Can Schering-Plough's Aggressive Lobbying Buy a Claritin Patent Extension?

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Consumers will pay through the nose if Schering-Plough's lobbying campaign for H.R. 1598/S. 1172 succeeds in getting a patent extension for its best-selling allergy drug Claritin. Claritin users would be forced to pay between $1.6 billion and $3.2 billion more over three years because of delayed generic competition.⁽¹⁾

Schering-Plough broke records in drug advertising in 1998, spending $267 million for Claritin advertising. Such expenditures were two-and-one-half times greater than spending on the second most advertised drug, Propecia.⁽²⁾ Will 1999 be another record-breaking year for Claritin - this time, for making Schering-Plough Washington's top spending pharmaceutical firm on lobbying? If recent trends continue, that could be the case.

• Between 1996 and 1998, Schering-Plough's lobbying expenditures more than doubled: from $1,895,000 in 1996 to $4,268,000 in 1998.⁽³⁾

• The number of outside lobbying firms retained to lobby on the patent extension also doubled, from five to ten. And 1999 got off to a brisk start, with Democratic power lobbyist Richard Ben-Veniste signing on to the team.

• While Schering-Plough ranks only ninth in sales among pharmaceutical companies, in 1998 the company was fourth highest in lobbying expenditures, moving up from its seventh-place rank in 1997.

Schering-Plough Lobbying Expenditures, 1996-1998

Not All of Schering-Plough's Capitol Hill Advocates Are Registered Lobbyists

In addition to the highly paid promoters who are registered to lobby for a patent extension for Claritin, Schering-Plough has benefited from the support of another prominent promoter, C. Everett Koop, M.D. Since leaving his position as Surgeon-General of the United States, Dr. Koop has engaged in several business ventures with pharmaceutical companies in addition to recently becoming an Internet multi-millionaire by selling stock in his drkoop.com web site, which offers medical advice.

• $1 million Schering-Plough grant. According to the June 20, 1999 New Jersey Star Ledger, Schering-Plough gave Dr. Koop's nonprofit group, The Koop Foundation, a $1 million grant. The company also advertises on Dr. Koop's web site.
  
• Koop support for the Claritin patent extension bill. On the Hill, Dr. Koop has actively promoted the Claritin patent extension bill. April 29, 1999, the day after H.R. 1598 was introduced, he sent a letter to all House members urging approval of the bill. On June 10, 1999, he spoke at a forum in the Capitol organized by the International Intellectual Property Institute to showcase H.R. 1598 and the proposed Claritin patent extension.⁽⁴⁾ Moreover, Dr. Koop had been listed on the proposed witness list released by staff of the House Judiciary Subcommittee on Courts and Intellectual Property for the July 1, 1999, hearing on H.R. 1598, but his name did not appear on the final witness list.

• Koop's non-disclosure. When Dr. Koop spoke at the June 10 forum, he did not disclose his financial support from Schering-Plough. Nor was it was mentioned in his April letter supporting H.R. 1598.
  
• Koop meets with the House Commerce Committee to support Schering-Plough's controversial Hepatitis C bundled kit of two drugs. The Star Ledger reports that the Claritin bill is not the only Schering-Plough issue on which Dr. Koop has been active on the Hill. According to its June 20 story, on May 5, 1999, Dr. Koop attended a closed-door meeting of the House Commerce Committee and defended Schering-Plough's marketing of Rebetron, a kit that bundles two Hepatitis C drugs together and costs up to $18,000 a year. In response to consumer protests, FDA wrote Schering-Plough encouraging the drug maker to unbundle the kit, but the company refused. At the May 5 meeting, Koop reportedly distributed a three-page statement that "largely reiterated Schering-Plough's position." [reporter's words]
  

Which Lobbying Firms Are Sharing Schering-Plough's Wealth?

Some of the best connected law firms in Washington have worked for Schering-Plough over the last three years (1996-1998). Former Members of Congress, former Congressional staffers, and other powerful Washington insiders are among the company's cadre of highly-priced outside lobbyists.

Former Members of Congress Lobbying for Schering-Plough

Some of the most effective lobbyists are former Members of Congress. Having come recently from positions inside the House or Senate, these individuals have extensive knowledge of the legislative process and, even more important, close connections to current Members.

Former Staffers Lobbying for Schering-Plough

In addition to former Members of Congress, many ex-Congressional staff members lobby or have lobbied for Schering-Plough. These staffers, in many cases, worked closely with current Members of Congress or key Congressional Committees involved in Schering-Plough's legislative agenda.

Other Notable Washington Insiders

Peter Knight

A long-time assistant to then-Senator Al Gore, Peter Knight lobbied for Schering-Plough in 1997 and 1998 on behalf of Wunder, Knight, Levine, Thelen & Forscey receiving $420,000. Knight was a top fund raiser for the Clinton-Gore campaigns and was campaign manager for the 1996 Clinton-Gore campaign.

Richard Ben-Veniste

The law firm of Weil, Gotshal & Manges, of which Ben-Veniste is a partner, registered to lobby for Schering-Plough in February of 1999. Ben-Veniste's extensive resume includes stints as: Assistant Special Prosecutor and Chief of the Watergate Task Force; Democratic Minority Counsel for the Senate Whitewater Hearings, and Assistant U.S. Attorney. He is well connected with Judiciary Committee members which must first approve patent extension legislation.

