Copyright 1999 The Washington Post
The Washington
Post
October 30, 1999, Saturday, Final Edition
SECTION: A SECTION; Pg. A01
LENGTH: 2110 words
HEADLINE:
Patent Fight Tests Drug Firm's Clout; Claritin Maker Goes All Out in Congress
BYLINE: Charles R. Babcock, Washington Post Staff
Writer
BODY:
Over the past
few years, the blockbuster antihistamine Claritin has become almost as
ubiquitous as aspirin, used by millions of American allergy sufferers.
But unlike with aspirin, only one company, New Jersey pharmaceutical
giant Schering-Plough Corp., gets the revenue from Claritin sales, which totaled
$ 1.9 billion last year.
Now, Congress faces a question with huge
implications for both Schering-Plough and drug consumers: Should Schering-Plough
be able to control Claritin and its profits for years into the future, or should
competition from cheaper generic versions be allowed sooner?
For three
years, the company has used a multimillion-dollar lobbying campaign to try to
get help from Congress in protecting the Claritin patent beyond its 2002
expiration date.
The latest attempt is a bill that would let
Schering-Plough and a few other companies plead their case for three years of
added life before a special patent review board. The company just wants a fair
hearing, chief executive Richard Jay Kogan told a Senate hearing in August.
But Schering-Plough's battle to win passage of the measure this year has
taken on larger dimensions. Opponents have cast it as a test of corporate
influence versus Congress's concern that drugs be made more affordable,
especially for uninsured seniors who must pay full price.
A dose of
Claritin costs between $ 1.80 and $ 2.66 retail, which for many users is largely
absorbed by insurers. Generic drug manufacturers say they can make an equivalent
for about 50 cents.
Rep. Henry A. Waxman (D-Calif.), an
advocate for low-priced generics, calls the proposal the "Claritin Monopoly
Extension Act." Its passage, he said, "would send a simple message that if you
spend enough money and hire the right lobbyists you can get a law that harms
consumers."
The importance to both sides is obvious from the intensity
of the fight. Since 1996, Schering-Plough has doubled its lobbying spending to $
4 million a year, adding several familiar faces to woo Democratic support,
including Peter Knight, a confidant of Vice President Gore, and Linda Daschle,
the wife of Senate Minority Leader Thomas A. Daschle (D-S.D.).
The
company has made other gestures large and small: a $ 1 million donation to the
foundation of supporter C. Everett Koop, the former surgeon general; an
outpouring of campaign donations; use of its Gulfstream IV corporate jet by a
key senator; and free Baltimore Orioles tickets.
Though outgunned, the
makers of generic drugs have fought back, even launching personal attacks on the
patent legislation's sponsors.
Schering-Plough is not the only
drug company to turn to Congress for patent help in recent years, but it stands
out for its sheer persistence.
The company's problem began in 1984, when
the drug was moving slowly through the Food and Drug Administration approval
process. That year, Congress passed a Waxman-sponsored bill
opening the market more for generics.
To lessen the impact on brand
names, Congress built in a concession. It granted patent extensions of up to
five years to drugs that were not yet in clinical trials. Those further along in
the FDA pipeline, such as Claritin, got only two extra years because approval
was considered imminent.
But several years passed and still Claritin
waited. Schering-Plough's Kogan said the short-staffed FDA put his product at
the "back of the line" because it was not a potentially lifesaving drug. An FDA
spokeswoman acknowledged delays but said there were substantive questions about
the product.
Claritin was finally approved in 1993, and U.S. sales
soared to nearly $ 900 million by 1996. But its very success created
controversy.
A few insurers balked at Claritin's costs and ordered
higher co-payments for Claritin purchasers, a way of pushing less expensive
alternatives such as nasal sprays. (George Washington University's health plan,
for example, removed Claritin from its preferred drug list in July).
