The Waxman Report

by Henry Waxman; Joshua Green

  Often, the most effective leverage in a situation such as this does not come from political opponents, but from supporters, especially those who have personal relationships with the president. Every New Year’s Eve, the Reagans attended a party thrown by the Annenberg family in Palm Springs. A Republican businessman from my district named Ted Cummings was part of that crowd, so I called him and said, “I’d like you to talk to President Reagan at the New Year’s Eve party.” Cummings protested that all talk of politics would be strictly off limits at the party. Don’t worry, I assured him, this wasn’t politics but a situation where people suffering from rare diseases had a chance to get lifesaving medication. Cummings thought it over, but wouldn’t commit. “We just don’t do that kind of thing,” he said.

  I never found out what transpired at the Annenbergs’ party. Some things are better left as mysteries. But just after New Year’s, Schweiker got a call from the White House telling him to prepare a new message: The president would sign the bill; and on January 4, 1983, the Orphan Drug Act became law.

  AS SEVERAL PEOPLE REMARKED AT THE TIME, THE DRAMATIC REScue effort had all the hallmarks of a Hollywood ending. Afterward, Jack Klugman and everyone else who played a role in passing the legislation gathered for a huge party.

  But the real Hollywood ending unfolded over the next twenty-five years, as the Orphan Drug Act took effect and produced enormous benefits. Some were anticipated. Since 1983, the FDA has approved more than three hundred orphan drugs—up from ten the decade prior—with 1,100 more currently under development. Rare-disease work at NIH has expanded significantly due to the increased visibility and funding. In January 1985, Pimozide became one of the first orphan drugs to gain FDA approval under the new law, and continues to be widely prescribed as a treatment for Tourette’s syndrome. Another group that saw early benefit from the law was the growing number of those with AIDS. One of the first drugs approved to treat the disease, AZT, was developed and marketed as an orphan drug.

  The Orphan Drug Act has worked so well that it has served as a model for similar programs in the European Union, Japan, and Australia. Under the leadership of Abbey Meyers, an early activist for Tourette’s who was instrumental in helping us pass the law, the National Organization for Rare Disorders has gone on to achieve global renown, and now organizes the latest drug research from all over the world.

  Nearly as significant have been the law’s unexpected benefits. The pharmaceutical industry, for instance, has come full circle and now lauds the Orphan Drug Act. While our aim had been to encourage the big drugmakers to develop promising compounds, only about 15 percent of the applications for orphan drugs today derive from the major pharmaceutical companies. Instead, many smaller firms have come into being specifically to develop them.

  One reason for this, likewise unexpected, is the degree to which the law’s exclusivity provision has fostered new drugs. The critical legislative battle was fought over tax credits for clinical trials because we believed that this expense posed the single greatest impediment to developing orphan compounds. As it turned out, however, drug prices began rising steadily in the early 1980s, generating bigger and bigger profits for pharmaceutical companies the higher they climbed. Consequently, many drugs that were once considered financially unviable suddenly held new profit potential, and the need to subsidize clinical trials diminished.

  Instead, the law’s guarantee of seven years’ market exclusivity became the key issue for its success. In 1985 the Orphan Drug Act was amended to include biological as well as chemical drugs, which helped give rise to an entire new industry, biotechnology drugs. In the 1980s, as biotech products began to emerge, there was uncertainty about how patent laws would apply to them. While today’s patent protection for biotech drugs are robust, at the time they were perceived to be so unpredictable that many companies, especially small upstarts, had little confidence in the market protections available to them. The Orphan Drug Act’s guarantee of seven years’ protection from competition functioned as an effective substitute, sheltering smaller firms as they developed drugs for orphan diseases that often became profitable. (Many orphan diseases lend themselves to biotech treatments.) Some of the most successful biotech drugs, such as synthetic human growth hormone, came into being as orphan drugs.

