with as soon as possible. But I am persuaded that we will not
have some votes that we need to adopt it if we insist on attaching it
to this measure.
Having said that, let me simply outline the issue that is before us.
It is well described in a New York Times editorial of February 28. I
will quote a portion of that, because I think it is quite succinct and
to the point:
Congress finds it hard to remedy the simplest mistakes when
powerful corporate interests are at stake. In 1974, when
Congress approved a new trade pact with more than 100 other
countries, it unintentionally handed pharmaceutical drug
companies windfall profits. More than a year later, Congress
has yet to correct the error. The trade pact obliged the
United States to change its patent laws to conform with those
of the rest of the world. They had the effect of extending
some American patents for up to 20 months.
Mr. President, those are the opening lines of the editorial.
The simple fact is this. We had people research drugs and put the
investment into it and receive the full length of their exclusivity
that this Congress has supported and put into statute. The GATT
agreement gave a serendipitous extension to that. In other words, under
the GATT agreement and the conforming changes of law that this Congress
adopted, people who had invested in and relied on our laws got a longer
period of patent protection than they have ever planned for. But the
GATT agreement also had a provision, an exception for that extended
protection when someone had made a substantial investment in reliance
on our laws in providing competitive products.
In other words, what we propose in this amendment is nothing more
than absolutely the process that was contemplated and planned for under
GATT. And, I might mention, Mr. President, many countries have done
exactly the same thing. As a matter of fact, this country has done a
similar kind of thing with other products.
What this amendment simply suggests is that where we have given
someone an unexpected, unplanned extension in their patent protection,
that we make an exception for that extension where someone else has
made a substantial investment in producing and providing a competitive
product--in this case, a generic drug.
If we do not adopt this, we will have said to people who produce
products in reliance to our laws, ``After you have made the investment,
after you have put the money into it, after you have made under the
terms of what will be the statute a substantial investment on reliance
of our laws, we are going to pull the rug out from under you and change
the rules retroactively.''
Mr. President, that is not right. That is not honest. That is not
fair. That is not a good way to do business. We have talked about the
horrible damage--and it is enormous damage--done to consumers by this
unjustified quirk of the ratification document.
But I want to focus the Members' attention on what is unfair to
business. I believe it is unfair to business to say, ``Look, here are
the laws. Here is how long you have for patent protection. And by the
way, we're going to change the law retroactively, and even though you
made substantial investment in producing a competing product, we're not
going to let you compete.'' Now, that is what has happened.
If we do not pass this bill as it is in committee or the amendment as
we offer it on the floor, what you are going to do is not only impact
consumers to the tune of billions of dollars, but you are going to say
to businesses that have relied on the law, that it is tough luck, you
should not have believed us. You should not have relied on what we did.
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Why is it important to pass it on this bill or pass it quickly? I
think that is a fair question. I must tell the Members, I am
disappointed I have not been able to persuade all the other people who
support the concept that it is important to pass it on this measure.
It is important because the impact of this, if it goes uncorrected,
could be over $2 billion, according to the Washington Post. It is
important because this costs consumers up to $5 million a day while we
delay. Mr. President, let me repeat that because I am not sure people
have focused on the impact of delay. It costs up to $5 million a day to
consumers in this country if we do not act. Some estimates indicated it
may have cost consumers already $700 million.
Mr. President, this is not anything other than fairness. This is not
anything other than saying the patent protection that was planned in
the law ought to be delivered as it was planned in the law.
Mr. President, I will not prolong the argument. I know the
distinguished Senator from Arkansas has worked on this and has some
remarks, but I ask unanimous consent to have printed in the Record the
editorial from the Washington Post, a letter from The Seniors
Coalition, a letter from the National Committee to Preserve Social
Security and Medicare, a letter from the National Women's Health
Network, a letter from the Citizen Action, a letter from the Gray
Panthers, a letter from the Generic Drug Equity Coalition, a letter
from the Consumer Federation of America, and a letter from the Citizen
Advocacy Center, all pertaining to this subject and advocating the
position of this amendment. I ask unanimous consent that all of these
letters be printed in the Record.
There being no objection, the material was ordered to be printed in
the Record, as follows:
[From the Washington Post, Dec. 4, 1995]
The Zantac Windfall
All for lack of a technical conforming clause in a trade
bill, full patent protection for a drug called Zantac will
run 19 months beyond its original expiration date. Zantac,
used to treat ulcers, is the world's most widely prescribed
drug, and its sales in this country run to more than $2
billion a year. The patent extension postpones the date at
which generic products can begin to compete with it and pull
the price down. That provides a great windfall to Zantac's
maker, Glaxo Wellcome Inc.
It's a case study in legislation and high-powered lobbying.
When Congress enacted the big Uruguay Round trade bill a year
ago, it changes the terms of American patents to a new
worldwide standard. The effect was to lengthen existing
patents, usually by a year or two. But Congress had heard
from companies that were counting on the expiration of
competitors' patents. It responded by writing into the trade
bill a transitional provision. Any company that had already
invested in facilities to manufacture a knock-off, it said,
could pay a royalty to the patent-holder and go into
production on the patent's original expiration date.
But Congress neglected to add a clause amending a crucial
paragraph in the drug laws. The result is that the
transitional clause now applies to every industry but drugs.