Schering-Plough argued that Claritin profits help fund vital drug
research and development. Foes of the patent extension point out that the firm
reported $ 1.8 billion in profit last year, even after its $ 1 billion research
and development spending.
Makers of generic drugs are eager to break
into the prescription allergy medicine market, which has grown 600 percent in
five years, according to a recent study. But Schering-Plough is vigilant. It
already has sued some generic firms, claiming they are infringing on Claritin
patents.
Schering-Plough's appeal to Congress began in the
spring of 1996, not long after drugmaker G.D. Searle & Co. won a patent
extension for its arthritis drug, Daypro.
For years, Schering-Plough had
used the lobbying services of a firm headed by former Senate majority leader
Howard H. Baker Jr. (R-Tenn.). But that year it began hiring what became an army
of a dozen other lobbying firms.
Its first tack was to persuade Sen.
Arlen Specter (R-Pa.), an Appropriations Committee member, to try to attach a
two-year Claritin patent extension to the Agriculture Department spending bill.
Such maneuvers are often used by members to slip in controversial measures, but
Specter's effort failed.
In early 1997, Schering-Plough's in-house
lobbyist, Robert Lively, began pushing the notion of a patent review board. The
approach would take "the issue out of politics," said company spokesman William
O'Donnell.
Opponents argued that Congress would merely be signaling its
endorsement, which would be hard for a review board to ignore.
To float
the idea, the company turned to Sen. Fred D. Thompson (R-Tenn.), whose state is
home to two Schering-Plough facilities, and then to home-state Sen. Robert G.
Torricelli (D-N.J.). But they stopped short of introducing legislation.
Claritin's U.S. sales in 1997 soared to $ 1.4 billion, helped by an FDA
decision to make it easier for drug companies to advertise directly to
consumers. Claritin's advertising campaign was massive, costing nearly $ 200
million last year.
Last fall, Schering-Plough went to New Jersey's other
senator, Frank R. Lautenberg (D), who tried to attach the review board provision
to a late-session omnibus spending bill. A Lautenberg spokesman said he helped
because the company is important to New Jersey's economy.
Public
interest groups and lobbyists for the generics industry again complained about
stealth tactics. That was when Koop, a respected voice on Capitol Hill, entered
the picture.
Last Oct. 13, he wrote members, saying the proposed
legislation "merely creates a fair, open process." Still, the effort failed.
This year, Claritin's maker changed its approach again, pushing for
public debate on the issue. It persuaded Torricelli to introduce a Senate
bill--the day after Schering-Plough contributed $ 50,000 to the Democratic
Senate campaign committee he chairs. The timing was a coincidence, a company
spokesman and a Torricelli aide said.
In the House, Reps. Edward G.
Bryant (R-Tenn.) and Jim McDermott (D-Wash.) co-sponsored a Schering-Plough
bill. The next day, Koop sent another letter to members praising the measure.
Meanwhile, Schering-Plough also shifted its political giving.
Historically, the firm's political action committee (PAC) favored Republicans.
This year through June, more than half its donations flowed to Democrats. A
similar change occurred in its "soft money"--corporate donations to political
parties.
McDermott's support shocked consumer groups, which consider him
an ally. A psychiatrist, he supports national health insurance and has advocated
cheaper drugs for seniors. Schering-Plough's PAC has donated to McDermott's
campaigns for years and lobbyist Lively has supplied the House member with
Baltimore Orioles tickets as an in-kind political contribution.
David
Schaefer, a spokesman for McDermott, said McDermott believes allowing a patent
hearing is better than trying to sneak extensions into bills "in the middle of
the night." McDermott considers Schering-Plough a "good corporate citizen," the
spokesman added. In the early 1990s, it supplied him with antibiotics on
overseas health care missions.
Schaefer said McDermott was miffed when
one segment of the generic drugs industry got personal. It sponsored attack
radio ads in McDermott's district, asking constituents to send in $ 1 bills to
"Buy Jim Back" by matching $ 7,000 in Schering-Plough donations.