  Even successful legislation needs periodic updating to close loopholes, address unanticipated shortcomings, and keep up with changing circumstances. This can be a major battle in its own right. The protections outlined in the Orphan Drug Act were designed to make drug development economically feasible where otherwise it might not have been. Some manufacturers took advantage of the protections to inflate profits and stave off competition, reaping windfalls far in excess of development costs that consumers and the federal government (through Medicare and Medicaid) end up subsidizing in the form of higher prices. Another dishonest tactic was to claim orphan drug status for a narrowly defined treatment group and then pile up additional orphan designations for different applications of the same drug, a technique known as “salami slicing.”

  In 1990, we introduced a package of amendments that would have created “shared exclusivity,” allowing firms to develop drugs simultaneously and lower prices through competition. We also tried to give the FDA power to reassess orphan drug exclusivity after three years to determine whether market protection was still necessary. This would have ensured that the law functioned as intended, helping to create drugs for small rare-disease populations and limiting opportunities to exploit it. The House and Senate passed the bill unanimously. But President George H. W. Bush vetoed it after heavy lobbying from the pharmaceutical industry. The episode serves as a stark reminder of the industry’s tremendous power, and why it is important, when crafting legislation, never to give too much away. In all my years as a legislator, I can’t recall a single example of a law where, when drug companies were granted excessive government concessions, we ever managed to scale them back later.

  The Orphan Drug Act nevertheless remains an example of government at its finest, demonstrating how Congress applies itself to solve overlooked, but deeply important, problems that affect millions of Americans. Muriel Seligman’s phone call became the catalyst for new a law that, twenty-five years later, has helped transform not only the lives of families like the Seligmans, but the entire way in which the drug industry approaches the development of new medications for orphan diseases.

  CHAPTER 5

  The Clean Air Act

  NOTHING IS MORE FUNDAMENTAL THAN THE AIR WE breathe, the food we eat, and the water we drink—but until 1970, nothing limited the amount of pollution that could be released into the air. The Clean Air Act of 1970 stands as landmark legislation because it established the first system to regulate pollution from industrial plants and cars. In 1977, Paul Rogers, my old subcommittee chairman, took a lead in strengthening the law by cutting down on vehicle tailpipe emissions. As a native of Los Angeles, I was pleased to have played a small part, and recalled the days when Uncle Al had faced off with local industry. By the time I entered Congress, both parties recognized the importance of clean air.

  Ronald Reagan did not. During his presidential campaign, Reagan betrayed his lack of regard for the environment by claiming that trees cause pollution. Soon after sweeping into office on an anti-government wave, he led a serious assault on the Clean Air Act. Reagan wanted to attack the philosophical core of the law—the idea that its central purpose was to protect people’s health—and replace it with a cost-based standard more amenable to business. He wanted to double the amount of pollution cars could emit; double the pollution permitted in national parks; and relax controls on nearly every source of industrial emissions. Most frightening to anyone who cared about the environment was the near certainty that he could do it. American industry eagerly lined up behind him. Republicans had gained expanded numbers in Congress after routing Democrats in the election. And a powerful Democrat, John Dingell of Michigan, champion of the auto industry and chairman of the House Energy and
Commerce Committee, had agreed to sponsor Reagan’s bill. Advocates of clean air knew no darker time than the early days of 1981.

  Yet the rollback never materialized. Reagan’s assault was turned against him, and energized a decade-long battle that culminated in the toughest environmental law in American history. The Clean Air Act Amendments of 1990 reversed the causes of acid rain, ozone depletion, and smog, while imposing further significant restrictions on pollution from cars and trucks. By the mid-1990s it was clear that this was not just America’s toughest environmental legislation, but also its most effective: Dramatic reductions in pollution came at a fraction of the cost that industry and experts had predicted.

  The story of the Clean Air Act is one of the best illustrations of how Congress really works—how the oversight and legislative processes can combine to solve immense societal problems; how industry and its allies in Congress attack the regulatory system, and how they can be stopped; and how major acts of legislation, though they may take years to push through, provide benefits that last for generations. From my own perspective, the fight to renew the Clean Air Act is also an adventure tale, complete with several near-death experiences, years of careful plotting and brinkmanship, and the eventual triumph of David over Goliath. Above all, the story serves as a reminder that no matter how gloomy the outlook or fearsome the opposition of the White House, powerful members of Congress, or the private sector, landmark legislation can be attained through organization, skill, and hard work.