That set off a huge lobbying and public relations war with
the generic manufacturers enlisting the support of consumers'
organizations and Glaxo Wellcome invoking the sacred
inviolability of an American patent.
Mickey Kantor, the president's trade representative, who
managed the trade bill for the administration, says that the
omission was an error, pure and simple. But it has created a
rich benefit for one company in particular. A small band of
senators led by David Pryor (D-Ark.) has been trying to right
this by enacting the missing clause, but so far it hasn't got
far. Glaxo Wellcome and the other defenders of drug patents
are winning. Other drugs are also involved, incidentally,
although Zantac is by far the most important in financial
terms.
Drug prices are a particularly sensitive area of health
economics because Medicare does not, in most cases, cover
drugs. The money spent on Zantac is only a small fraction of
the $80 billion a year that Americans spend on all
prescription drugs. Especially for the elderly, the cost of
drugs can be a terrifying burden. That makes it doubly
difficult to understand why the Senate refuses to do anything
about a windfall that, as far as the administration is
concerned, is based on nothing more than an error of
omission.
____
The Seniors Coalition, Protecting the Future You Have
Earned,
Washington, DC, April 17, 1996.
Hon. Hank Brown,
U.S. Senate,
Washington, DC.
Dear Senator Brown: The Seniors Coalition urges you to
support legislation offered by Senator Brown in the Judiciary
Committee to correct an egregious mistake made in the
implementation of the GATT treaty. This mistake has cost the
consumers, and primarily the elderly, of this nation millions
of dollars. This loophole has allowed a few drug companies to
take advantage of a situation that was unintended and to line
their pockets with unearned money from American citizens.
I ask you to read the article ``What you don't know about
brand name drugs is costing you millions'' (pp. 4-5) in our
latest edition of The Senior Class which outlines the problem
and then to vote to support the correction. Your support for
this effort is critical to the financial well being of
thousands of senior citizens.
I submitted testimony to the Senate Judiciary Committee on
this issue when the committee held hearings on this issue in
February. At that time I called for the Congress to correct
the mistake and reject the efforts of brand name companies to
thwart the correction. The so-called ``compromise'' that has
been drafted by Glaxo and may be offered by a member of the
Judiciary Committee is nothing more than a thinly veiled
effort to codify the mistake that was made. A careful reading
of the language will find that it does even more damage to
the ability of consumers, especially seniors, to find safe
and affordable pharmaceutical products in the marketplace.
Again, please support Senator Brown and his effort to
correct this mistake. Now is the time for the Congress to do
something for the American public.
Sincerely,
Thair Phillips,
CEO.
____
National Committee to Preserve Social Security and
Medicare,
Washington, DC, March 27, 1996.
Honorable Hank Brown,
Senate Judiciary Committee, U.S. Senate, Hart Senate Office
Building, Washington, DC.
Dear Senator Brown: We understand the Senate Judiciary
Committee plans to mark-up legislation addressing and General
Agreement of Tariff and Trade (GATT) patent pharmaceutical
issue tomorrow. We urge you to support legislation (
S. 1277)
sponsored by Senators Chafee, Pryor, and Brown to correct an
oversight in the GATT implementing legislation that will save
consumers and taxpayers billions of dollars in prescription
drug costs. We urge you to oppose any alternative measures
that would maintain this costly and unintended loophole under
GATT.
As you know, because of an oversight in patent changes
approved under the GATT treaty implementing legislation, the
availability of lower-priced generic versions of more than 25
widely-prescribed drugs must be delayed for up to an
additional three years. As a result, seniors and other
consumers will wait longer for access to less-costly generic
drugs.
Every day Congress delays in correcting this oversight
costs consumers $5 million dollars in additional prescription
drug costs. In fact, the delay has already cost consumers an
additional $500 million dollars. The biggest losers among
U.S. consumers are senior citizens, as older Americans
consume about one-third of the prescription drugs sold in the
United States. On fixed incomes and with no pharmaceutical
coverage under Medicare, three out of four seniors cite
prescription drugs as their largest out-of-pocket expense.
On behalf of our millions of members and supporters, the
National Committee to Preserve Social Security and Medicare
urges you to support and report out of Committee the Chafee/
Pryor/Brown generic drug legislation.
Sincerely,
Martha A. McSteen,
President.
____
National Women's Health Network,
Washington, DC, March 21, 1996.
Dear Judiciary Committee Member: In this time of federal,
state and local budget-cutting, threats to Medicare and
Medicaid, and continually rising medical costs, health care
savings are more important than ever to the American public.
Given the seriousness of skyrocketing health care costs, it
is unconscionable that Congress has so far failed to address
an error that needlessly increases the cost of health care
for millions of Americans, and unnecessarily boosts costs to
the federal government, as well.
More than a year ago, Congress discovered that the
legislation implementing the GATT Treaty contained an
unintended loophole for some pharmaceutical drug companies.
An error of omission granted the manufacturers of brand-name
drugs treatment unique in all of American industry.
By failing to include generic drugs in its rules concerning
transition to new patent terms under the GATT Treaty,
Congress has done a disservice to women's health,
specifically, and to consumers and taxpayers, generally.
