WASHINGTON _ The House has packed its bags andthe Senate is about to follow suit for a two-week recessbefore Congress returns after Labor Day to tackle themost serious deficit reduction legislation in recent history.

During the past six months Congress has been consumedwith the partisan debate and political power plays thathave so far produced the specter of what Washingtoninsiders are calling a political "train wreck," wherein theRepublican-led Congress and President Clinton collideover how to balance the federal budget and whether to cutindividual and corporate taxes.

The sheer contentiousness of these issues has squeezedoff the front page much of the legislation criticallyimportant to biotech companies. FDA reform legislation,has not even been introduced by a Republican healthcommittee chairman in either the House or Senate. Oneversion has been introduced by House Commerce HealthSubcommittee Ranking Democrat Ron Wyden (Ore.).(See BioWorld Today, June 7, 1995, p. 1.)

Even the fate of all tax legislation, including thoseidentified by the Biotechnology Industry Organization(BIO) as the biotech industry's top legislative priorities,hinges on whether the Republican Congressionalleadership and the White House can work out acompromise on how deeply to cut Medicare and otherdomestic spending, said Chuck Ludlam, BIO's vicepresident for government relations.

If Congress survives the expected bloody battle overspending cuts, the next partisan debate will roll out manydifferent arguments about the wisdom of cutting taxes."After Congress completes action on the spending side,the Congressional Budget Office must then certify thatthere have been sufficient spending cuts to accommodatea tax cut," said Ludlam.

Congress left room for $245 billion in tax rollbacks butthat figure may shrink if Congress fails to meet itsspending targets included in the budget reconciliationplan, said Ludlam in an interview with BioWorld Today.

The House Ways & Means Committee on Sept. 7 willbegin debate on spending cuts and other deficit reductionbills to meet its budget reconciliation targets.

A wrap-up of Congressional action and pending actionfollows:

FDA Reform. Lobbyists for BIO and the PharmaceuticalResearch Manufacturers of America (PhRMA) havereadied their version of FDA reform legislation but so farhave failed to engender sufficient interest on Capitol Hill,said Steve Lawton, a lawyer with the Washington firm ofHogan & Hartson. While Rep. Joe Barton (R-Tex.),chairman of the House Commerce Oversight andInvestigations Subcommittee, has held three hearings thathave built a record documenting that the drug and deviceindustries are victims of an out-of-control FDA regulatoryprocess, he has not yet introduced legislation. Barton andother Congressional health subcommittee chairs are notexpected to turn their sights on FDA reform bills untilafter a showdown with the White House over tax cuts andreductions in domestic spending, Barton said.

National Institutes of Health (NIH) Funding. The Houserecessed on a sour note, engaging is a sharply ideologicaland partisan debate before passing deep cuts in health,education and other social programs while tightening thecurbs on abortion. Included in the fiscal 1996 spendingbill for the Department of Health and Human Serviceswas a modest $643 million increase for the NIH. TheSenate is expected to enhance NIH funding when it takesup the spending package next month. The House bill alsoprohibits the NIH from funding any research involvingfetal tissue. (See BioWorld Today, July 7, 1995, p. 1.)

Product Liability. Proponents of product liability hope toresurrect interest in the bill this fall when the Senate willreconsider a version that failed in late April afteropponents convinced a sufficient number of Senators thatthe bill would weaken consumer protections againstunsafe products. Lobbyists for BIO and PhRMA hope topersuade the Senate to include an amendment to the billcalled the "FDA defense." This language would shieldmedical product manufacturers from punitive damages iftheir product had been cleared by the FDA and nodamaging information had been withheld from theagency. The FDA defense amendment was included inthe product liability bill passed by the House. (SeeBioWorld Today, April 28, 1995, p. 1.)

Capital Gains Tax Cut. While the Clinton Administrationhas not signaled its intentions on whether it will opposecapital gains tax cuts, Ludlam said a massive coalition ofbusiness interests is pushing a broad-based proposal. BIOis lobbying for the across-the-board capital gains tax cutenhanced by a venture capital tax break. Enactment ofcapital gains is a top priority for CongressionalRepublicans who included this bill in their Contract withAmerica. (See BioWorld Today, June 23, 1995, p. 1.)

Orphan Drug Tax Credit. Similar legislation has beenintroduced both in the House and Senate to givemanufacturers a tax credit for the development andmanufacture of therapies given orphan drug status by theFDA. For every dollar spent on developing an orphandrug, a manufacturer could claim a 50 cent tax credit.Both bills would make the tax credit, which expired lastyear, permanent. Neither bill has been subjected tohearings. (See BioWorld Today, July 24, 1995, p. 1.)

Research And Development Tax Credit. The same Houseand Senate sponsors of orphan drug tax credit legislation,Sens. Orrin Hatch (R-Utah) and Max Baucus (D-Mont.)and Reps. Nancy Johnson (R-Conn.) and Robert Matsui(D-Calif.) have introduced legislation that would makethe current research and development tax creditpermanent. (See BioWorld Today, July 24, 1995, p. 1.)

Process Patents. Identical bills are pending in the Houseand Senate to protect the patent rights of manufacturerswho invent novel biotech processes. The Senate bill willbe considered by the Senate Judiciary Committee inSeptember. House committee action is expected afterthat. In previous years different biotech process patentbills were introduced in the House and Senate and theirlack of similarities eventually doomed the legislation.(See BioWorld Today, June 8, 1995, p. 1.)

Patent Protection. No consensus has emerged yet amongHouse Republicans on how to protect drug makers frompatent protections that were eroded by the GeneralAgreement on Tariffs and Trade. House JudiciaryChairman Carlos Moorhead (R-Calif.) and Rep. DanRohrabacher (R-Calif.) have differing approaches topatent extension protections that will have to be resolvedin committee. Ludlam said the first hearing on thelegislation is scheduled for Nov. 1. (See BioWorldToday, June 28, 1995, p. 1.) n

-- Michele L. Robinson Washington Editor

(c) 1997 American Health Consultants. All rights reserved.