Profits, politics, and a drug patent
A controversial draft bill offers glimpse of the close dance between a giant drug company and two key senators.
Lawmakers are finding that large political donations can come at an uncomfortable price - especially when the giver has something big to gain on Capitol Hill.
Two Republican senators - John Ashcroft of Missouri and Orrin Hatch of Utah - are the latest to come under fire for accepting fat donations from America's drug industry.
Senator Ashcroft was labeled "the Fortune 500 senator" this week by Green Party presidential candidate Ralph Nader after a big drugmaker gave $50,000 to the Ashcroft Victory Committee.
Senator Hatch has spent recent weeks fending off critics who charged that he was quietly trying to help the same drugmaker (Schering-Plough) win a patent extension that could be worth billions to the firm. Hatch is chairman of the Senate Judiciary Committee, and Ashcroft is chairman of Judiciary's Subcommittee on Constitution, Federalism, and Property Rights that oversees patent issues. Both senators are up for reelection this year.
The brouhaha over Hatch and Ashcroft and their relationship with drug giant Schering-Plough has showered Capitol Hill with political sparks for several weeks.
Briefly, here's the background:
*Schering-Plough makes a drug named Claritin with sales in the United States of $2.7 billion a year. Claritin is America's No. 1 selling allergy medicine.
*Claritin's valuable patent expires in 2002, unless Congress gives it a waiver.
*Once the patent expires, generic drug firms can make and sell the product. Usually they drop prices on brand-name drugs by 30 to 60 percent, sharply cutting into profits for firms like Schering-Plough.
The question critics ask is: Did Hatch and Ashcroft, in response to those contributions, do the bidding of Schering-Plough while disregarding the impact of their actions on the prices that Americans pay for drugs?
Recently, the spotlight has shone on Hatch. It began when someone in the Senate crafted a bill that would make it easier for drug companies to extend patents, a move opposed by generic drug firms.
The Senior Coalition, alarmed by the draft legislation, offered a $1,000 reward to whomever exposed the name of the senator responsible for producing it. They labeled this mystery person "Senator Anonymous."
After much speculation, Hatch conceded that he was that person. But he insisted that a more accurate name would be "Senator Anonymous, Wrongly Accused." Hatch says he did nothing improper. He explains that his Judiciary Committee staff, without his knowledge, drafted the proposal.
Hatch spokesman Chris Rosche says the draft was only "for the purpose of discussion." It was "far more overreaching than Senator Hatch would ever allow to become law," he says.
Escalating drug costs
Critics remain skeptical. One portion of the draft bill directs the head of the United States Patent and Trademark Office to grant a patent holder an automatic extension under certain conditions.
Drug issues are particularly sensitive right now because with rising costs, Americans spent approximately $100 billion for prescription medicine in 1999, or $360 apiece for every man, woman, and child in the country. That's up 17.4 percent from the previous year.
As drug costs rise, pharmaceutical companies have become leading campaign contributors in Election 2000. They also put more money into lobbying than any group in Washington.
One of those lobbying firms for Schering-Plough is Parry & Romani Associates Inc., headed by Thomas Parry, a former chief of staff in Hatch's Senate office. Scott Hatch, the senator's son, works as a researcher for the Parry firm, and has lobbied Congress on the Claritin issue. Rosche says: "He [Scott Hatch] says that he is aware of the potential for conflict of interest, and so avoids as much as is practical going to meetings in the Senate."
The draft bill and Hatch's close ties with the drug industry have put consumer groups on high alert. Holly Bailey, a researcher at the Center for Responsive Politics in Washington, says: "Orrin Hatch's relationship with Schering-Plough is one of the most blatant things we've seen in terms of whether money plays a role in what happens on Capitol Hill."
As the leading recipient of drug industry money in Congress, Hatch had collected more than $169,000 in campaign contributions from pharmaceutical companies as of May 1, according to the Federal Election Commission. Of that, $14,000 came from Schering-Plough. He also used an airplane owned by Schering-Plough during his bid for the 2000 GOP presidential nomination.
Hatch insists that utilizing the Schering-Plough airplane was proper. He told the Associated Press through a spokesman on Nov. 9, 1999: "The fact that an owner of a plane may have something pending before the Congress does not affect the decisions that are made. There are rules for the use of private planes, and we adhere to those rules."
Charles Lewis, executive director of the Washington-based Center for Public Integrity, notes that with their great wealth, pharmaceutical firm contributions can often be "lavish." Further, "their legislation is very precise legislation, geared to specific drugs that are on the market."
Mr. Lewis complains that if a legislator "takes money and [then] does something for the industry, it appears there is a quid pro quo....That is one of the reasons why nearly all Americans have concluded that politics is a corrupt process."
Meanwhile, Ashcroft, locked in a "toss-up" race for reelection in Missouri, has come under criticism for cosponsoring S1172, another patent-extension bill.
David James, communications director for Ashcroft's campaign, says: "John Ashcroft supports the protection of lifesaving research, which this bill provides. John Ashcroft does not receive a dime of this contribution. It goes to the Republican Senatorial Committee...."
A New Jersey's senators view
Another S1172 cosponsor is Sen. Robert Torricelli (D) of New Jersey, home state of Schering-Plough. Senator Torricelli, not up for reelection this year, also accepted a $50,000 donation from Schering-Plough on behalf of the Democratic Senatorial Campaign Committee that he chairs. Richard McGrath, spokesman for Senator Torricelli, says there is "absolutely no connection" between the $50,000 donation and the senator's sponsorship of the patent extension bill.
Some form of patent-extension legislation has now surfaced for four years in a row in Congress. Each time it expired after criticism that it would drive up the cost of drugs to consumers.
Campaign giving by companies often closely tracks political developments in Congress. For its part, Schering-Plough says that its four-year effort to win a patent extension is a matter of simple fairness. William O'Donnell, a spokesman for Schering-Plough, says: "What we are asking for is an opportunity to go before a fair and independent panel, so that we can make our case for having some life restored [to the patent] for all the time that Claritin spent in the regulatory review process...."
Critics expect some sort of patent-extension legislation to come up again soon. With this in mind, the group that sponsored the bounty on "Senator Anonymous" says it will donate $1,000 to a senior center in Utah. John Powell, head of The Seniors Coalition, says the money could be used to invite Hatch over for some straight talk from seniors on the "negative effects of unwarranted patent extensions."
(c) Copyright 2000. The Christian Science Publishing Society