While the mistake was unintentional, the consequences are
grave. Each day that passes without Congressional action to
correct this error costs millions of dollars; the total cost
is expected to exceed $2 billion.
The beneficiaries of the current situation are the handful
of giant pharmaceutical corporations that will enjoy windfall
profits for three additional years. Their glee at this
unanticipated windfall is evidenced by the fierceness with
which the lobbyists for these companies are fighting to
preserve their protected status.
The exemption of drug companies from the GATT transition
rules was a mistake. It
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would be intolerable to compound this mistake by failing to
correct it. Please support the solution proposed by Senators
Brown, Chafee and Pryor.
Sincerely,
Cynthia Pearson,
Program Director.
____
Citizen Action,
Washington, DC, March 26, 1996.
Dear Judiciary Committee Member: On behalf of Citizen
Action and our three million members, I would like to ask
your support for a proposal which will shortly be offered by
Senators Brown, Chafee and Pryor. This proposal would undo a
legislative error which, if not corrected, will cost U.S.
consumers hundreds of millions of dollars in unnecessary
prescription drug costs.
When Congress passed new patent terms under the GATT
Treaty, it failed to include prescription drugs under its
transition rules. GATT extends patent terms of U.S. products
from 17 to 20 years. Because many manufacturers had already
invested millions of dollars in competing products in
expectation of the 17-year limit, Congress adopted transition
rules to allow those companies to introduce generic
alternatives on the date that the 17-year patent would have
expired.
The omission of prescription drugs in the transition rule
means that makers of lower-cost generic drugs will be unable
to bring their products to market until the full 20-year term
of patent protection has expired. This loophole will allow a
few large pharmaceutical companies to reap more than $2
billion in windfall profits. Because lower-cost generics will
be kept off the market, consumers will be forced to pay
higher prices for more than a dozen drugs, including big-
sellers Zantac and Capoten.
Without a correction, taxpayer-funded federal and state
health programs, as well as individual purchasers of
prescription drugs, will be forced to pay higher than
necessary costs. The Department of Veterans Affairs estimates
that it alone will spend $211 million in additional costs
over the next three years.
The Judiciary Committee has an opportunity to correct a
provision that will have grave consequences for consumers.
Again, Citizen Action urges that you act now to remove this
unique loophole which rewards certain large pharmaceutical
companies at the expense of taxpayers and consumers.
Sincerely,
Cathy L. Hurwit,
Legislative Director.
____
Gray Panthers Project Fund,
Age and Youth in Action,
Washington, DC, February 29, 1996.
Hon. Hank Brown,
U.S. Senate, Senate Hart Office Building, Washington, DC.
Dear Senator Brown: Attached please find copies of
Tuesday's ABC World News Tonight news story focusing on the
negative impact that the GATT loophole will have on American
consumers like Eleanor Black and her mother Sally. In
addition, attached are copies of the testimony submitted to
the Judiciary Committee from Ms. Black and myself, as well as
Wednesday's New York Times editorial on the issue.
With the Senate Judiciary Committee hearings on GATT now
behind us, Senators Chafee, Brown, and Pryor have vowed to
introduce legislation within the next few weeks that will
correct this loophole and bring relief to millions of
consumers like the Blacks who rely on the savings that
generic pharmaceuticals offer.
In December, an effort to bring the Chafee-Brown-Pryor
amendment to the Senate floor was narrowly defeated by one
vote. When the Chafee-Brown-Pryor amendment is introduced in
the near future, I urge you and your colleagues to do the
right thing and correct this Congressional oversight and save
American taxpayers from a costly mistake.
Please support the Chafee-Brown-Pryor amendment and close
the GATT loophole.
Sincerely,
Dixie D. Horning,
Executive Director.
____
Generic Drug Equity Coalition,
Washington, DC, March 29, 1996.
To: Members, United States Senate
FR: Generic Drug Equity Coalition
RE: No More Delays, Pass Chafee/Pryor/Brown
When the Senate adjourns today for the Spring recess,
consumers and taxpayers will have paid $580 million more for
prescription drugs than they should have because of a mistake
Congress and the administration made in December 1994, $580
million. Everyday that passes costs consumers and taxpayers
$5 million more.
By the time you return in two weeks, the cost to consumers
and taxpayers will have reached $650 million.
Yet, despite written commitments to markup a bill to close
the GATT loophole in the Senate Judiciary Committee in March,
nothing has happened.
A few companies continue to reap unintended windfall
profits at the expense of American consumers, taxpayers and
generic drug manufacturers.
While you are away observing the Easter and Passover
Holidays be sure to think about Americans like 69-year old
Eleanor Black and her 89-year old mother Sally who spend $339
a month, one quarter of their monthly income, for Zantac
because of the GATT loophole.
The Generic Drug Equity Coalition urges you to support the
Chafee/Pryor/Brown proposal and close the GATT loophole.
The Judiciary Committee leadership has missed its own,
self-imposed deadline. It is time for a vote on the Senate
floor.
____
Consumer Federation of America,
Washington, DC, March 27, 1996.
Dear Senate Judiciary Committee Member: The Senate
Judiciary Committee plans this week to examine the loophole
in the General Agreement on Tariffs and Trade (GATT) which
exempts the pharmaceutical industry from patent transition
terms. We urge you at this time to support the efforts of
Senators Brown, Chafee, and Pryor to redress this unintended
and potentially costly, effect of the GATT Treaty.