  THE GREATEST MISCONCEPTION ABOUT MAKING LAWS IS THE ASsumption that most problems have clear solutions, and reaching compromise mainly entails splitting the difference between partisan extremes. This is rarely the case, and legislation crafted this way usually fails. “Meeting in the middle” doesn’t work for the simple reason that it invariably neglects to solve whatever problem raised the issue in the first place. Take the problem of smog. If 200 million tons of pollution must be eliminated to clean the air, and industry wants to emit 100 million more, any splitting of the difference would effectively make things worse: The offending industry would wind up being saddled with additional costs, and the air wouldn’t be noticeably cleaner. Nobody wins. Successful legislation, on the other hand, would find a way to solve the problem and clean the air without putting anyone out of business or costing anyone a job. This was the challenge that lay ahead of us in 1981. But first we had to stop Reagan.

  What made the new president’s coalition so imposing was its broad support in Congress. Important leaders in both parties had committed to undoing the 1970 law. From outside, legislative clashes are usually assumed to take place between the two parties; but the reality is that regional loyalties, not partisan ones, often draw the congressional battle lines. Such was the case with clean air. John Dingell, a Democrat, sided with Ronald Reagan, a Republican, because he represented the auto industry, and in 1981 the major automakers were reeling from a severe recession. Chrysler had teetered on the brink of bankruptcy, while Ford and GM were laying off thousands of workers. To Dingell and other Rust Belt Democrats, the conservative push to weaken environmental regulations presented an opportunity for them to ease the economic burden on some important constituents.

  As chairman of the Energy and Commerce Committee, environmental legislation came under Dingell’s purview. So in addition to the automotive industry, he was the point man for the oil, coal, steel, power, and chemical industries as well. Initially, this was a source of strength. Industry presented a unified front because Reagan had promised something for each interest. But privately, each worried that its interest would be sacrificed if the bill ran into trouble. It became one of our primary tactics to exploit this fear.

  Regional differences helped our side, too, though we lacked anything like the nationwide momentum of the Reagan Revolution. Jerry Lewis, a Republican from Southern California also under the shadow of Los Angeles smog, agreed to co-sponsor a competing bill with me. And one of few reassuring moments early on came in conversation with Robert Stafford, a Vermont Republican whom the new Republican majority had made chair of the Senate’s Environment and Public Works Committee. Stafford pledged to do whatever he could to block the Dingell bill that both of us feared would emerge from the House.

  WHEN CONFRONTED BY A STEAMROLLER, AS WE WERE ABOUT TO be, you first need to slow its momentum. There are two ways to go about this. One way is to stall, by whipping up a blizzard of amendments that demand the committee’s attention, while pursuing every parliamentary maneuver in the rule book to delay the proceedings. The other way is to win a skirmish, to prevail on an amendment and force the other side to have to fall back and regroup, in the process sowing doubt and discord in its ranks.

  Dingell envisioned a straightforward power play: He would ram a bill through the House, and then the Senate, backed by a coalition of Republicans and pressure from industry groups. The strategy suited him. An avid hunter, whose office is adorned with animal heads, Dingell is a large man, tall and physically imposing, who can intimidate his colleagues, much like Lyndon Johnson in the famous series of photographs by George Tames. Dingell took such delight in playing the heavy that he even coined a term for his technique. He called it “diddling.” To diddle someone was to aggressively work them over in a very public way and keep going after them until they submitted. Once, while we worked on a bill together, I suggested getting on with business. “No, no,” he replied. “I want to diddle that guy a little longer.”

  Dingell and I introduced competing measures to rewrite the Clean Air Act, though little doubt existed as to whose bill commanded more support. But both were referred to the Health and the Environment Subcommittee—so even though Dingell chaired the full committee, the chairman’s powers initially lay with me.

