E-drug: Time Magazine on Corporate Welfare and patent extensions
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[copied from PHARM-POLICY]
Interesting story in Time. Jamie
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SPECIAL REPORT/CORPORATE WELFARE
NOVEMBER 16, 1998 VOL. 152 NO. 20
SEARLE & CO.: A CASE STUDY
The Mysterious Midnight Favor
Sometimes members of Congress debate long and loud about
specific programs that represent corporate welfare. Other
times they resort to arcane paragraphs tucked into unrelated
legislation during late-night sessions, hoping no one will
notice the giveaway.
Even hotly debated legislation--and even legislation meant
to cut costs--can end up containing handsome gifts for
targeted corporations. That's what happened with the
Balanced Budget Down Payment Act of 1996, a long and
bitterly debated piece of legislation. So long and bitter that
the country went without a budget for seven months and
endured two partial Federal Government shutdowns.
In the end Congress carved $22 billion out of the budget,
prompting Representative John Kasich, the Ohio Republican
who chairs the House Budget Committee, to declare that the
new law made "the most significant reductions in Washington
spending since World War II."
Well, maybe. But buried in the thousands of words that
slashed government spending on everything from legal aid to
the poor to helping the needy pay their home-heating bills
was this intriguing sentence:
"In General: Any owner on the date of enactment of this Act
of the right to market a nonsteroidal anti-inflammatory drug
that (1) contains a previously patented active agent; (2) has
been reviewed by the Federal Food and Drug Administration
for a period of more than 120 months as a new drug
application; and (3) was approved as safe and effective by
the Federal Food and Drug Administration on October 29,
1992, shall be entitled, for the two-year period beginning on
October 29, 1997, to exclude others from making, using,
offering for sale, selling, or importing into the United States
such active agent, in accordance with section 154(a)(1) of
Title 35, United States Code... "
Those 112 words obviously had nothing to do with cutting
funds to departments and programs of the U.S. government.
On the contrary, they would end up costing consumers many
tens of millions of dollars--and fattening up G.D. Searle &
Co. by the same amount.
The words, planted in the legislation by friendly members of
Congress, extended for two years Searle's patent protection
on Daypro, an anti-inflammatory drug that is the second
best-selling drug for arthritis in the country. They also meant
that for two more years, no cheaper generic versions of the
drug could be sold.
Searle is a subsidiary of Monsanto Co., a global chemical and
pharmaceutical giant with annual revenues of $7.5 billion.
How important was Daypro to Searle and Monsanto? The
company sells $300 million worth of the stuff a year.
Most lawmakers were unaware of the handout. It was not in
the original bill passed by the House nor in the one passed by
the Senate. As often happens with special interests, the
stealth provision was slipped into the legislation during a
conference session, when the two houses were ironing out
differences between their respective bills.
No record exists identifying the lawmaker who inserted it. To
this day, no one claims credit. But it is worth noting that in
December 1995, four months before the budget bill was
passed, then Senator Paul Simon, Democrat from
Chicago--the home of G.D. Searle--introduced on the floor
of the Senate a bill to specifically extend Daypro's patent
protection. The bill was co-sponsored by Senator Carol
Moseley-Braun, also a Chicago Democrat, and Senators
John Ashcroft and Christopher Bond, both Republicans from
Missouri, the home of Searle's parent, Monsanto. That bill
went nowhere.
Not all drug companies are as lucky as Searle. American Home
Products later sought to have the patent extended on one of
its arthritis drugs, Lodine. Following Searle's lead, American
Home Products arranged for a friendly member of Congress
to drop the required paragraphs into an unrelated piece of
legislation: the Health Insurance Portability and Accountability
Act of 1996.
Once again, the wording was not in either the House bill or
the Senate bill. Rather, it was slipped into the
conference-committee report in the middle of the night. And
again no one seemed to notice.
No one, that is, until Senator Edward Kennedy,
Massachusetts Democrat, blew the whistle two days later.
Kennedy denounced this legislative gimmick and noted that
Lodine brought in $275 million a year for American Home
Products. Paul Wellstone, the Democratic Senator from
Minnesota, chimed in, assailing "the mysterious manner in
which [the] giveaway [was added to the legislation late at
night] at the expense of patients and senior citizens."
The furor was so great that Trent Lott, Mississippi
Republican, Senate majority leader and the bill's original
sponsor, ordered the offending paragraphs removed.
As it turned out, however, American Home Products almost
prevailed after all. Last June the company announced that it
would acquire Monsanto and its G.D. Searle unit for $34.4
billion in stock. The merger, however, soon unraveled and by
last month both companies had decided that it was "not in
the best interests" of either.
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