As you know, an error of omission in the legislative
language implementing the GATT Treaty has exempted the
pharmaceutical industry from the patent transition terms. As
a result, the pharmaceutical drug industry--alone among all
industries--enjoys a 20-year patent term, and generic
manufacturers are unable to market long-planned products.
The unintended effects of the patent extension include
diminished market competition, an undeserved windfall to pre-
GATT patent holders, and further inflated costs to millions
of Americans. The Congressional Budget Office (CBO) has
estimated that this simple mistake will cost consumers and
taxpayers as much as $2 billion as drug companies reap
windfall profits in the absence of competition. This windfall
was not intended by Congress, nor envisioned in the GATT
treaty itself.
Senators, Brown, Chafee, and Pryor have proposed closing
the loophole, thereby protecting consumers' health and
taxpayers' wallets. This solution would not convey special
status on the generic drug industry; instead, this amendment
provides for equal treatment, and would compel brand-name
drug manufacturers to live under the same rules as every
other American industry.
In the interest of consumers, taxpayers and fairness, we
urge you to support the efforts Senators, Brown, Chafee, and
Pryor have made to redress this costly error.
Sincerely,
Mern Horan,
Legislative Representative,
Consumer Federation of America.
____
Citizen Advocacy Center,
Elmhurst, IL, March 25, 1996.
Dear Judiciary Committee Member: An oversight in the
legislation implementing the GATT Treaty has granted the
pharmaceutical industry a privileged status at the expense of
consumers and taxpayers. More than a year after the
implementing legislation was adopted, Congress has yet to
correct this windfall benefit. Now, Senators Brown, Chafee,
and Pryor have developed a solution that is fair and
reasonable and deserving of your support.
GATT is premised on opening world markets to competition.
Under our implementing legislation, however, manufacturers of
generic drugs, alone among all industries in the United
States, are prohibited from bringing products to market until
the full twenty-year patent term has expired for brand-name
drugs. This anticompetitive windfall is estimated to be worth
two billion dollars in profits. Health care consumers are
thus forced to pay higher costs, as will taxpayers, who fund
drug purchases through a number of government programs. The
City of Elmhurst has a high percentage of Senior Citizens, a
group that is disproportionately harmed by high health care
costs, and the adverse effects of the as yet uncorrected
legislation.
Congress did not intend to bestow this windfall on drug
companies when it adopted the transitional rules for GATT. We
urge you, in the interest of consumers, seniors, and
taxpayers, to correct this oversight and to not be lulled
into inaction by the multi-million dollar lobbying blitz of
the companies enjoying this windfall daily.
Senators Brown, Chafee and Pryor have proposed a simple
solution that would protect the balance of interest between
generic and brand-name manufacturers envisioned in the Hatch-
Waxman Act of 1984. It's time to support their proposal.
Very truly yours,
Theresa Amato,
Executive Director,
Citizen Advocacy Center.
Mr. PRYOR addressed the Chair.
The PRESIDING OFFICER. The Senator from Arkansas.
Mr. PRYOR. Mr. President, my apologies to the Senator from Colorado.
Has the Senator from Colorado finished his statement?
Mr. BROWN. Yes.
Mr. PRYOR. Mr. President, I will take but a few moments of the
Senate's time this evening. We need to move on. The distinguished
managers have requested that we move to final resolution of this very
important measure. But I would like to take, Mr. President, in opening,
a few moments to discuss our particular concerns over this uncorrected
error in our laws which has led to unnecessarily high drug prices.
I would like to quote from my good colleague who is departing the
Senate and is a great friend, Senator Paul Simon of Illinois. Senator
Simon recently spoke on the issue of correcting
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this problem in the GATT treaty. I quote from Senator Simon when he
said, ``This is a classic example of special interests versus the
public interest.''
Mr. President, that is what this debate, I am afraid, has boiled down
to. I know my friend from Colorado, Senator Brown, in his eloquent
statement has placed into the Record a recent editorial of December 4,
1995 from the Washington Post. I will read a paragraph from that
editorial:
All for lack of a technical conforming clause in a trade
bill, full patent protection for a drug called Zantac will
run 19 months beyond its original expiration date. Zantac,
used to treat ulcers, is the world's most widely prescribed
drug, and its sales in this country run to more than $2
billion a year.
I continue quoting from the Washington Post editorial:
The patent extension postpones the date at which generic
products can begin to compete with it and pull the price
down. That provides a great windfall to Zantac's maker, Glaxo
Wellcome, Inc.
That is the beginning paragraph, Mr. President, of the Washington
Post editorial. To conclude from that editorial, let me read:
That makes it doubly difficult to understand why the Senate
refuses to do anything about a windfall that, as far as the
administration is concerned, is based on nothing more than an
error of omission.
Well, once again, this issue is with us. We failed by one vote back
on December 7 to rectify this mistake. Since that time, a few companies
like Glaxo Wellcome have earned more than $600 million in extra
revenues because of a congressional error. It also means that the
Veterans Administration, the Medicaid programs, the consumers of
America, and especially the elderly of America are having to pay double
for Zantac than what they would be paying had we allowed a generic to
come into the marketplace and compete.