  As soon as the new administration settled in, I used those powers to hold oversight hearings intended to educate fellow members, Senate colleagues, and the public about the dire nature of what Reagan planned to do. Bill Dannemeyer, the subcommittee’s ranking member, was an adversary from the outset. He didn’t deny that pollution was a problem, Dannemeyer once told the committee, but he had started getting up earlier in the morning for his daily jog and that had made things much better.

  One benefit of the close relationships my staff developed with the agencies was the willingness of some career employees to leak us information when they decided that the administration’s plans were too reckless or damaging. Early on, someone at the Environmental Protection Agency leaked us Reagan’s draft recommendations for amending the Clean Air Act, and the severe cuts he intended promptly became the basis for a hearing that aroused a public outcry.

  Though Washington insiders may have thought that weakening the Clean Air Act was a fait accompli, the rest of the country was unpersuaded. A June 1981 Harris poll showed that 86 percent of Americans opposed the idea. When I invited Lou Harris, the pollster, to appear before the subcommittee, he announced that “clean air happens to be one of the sacred cows of the American people.” Harris was hardly an authority on regulatory policy. But as an expert on public opinion he made a powerful witness nonetheless because he spoke directly to the fears of my congressional colleagues, an audience I very much wanted to influence. In mid-December, the bill had not budged, and industry was growing nervous. To a reporter’s question about what was holding it up, GM’s chief Washington lobbyist replied: “The Lou Harris poll.”

  By February, however, we could hold things back no longer and the steamroller moved on. Dingell’s bill prevailed over mine, and the battle shifted to a series of counter-amendments, each designed to highlight a shortcoming, that my subcommittee colleagues and I introduced over the coming weeks. Dingell defeated every one of them—nearly sixty in all—usually by a 12–8 majority that consisted of three other Midwestern Democrats and the committee’s Republicans.

  Meanwhile, I employed a number of parliamentary tactics to throw sand in the gears, such as insisting that the committee clerk read the entire text of the bill aloud. In this way, we manag
ed to slow matters to a crawl. With the 1982 midterm elections inching closer, Dingell came under growing pressure from nervous lawmakers. That pressure, and my delaying tactics, created considerable tension between the two of us. Then, in late March, a group of protesters leapt up in the middle of a subcommittee hearing and tore open their shirts to reveal “Dirty Dingell” T-shirts underneath. I was stunned, and quite unsure about the protocol for how a chairman should respond. As gently as possible, I suggested to the activists that their outburst was making it difficult to amend the bill, and politely but firmly asked them to stop. A few seats away, Dingell, fuming because I had not immediately evicted them, seemed to suspect that we were somehow in cahoots.

  But the next day our amendment strategy had run its course, and Dingell’s bill passed through subcommittee by a 13–7 vote. All that we had done had not stopped him.

  WITH ACTION NOW SHIFTING TO THE FULL ENERGY AND COMmerce Committee, which was under his chairmanship, our chances of stopping Dingell’s bill appeared all but dead. We embarked on the same delaying tactics as before, in hopes that we could generate media and public attention. The House had something called a “Five-Minute Rule,” which stipulated that committees could not meet for debate without first gaining unanimous consent on the floor. Each morning, the House clerk routinely waived the rule—until I started showing up to insist that he enforce it. Then I’d return to the committee and introduce a point of order that we didn’t have permission to meet, thereby bringing everything to a halt. (The House eventually abolished this rule in large part, it’s said, because of me.)

  We also introduced in the full committee many of the amendments that had failed in subcommittee, still hoping to find an issue where we could prevail over Dingell and demonstrate that his strength was not as great as imagined. We needed a magic bullet. The only advantage in being an enormous underdog up against a broad and powerful coalition is that if you can find a way to weaken it at a critical moment sometimes the whole thing will fall apart. Three amendments struck us as promising, and these became critical test-case votes, recognized by everyone on the committee as important measures of strength.