Consumers Denounce “Taxpayers’ Billion-Dollar Gift to

Aug. 3, 1999

Consumers Denounce “Taxpayers’ Billion-Dollar Gift to
Schering-Plough Shareholders”

Senate Judiciary Committee to Hold Hearing on Claritin Patent Bill

WASHINGTON — Legislation that would grant patent extensions to the manufacturers of Claritin and six other prescription drugs is a prime example of “multibillion-dollar corporate welfare” catering to special interests, Public Citizen said Tuesday in denouncing the measure. The Senate Judiciary Committee will hold a hearing on the bill, S. 1172, at 10 a.m. Wednesday, August 4.

“Not all of the special-interest pork is tucked away in tax and appropriations bills this year,” said Public Citizen President Joan Claybrook. “Proponents of the Claritin patent extension bill are bold enough to try to rob consumers and taxpayers in broad daylight.”

Claritin is a popular allergy medication manufactured by Schering-Plough, a giant among pharmaceutical companies and one that has invested heavily in lobbying Congress. The bill, S. 1172, and a companion House measure, H.R. 1598, would allow up to three years of additional monopoly patent protection for seven drugs already on the market. Patent protection keeps cheaper generic drugs off the market — drugs that cost consumers between 30 and 60 percent less than the name brands. The legislation therefore would cost consumers and taxpayers between $2.2 billion and $4.5 billion for the three-year period. The cost of extending the Claritin patent alone would be between $1.6 billion and $3.2 billion.

“Schering-Plough just reported a 22 percent increase in Claritin sales for the second quarter over last year,” Claybrook said. “Its increase in earnings per share for 1999 is expected to approach 20 percent. Why should consumers pay through the nose to pad Schering-Plough’s bottom line?”

Said Frank Clemente, director of Public Citizen’s Congress Watch, “This special interest bill is alive because of special interest money, not the bill?s merits.” Clemente noted that:

Schering-Plough spent $4.3 million to lobby Congress in 1997-98;

Profits, not research and development, have first claim on Claritin’s earnings, rebutting claims that the patent extension would fuel corporate R&D. In the first six months of 1999, Schering-Plough allocated 12.1 percent of its net sales revenues for R&D while enjoying profits that equaled 23.4 percent of those revenues — almost twice as much; and

Spending on prescription drugs — with oral antihistamines like Claritin leading the way — has grown twice as fast as total health care spending over the past five years, according to a recent study by the National Institute for Health Care Management Research and Education Foundation. The study found that prescription drugs now represent about 12 percent of total private sector medical costs.

“The Claritin corporate welfare bill is a slap in the face to consumers, taxpayers and Medicare beneficiaries who lack prescription drug coverage,” Clemente said. “The chief barrier to a Medicare prescription drug benefit is the high and rapidly increasing cost of drugs. Congress should act to lower drug costs, not raise them, as this bill would do.”

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