This is not fair, Mr. President. We know that this is not fair. The
Judiciary Committee this morning had scheduled a markup, one which has
already been delayed from last month. They continue to promise that
they are going to mark up
S. 1277, the measure offered by Senator Brown
and Senator Chafee and myself to correct this mistake in the GATT
treaty.
But, once again, this morning an unnamed Senator objected to the
Senate Judiciary Committee marking up this measure, and, once again, it
means more and more windfall profits for undeserving companies at the
expense of consumers. These delays are completely unacceptable and
unwarranted. The American public simply cannot abide further delays on
behalf of special interests.
What is at stake? Back on November 27, 1995, an editorial in the Des
Moines Register stated that:
A month's supply of Zantac ordinarily sells for around
$115; the generic price--meaning the same drug without the
Zantac label--would be around $35, the generic makers
contend.
Mr. President, I ask unanimous consent that a copy of that Des Moines
Register editorial be printed in the Record.
There being no objection, the editorial was ordered to be printed in
the Record, as follows:
[From the Des Moines Register, Nov. 27, 1995]
A Costly Oversight
fine print in gatt law could cost zantac users millions
The nation's prescription drug makers are at war again,
with a $1 billion-plus purse going to the winner. If the
brand-name drug manufacturers win, the losers will include
the millions of Americans who suffer from ulcers or
heartburn, and take the drug Zantac regularly to combat the
problem. It's going to cost each of them about $1,600.
Zantac is made by GlaxoWellcome, the biggest in the
business.
Here's what started the current war:
When a new prescription drug hits the market, generic drug
manufacturers await the patent expiration so they can enter
the market with the same drug. They offer it for sale without
the brand name, usually at a fraction of the brand-name
price.
The new international GATT treaty signed by the United
States and 122 other countries sets the life of a patent at
20 years from the date of application. Former U.S. law
provided patent protection for pharmaceuticals for 17 years
from the date of approval. Because the difference could have
a significant impact on the number of years a firm could
market its patented drug without competition. Congress made
special provisions for drugs under patent at the time GATT
was approved last summer.
But when the legal beagles got done reading all the fine
print, it turned out that Zantac was granted a 19-month
extension of its patent life--and it is such a hugely popular
drug that that translates into a multimillion-dollar
windfall.
Generic drug makers call the windfall a congressional
oversight, and estimate the difference is worth $2.2 billion
to Glaxo, because the generics can't enter the market for 19
more months. Glaxo counters that Congress made no mistake,
that the extension was part of the compromise with generics.
It won't wash. Nothing in the GATT treaty was intended to
further enrich the happy handful of brand-name drug makers
who hold lucrative patents--or to personalize the users of
the drugs.
A month's supply of Zantac ordinarily sells for around
$115; the generic price--meaning the same drug without the
Zantac label--would be around $35, the generic makers
contend. Unless Congress changes the wording of the law
regarding transition to GATT provisions, Zantac users will
pay the difference for 19 months longer.
Some generic drug manufacturers had already spent a bundle
preparing to enter the market before the GATT treaty took
effect. They lose. So do taxpayers, who pay for Medicaid
prescriptions. The Generic Drug Equity Coalition estimates
that the higher costs of Zantac and some other drugs affected
by the mistake (such as Capoten, for high blood pressure)
will cost Iowa Medicaid $3.5 million. Further, say the
generic drug makers, it will tack another $1.2 million onto
the cost of health-insurance premiums for Iowa state
employees.
Glaxo's political action committee has doubled its
contributions to Congress in recent months. Glaxo wants the
mistake to stay in the law. Generic drug manufacturers want
it out.
So should ulcer sufferers. So should taxpayers. So should
Congress.
Mr. PRYOR. Mr. President, finally, let me say we all know what this
issue is about. We have debated this issue to some extent on the floor
of the Senate and to a great extent in the Judiciary Committee. We
heard our U.S. Trade Representative, Ambassador Kantor conclusively
explain the situation, and I quote:
The provision was written neutrally because it was intended
to apply to all types of patentable subject matter, including
pharmaceutical products. Conforming amendments should have
been made to the Federal Food, Drug and Cosmetic Act and
section 271 of the U.S. Patent Act, but were inadvertently
overlooked.
One other quote from Ambassador Kantor:
We intended to apply this grandfather provision to the
pharmaceutical area.
S. 1277 would result in a level of
protection that is consistent with our original intent.
Mr. President, let me say, Senator Brown, Senator Chafee and myself
have tried to proceed in good faith. There are Members on each side of
the aisle that have stated their concern about, and in some cases their
objection to, certain language that we had in this legislation. We have
attempted to meet with them. We have attempted to compromise. We have
certainly gone to the negotiating table and attempted to bargain in
good faith and see what their concerns are.
Truly, Mr. President, I believe that we now have come together and
crafted an amendment that is acceptable to all those concerned with
doing what is right for consumers, businesses which have relied upon
the law in good faith and for our compliance with a very important
treaty. The amendment represents the simplest and best means for us to
correct the egregious flaw that persists today because of
unconscionable delays and the efforts of special interests.