The
tension between the sides was also in evidence June 10, in a Capitol basement
hallway. C. McClain Haddow, a lobbyist for generics maker Mylan Laboratories,
needled former surgeon general Koop as he waited to talk about "fairness in drug
patenting."
"Come on, Chick! You can't tell me Schering isn't helping
you out on one of your programs," Haddow recalled telling Koop. Later, he
learned about Schering-Plough's $ 1 million donation to Koop's foundation. The
company and a Koop aide said the gift was not related to his advocacy.
In July, Sen. Orrin G. Hatch (R-Utah) scheduled a
hearing on the Torricelli bill. He had just announced a presidential bid, and
asked Schering-Plough for the use of its Gulfstream executive jet for campaign
travel, according to spokesman Jeff Flint.
Federal campaign rules allow
a candidate to use a corporate jet for the price of a first-class airline
ticket, which is less than it costs the company to operate the plane.
O'Donnell said Schering-Plough historically has made its aircraft
available to members of Congress "on a very limited basis."
Hatch's spending report shows he has paid for use of the
drugmaker's jet five times. One payment was made the day after the hearing, for
what Flint said was a trip to Iowa.
O'Donnell and Flint both said
Hatch's use of the plane had nothing to do with his decision to
hold the hearing.
Now, Schering-Plough's proposal seems stalled in
Congress's waning days, but the two sides continue to jockey for position. On
Tuesday, four more House members agreed to co-sponsor the Bryant-McDermott bill.
And last month, a seniors group persuaded Sen. Conrad Burns (R-Mont.) to
drop his co-sponsorship of Torricelli's bill. "I would be blocking patient
access to generic medications for three more years, forcing millions of
Americans to pay inflated prices for these drugs," he said.
Earlier this
week a collection of labor, consumer and seniors groups wrote members of
Congress, asking them to be on watch for stealth attempts to attach the Claritin
bill to must-pass appropriations bills at the end of the session.
If
Schering-Plough fails again, Public Citizen's Maura Kealey said, "be assured
they will be back next year."
Staff researcher Alice Crites contributed
to this report.
JUMP INFORMATION APPENDED FROM FILE
Schering-Plough's Political Voice in Washington 1996-1999
Lobbying -- Schering-Plough spent less than $ 2 million on
lobbying in 1996, the year it first tried to get a patent extension for
Claritin. It doubled its lobbying expenditures to more than $ 4 million last
year, and spent another $ 2.2 million in the first six months of this year. The
firm of former Senate majority leader Howard Baker (R-Tenn.) has represented
Schering-Plough for years, but the company has added a dozen other lobbying
firms to its roster since mid-1996.
Campaign donations -- Though
Schering-Plough, like many corporations, has historically given the majority of
its political action committee (PAC) and unlimited "soft money" donations to
Republican candidates and committees, its recent giving has matched its effort
to get bipartisan support for the patent extension. In the 1996 and 1998
election cycles, three-fourths of its PAC donations went to Republicans; in the
first six months of this year, 61 percent went to Democrats, according to Public
Disclosure Inc.
In the 1996 cycle, 96 percent of Schering-Plough's $
395,000 in corporate donations went to the GOP. So far this year, only about 60
percent of its $ 242,000 in soft money has gone to Republican party committees.
Charity donations -- Former surgeon general C. Everett Koop has
backed Schering-Plough's position on the patent extension bill in letters and
meetings over the past year. The company made a $ 1 million donation to Koop's
personal foundation and advertises on his popular health care Internet site.
Corporate plane -- The company made its Gulfstream IV executive
jet available to the exploratory presidential campaign of Sen. Orrin
Hatch (R-Utah) starting in July, the same month
Hatch agreed to hold a hearing on a bill that would set up a
procedure where the company could argue for added patent life for Claritin.
LOAD-DATE: October 30, 1999