Linda Daschle

Though not registered specifically as a Schering-Plough lobbyist, the Senate Minority Leader's wife is a registered lobbyist for Baker, Donelson, Bearman & Caldwell, Schering's leading outside lobbying firm. According to staff accounts, she has personally lobbied members of the House Judiciary Committee on H.R. 1598.

Jack Martin

Before joining Parry, Romani & DeConcini as a lobbyist, Jack Martin worked at the Food and Drug Administration as Special Assistant to the Commissioner for Policy from 1985 until 1992.

Claritin Doesn't Deserve - or Need - a Patent Extension

Proponents of H.R. 1598/S. 1172 try to play the "R&D scare card" - they make the argument that the Claritin patent extension is in some way connected to the drug company continuing to do research and development. In Schering-Plough's case, the numbers tell a different story. With a profit rate of almost 22 percent, the company allocated a scant 12.5 percent to R&D in 1998.⁽⁵⁾

Nor does Schering-Plough need three additional years of patent protection to reap ample rewards for developing Claritin. According to a Public Citizen analysis, Schering-Plough has already earned $1.3 billion in profits on Claritin, and is expected to earn another $2.2 billion before the drug's patent expires in 2002.⁽⁶⁾ New product formulations and licensing agreements extend some patent protection for the #1 advertised drug in America to 2014. This is not a drug in need of a patent extension.

Schering-Plough's Costly Lobbying Campaign for the Claritin Patent Extension Is Inversely Related to the Merits of the Bill.

• Legislative history: There is no basis in legislative history for Schering-Plough's claim that Claritin got less than the full patent term restoration to which the Waxman-Hatch Act of 1984 should have entitled it.

• Economic impact: H.R.1598/S. 1172 would cost some individual American consumers hundreds of dollars more a year, and the U.S. health care system as a whole hundreds of millions of dollars more. If Schering-Plough got the full three year patent extension they are seeking, the price tag would run between $1.6 billion and $3.2 billion more during these three years.¹

• Subversion of patent system: H.R. 1598/S. 1172 subverts the drug patent system from its true purpose, which is to promote research and development of new pathbreaking drugs, into an anti-competitive shield to protect the monopoly profits of an old drug.

• Not a fair and open process: H.R. 1598/S. 1172 creates a "stacked deck" patent extension review process with all the aces in Schering-Plough's hand. The negative impact of high drug prices on consumers, taxpayers and the U.S. health care system are irrelevant under H.R. 1598/S. 1172.

• Future impact: If Schering-Plough gets away with this one, every other company with a profitable drug about to go off-patent will think it is entitled to the same special treatment.
  

Conclusion

H.R. 1598/S. 1172 is not about patent integrity or drug research and development. Above all, this bill would reward Schering-Plough's aggressive Congressional lobbying campaign with additional billions in profits which, if the company's past priorities are a guide, would go in large part to fuel aggressive marketing campaigns like that waged for Claritin, arguably the most aggressive in U.S. pharmaceutical history. That may be a legitimate reason for Schering-Plough stockholders to support the bill - but not for Congress to pass it.

July 30, 1999
For more information contact Maura Kealey 454-5116

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1. A 1996 Congressional Research Study found that generic competitors typically cost 30 percent - 60 percent less than brand-name drugs. See Public Citizen's May 24, 1999 fact sheet, "Stop Claritin's Billion Dollar Patent Extension Grab." www.citizen.org/congress/drugs/stopclaritin.htm.

2. IMS Health and Competitive Media Reporting, cited in Medical Marketing & Media, May 1999, p. 72.

3. Schering-Plough lobbying disclosure forms filed under the 1995 Lobbying Disclosure Act. These records do not provide an expenditure breakdown between lobbying on patent extension and other issues.

4. The International Intellectual Property Institute was formed by Bruce A. Lehman in December 1998. Prior to that Mr. Lehman was the Commissioner of Patents and Trademarks; while in that office he wrote a letter in support of last year's effort to gain a patent extension for Claritin. Before going to the PTO, Mr. Lehman was an attorney with Swidler & Berlin, which reported $140,000 in lobbying income from Schering-Plough in 1997-1998. In an April 5, 1999 interview about the Institute with the Washington Times, Mr. Lehman revealed that he had funding from "U.S. private sector companies" but did not state which ones. One of the two major intellectual property projects he discusses in the interview concerns pharmaceutical issues in Brazil.

In addition to Dr. Koop, other speakers at the June 10 forum included H.R.1598's sponsors, Representatives Jim McDermott (D-Wash.) and Ed Bryant (R-Tenn.); former PhRMA Executive Director Gerald Mossinghoff; Gerald Meyer, former FDA staff person who currently acts as a consultant to biotechnology firms; as well as former Judiciary Committee staff. When Mr. Lehman was questioned by a participant about the lack of balance in the program, he stated that his Institute's purpose was "to promote intellectual property rights."

5. Schering-Plough 1998 Annual Report, p. 33.

6. "Claritin Patent Extension Bill: Don't be Fooled by the 'R&D' Scare Card," Public Citizen fact sheet, June 21, 1999. www.citizen.org/congress/drugs/claritinrd.htm

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