Mr. President, I want to say in conclusion that I have thoroughly
enjoyed working with Senator Brown of Colorado and Senator Chafee of
Rhode Island, my colleagues on the other side of the aisle. I hope we
can bring this matter to a resolution in the very near future.
The PRESIDING OFFICER (Mr. Gorton). The Senator from Colorado.
Mr. BROWN. Mr. President, the vote on this measure was close, as has
been noted. Since that time, I believe we have persuaded others to join
us in advocating this amendment. The amendment has been compromised to
the point that specifically we have spelled out in the compromise
version that is before the Senate right now a very clear, bright-line
test of what substantial investment is. It is easy and clear to work
with. I think we have addressed the problems. I am confident we have
the votes.
However, because of the urgency of the particular underlying measure
that is here, some Members whose votes we need and count on are unable
to support this amendment because they fear
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it would bring controversy to the bill. It is, therefore, necessary for
me to reluctantly withdraw this measure.
I must mention, Mr. President, it does seem to me this is the
appropriate kind of thing that ought to be considered on a prompt
basis. Literally, to fail to act costs consumers $5 million or more a
day, and literally if we fail to act very promptly, the issue becomes
moot because the time simply runs out. I believe in fairness to
companies that have reinvested, and, in fairness to consumers, we
should and must act quickly.
I simply want to serve notice that we will be looking for other
vehicles to offer on this floor in a rather prompt fashion.
With that, I reluctantly withdraw the amendment.
The PRESIDING OFFICER. The Senator has the right to withdraw the
amendment.
So the amendment (No. 3678) is withdrawn.
Mrs. KASSEBAUM. Mr. President, I very much appreciate the sponsors of
the amendment withdrawing it. Senator Brown and Senator Pryor are very
persuasive in their arguments, as Senator Chafee was as well. I am
sympathetic to the purpose of the amendment.
As was noted by the sponsors, it is controversial. For that reason,
we would have to oppose it on the health insurance reform bill. I
appreciate the thoughtfulness in their withdrawal.
Unanimous-Consent Agreement
Mrs. KASSEBAUM. Mr. President, I put forward on behalf of the
majority leader a unanimous-consent agreement.
I ask unanimous consent during the remainder of the Senate's
consideration of
S. 1028, the following amendments be the only first-
degree amendments in order, that they may be subject to relevant
second-degree amendments, and following the disposition of the listed
amendments and the committee substitute, the bill be advanced to third
reading, and the Senate then proceed to the House companion bill, that
all after the enacting bill be stricken, the text of the Senate bill be
inserted, the bill be advanced to third reading and the Senate proceed
to vote on passage of
H.R. 3103, as amended, without any intervening
action or debate.
The list that I have of the amendments would be: Nickles, relevant;
Jeffords, lifetime caps; Thomas, rural health; McCain, biological
medical devices; Gramm, relevant; Coats, medical volunteer liability
coverage; Domenici, mental health; Specter, public health; pecter,
public health; Specter, public health; Gregg, choice care; Helms, study
of access by HHS; Senator Brown has withdrawn his amendment; McConnell,
medical malpractice; Bond, administration simplification; Pressler,
CRNAS; D'Amato, fair tax treatment; Kassebaum, relevant; Dole,
relevant; Roth, relevant; Simpson, commission; Bennett relevant; Burns,
telemedicine; Boxer, ban HMO gag rules; Conrad, nurse practitioner,
nurse anesthetists, advance nurse practitioner; Feinstein, nonprofit
insurance; Graham-Baucus, Medicare fraud; Harkin, fraud and abuse;
Harkin, fraud and abuse; Kennedy, relevant; Pryor relevant; Wellstone,
two domestic violence; Simon is a sense-of-the-Senate resolution;
Dorgan, organ donations; Lieberman, MM data banks; Kennedy, nursing
care; Daschle, relevant; Boxer, biomed devices.
Mr. KENNEDY. Would the Senator add Wellstone, relevant, sense of the
Senate.
The PRESIDING OFFICER. Is there objection to the unanimous consent
request?
Without objection, it is so ordered.
Mrs. KASSEBAUM. Mr. President, I believe Senator Jeffords has been
waiting, and I believe he is next to be recognized.
Mr. JEFFORDS. Mr. President, I yield to the Senator from Arkansas.
Mr. PRYOR. Mr. President, if we could ask a question, Mr. President,
while the two distinguished managers are on the floor. It is 6:15; I
did not realize there were quite as many amendments.
Mrs. KASSEBAUM. Neither did we.
Mr. PRYOR. Are we planning to go on into the evening?
Mrs. KASSEBAUM. Yes, Mr. President, I say to the Senator from
Arkansas, I think it is the hope not only of the managers but also of
the minority leader and the majority leader that we finish tonight.
Mr. PRYOR. Good night, Mr. President, thank you.
Amendment No. 3679
(Purpose: To establish a minimum amount that may be applied as an
aggregate lifetime limit with respect to coverage under an employee
health benefit plan or a group health plan)
Mr. JEFFORDS. Mr. President, I have an amendment at the desk.
The PRESIDING OFFICER. The clerk will report.
The legislative clerk read as follows:
The Senator from Vermont [Mr. Jeffords] proposes an
amendment numbered 3679.
Mr. JEFFORDS. Mr. President, I ask unanimous consent reading of the
amendment be dispensed with.
The PRESIDING OFFICER. Without objection, it is so ordered.
At the end of section 103, add the following new
subsection:
(g) Limitation on Lifetime Aggregate Limits.--
(1) In general.--Except as provided in paragraph (2), an
employee health benefit plan or a health plan issuer offering
a group health plan may not impose an aggregate dollar
lifetime limit of less than $10,000,000 (such amount to be
adjusted for inflation in fiscal years subsequent to the
fiscal year in which this subsection becomes effective) with
respect to coverage under the plan.
(2) Small employers.--Paragraph (1) shall not apply to a
group health plan offered to or maintained for employees of a
single employer that employ
s 25 or fewer employees.
(3) Rule of construction.--Paragraph (1) shall not be
construed as prohibiting the application by an employee
health benefit plan or a health plan issuer offering a group
health plan of any limits, exclusions, or other forms of cost
containment mechanisms with respect to coverage under the
plan other than the aggregate limit permitted under paragraph
(1).
(4) Disclosure.--Any limits, exclusions, or other cost
containment mechanisms permitted under paragraph (3) shall be
disclosed as provided for in section 105(c).
(5) Application of subsection.--This subsection shall not
apply to a health maintenance organization that meets the
requirements of title XIV of the Public Health Service Act.
(6) Effective date.--This paragraph shall become effective
with respect to health plans on the date that i
s 2 years
after the date of enactment of this Act.
At the end of section 105, add the following new
subsection:
(c) Disclosure of Limits and Exclusions.--An employee
health benefit plan or a health plan issuer offering a group
health plan shall disclose, as part of its solicitation and
sales materials and in a form and manner that is conspicuous
and understandable to a reasonable individual, any limits,
exclusions, or cost containment mechanisms with respect to
coverage provided under the plan.
Section 3711 of title 31, United States Code, is amended by
adding at the end the following new subsections:
``(g)(1) If a nontax debt or claim owed to the United
States has been delinquent for a period of 180 days--
``(A) the head of the executive, judicial, or legislative
agency that administers the program that gave rise to the
debt or claim shall transfer the debt or claim to the
Secretary of the Treasury; and
``(B) upon such transfer the Secretary of the Treasury
shall take appropriate action to collect or terminate
collection actions on the debt or claim.
``(2) Paragraph (1) shall not apply--
``(A) to any debt or claim that--
``(i) is in litigation or forelosure;
``(ii) will be disposed of under an asset sales program
within 1 year after the date the debt or claim is first
delinquent, or a greater period of time if a delay would be
in the best interests of the United States, as determined by
the Secretary of the Treasury;
``(iii) has been referred to a private collection
contractor for collection for a period of time determined by
the Secretary of the Treasury;
``(iv) has been referred by, or with the consent of, the
Secretary of the Treasury to a debt collection center for a
period of time determined by the Secretary of the Treasury;
or
``(v) will be collected under internal offset, if such
offset is sufficient to collect the claim within 3 years
after the date the debt or claim is first delinquent; and
``(B) to any other specific class of debt or claim, as
determined by the Secretary of the Treasury at the request of
the head of an executive, judicial, or legislative agency or
otherwise.
``(3) For purposes of this section, the Secretary of the
Treasury may designate, and withdraw such designation of debt
collection centers operated by other Federal agencies. The
Secretary of the Treasury shall designate such centers on the
basis of their performance in collecting delinquent claims
owed to the Government.
``(4) At the discretion of the Secretary of the Treasury,
referral of a nontax claim may be made to--
``(A) any executive department or agency operating a debt
collection center for servicing, collection, compromise, or
suspension or termination of collection action;
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``(B) a contractor operating under a contract for servicing
or collection action; or
``(C) the Department of Justice for litigation.
``(5) nontax claims referred or transferred under this
section shall be serviced, collected, or compromised, or
collection action thereon suspended or terminated, in
accordance with otherwise applicable statutory requirements
and authorities. Executive departments and agencies operating
debt collection centers may enter into agreements with the
Secretary of the Treasury to carry out the purposes of this
subsection. The Secretary of the Treasury shall--
``(A) maintain competition in carrying out this subsection;
``(B) maximize collections of delinquent debts by placing
delinquent debts quickly;
``(C) maintain a schedule of contractors and debt
collection centers eligible for referral or claims; and
``(D) refer delinquent debts to the person most appropriate
to collect the type or amount of claim involved.
``(6) Any agency operating a debt collection center to
which nontax claims are referred or transferred under this
subsection may charge a fee sufficient to cover the full cost
of implementing this subsection. The agency transferring or
referring the nontax claim shall be charged the fee, and the
agency charging the fee shall collect such fee by retaining
the amount of the fee from amounts collected pursuant to this
subsection. Agencies may agree to pay through a different
method, or to fund an activity from another account or from
revenue received from the procedure described under section
3720C of this title. Amounts charged under this subsection
concerning delinquent claims may be considered as costs
pursuant to section 3717(e) of this title.
``(7) Notwithstanding any other law concerning the
depositing and collection of Federal payments, including
section 3302(b) of this title, agencies collecting fees may
retain the fees from amounts collected. Any fee charged
pursuant to this subsection shall be deposited into an
account to be determined by the executive department or
agency operating the debt collection center charging the fee
(in this subsection referred to in this section as the
`Account'). Amounts deposited in the Account shall be
available until expended to cover costs associated with the
implementation and operation of Governmentwide debt
collection activities. Costs properly chargeable to the
Account include--
``(A) the costs of computer hardware and software, word
processing and telecommunications equipment, and other
equipment, supplies, and furniture;
``(B) personnel training and travel costs;
``(C) other personnel and administrative costs;
``(D) the costs of any contract for identification,
billing, or collection services; and
``(E) reasonable costs incurred by the Secretary of the
Treasury, including services and utilities provided by the
Secretary, and administration of the Account.
``(8) Not later than January 1, of each year, there shall
be deposited into the Treasury as miscellaneous receipts an
amount equal to the amount of unobligated balances remaining
in the Account at the close of business on September 30 of
the preceding year, minus any part of such balance that the
executive department or agency operating the debt collection
center determines is necessary to cover or defray the costs
under this subsection for the fiscal year in which the
deposit is made.
``(9) To carry out the purposes of this subsection, the
Secretary of the Treasury may prescribe such rules,
regulations, and procedures as the Secretary considers
necessary.
``(h)(1) The head of an executive, judicial, or legislative
agency acting under subsection (a)(1), (2), or (3) of this
section to collect a claim, compromise a claim, or terminate
collection action on a claim may obtain a consumer report (as
that term is defined in section 603 of the Fair Credit
Reporting Act (15 U.S.C. 1681a)) or comparable credit
information on any person who is liable for the claim.
``(2) The obtaining of a consumer report under this
subsection is deemed to be a circumstance or purpose
authorized or listed under section 604 of the Fair Credit
Reporting Act (15 U.S.C. 1681b).''.
Mr. JEFFORDS. Mr. President, I know that we have had a difficult day
today. We are having a difficult time trying to face the facts of life
that the bill we are amending is a very important one, one which I have
been an original cosponsor and one which part of the bill is mine. It
is something that I worked very hard on. I believe it is an excellent
job.
However, I also believe that it has a very serious flaw in it. Thus,
at the time the committee was meeting--and I want to point out that we
have already made an exception today--the Finance Committee came and
said, ``Hey, we have a bunch of amendments.'' Most of them have been
accepted. So we have already made several exceptions to the
nonamendment rule. I want to remind people of that.
Now, I submitted this amendment, which I have before this body, at
the committee. I am a member of the committee, ranking Republican on
the committee. At that time it was said, ``Hey, we want to get out of
here a unanimous bill. We may have problems.'' So I said, ``OK, I will
wait until the floor.'' So I come to the floor to offer an amendment,
which I think about everybody agrees ought to be on it, and they said,
``No. No amendments--except for the Finance Committee amendments.''
I understand that the ranking Republican and the chairman of the
committee are bound by their commitment to no amendments, but nobody
else is. Nobody else is in this body. So I hope Members would say he
deserves to be heard. He has told me I could raise this amendment on
the floor, and here it is.
Now we will talk about what the amendment is and why we are here. The
bill is one which provides, if a person is working for a business and
changing jobs, or whatever else, has a health problem, that they are
guaranteed an issuance of a policy or a continuance of a policy,
notwithstanding the fact that they are sick. That is very important.
This is an important breakthrough. That is why I supported the bill.
However, what we were not aware of at the time and I brought to the
committee's attention, but perhaps there was too little time to
consider it, is the fact that there is no requirement now under the
Federal law for any kind of a certain level of cap.
Now, what could happen to us is, OK, we require the insurance company
to take a sick person, but then the insurance company has the right to
change its benefits, or it can say, ``OK, we will lower the lifetime
cap. So when we take you on, as soon as we pay whatever level of funds
we reduce the limit to, you are gone, finished, you have no more
coverage.''
Well, this amendment would rectify that and say we have to put--as a
nationwide standard, with the exception, we admit it could cause some
problems with small businesses, so we exempt 25 and under. We say you
have to have $10 million of coverage. Why the $10 million? The $10
million lifetime cap is because the standard for the industry for many
years was a million dollars. But that wa
s 20 years ago. That million
dollars is worth about $100,000 now. So we say, let us go back to the
standard of 20 years ago and put on that cap.
I want to point out that when we do this, we are obviously going to
cause some costs. I will explain that later. But let us take a look at
who we are talking about when we are talking about those covered under
this provision. We are talking about those that are working for
businesses, as I say, that get sick. All of a sudden they have some
pretty big bills. Remember, some of the lifetime caps out there on
these insurance plans are $50,000. That is one day in a hospital
sometimes. So you go in there sick, and all of a sudden you have no
coverage. We are trying to correct that.
Now, let me point out to you, again, what we are talking about from a
national policy perspective. What happens now to that sick person? That
person is sick. They have been allowed to be covered and then chopped
off because they have reached the lifetime limit of, say, $50,000. What
happens? Under the law right now, in order for them to qualify for
Medicaid, they cannot have resources beyond a certain level. So what we
are talking about--and I will give some examples in a minute--is middle
income people, or even higher income people, who suddenly are
Amendments:
Cosponsors:
