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Executive Summary

Merck Chairman Roy Vagelos and Lilly Chairman Richard Wood headed a contingent of pharmaceutical industry executives who traveled to Washington Oct. 24 to urge the Administration to sign the compromise drug export/vaccine compensation legislation. The Merck and Lilly chairmen provided top-level follow-up in Washington to work done by representatives of the two companies at the end of the legislative session to revive drug export legislation as part of an omnibus bill (S 1744). Schering-Plough, Genentech and the Industrial Biotechnology Association (IBA) are also credited by Capitol Hill leaders as major players in the final negotiations to salvage an export bill. The industry executives reportedly met with Treasury Secretary James Baker Oct. 24 and Office of Management & Budget Director James Miller to press the campaign to get President Reagan's signature. The objective of the bill's supporters is to rally enough support within the administration -- especially for the export/trade part of the bill -- to offset the obdurate opposition of the Justice Department to the vaccine compensation plan. Baker, Miller, Vice President Bush, White House Chief of Staff Regan, Commerce Department Secretary Baldrige, and U.S. Trade Representative Yeutter are all considered potential allies of the omnibus bill. The nonprotectionist, free trade aspects of the export bill are expected to be a strong selling point with those key Reagan advisors. The pharmaceutical export bill and the vaccine injury compensation bill passed Congress as part of a comprehensive package of health legislation that was drafted with bipartisan agreement on Oct. 17. The package cleared the House the same day, and it became the next-to-last bill to pass the Senate on Oct. 18, the final day of the 99th Congress. The political liability in the omnibus package is the vaccine compensation package -- pushed on the Hill by Rep. Waxman (D-Calif.) and Sen. Hawkin (R-Fla.). The Administration, led by Justice, has been opposed to vaccine compensation legislation. Without a signature ten days after enrollment at the White House, the bill would die by "pocket veto." Sens. Hatch (R-Utah) and Hawkins convinced the Administration on Oct. 18 to release holds on the bill. Hatch, as sponsor of the export legislation, needed the vaccine part of the bill to get House clearance for exports. While Meese called off the "holds" on the bill, the department remains opposed to a national compensation program for victims of mandatory vaccinations on the grounds that it establishes a new federal entitlement program and presents a potential violation of the Constitution's separation of powers provision. The struggle between Hatch and Justice over the omnibus bill is a turn of events. Hatch has been an outspoken Senate supporter of Justice Department positions regarding Constitutional issues. If the Republicans hold control of the Senate, he is reported ready to seek a change to the chairmanship of the Judiciary Committee. Reagan could dodge the potential for adverse publicity from vetoing a bill with general health issues such as funding for Alzheimer's disease and vaccine compensation by signing the bill and hoping that the vaccine compensation section is killed later by a lack of appropriations. The bill states that after its enactment the vaccine program "shall take effect on the effective date of a tax enacted . . . to provide funds for compensation." However, counting on a new Congress to vote down vaccine funding would be a risky way for Reagan to kill a bill. By lobbying around Meese and Justice, the bill's supporters are seeking to isolate his dissent in a chorus of support among President Reagan's advisers. Although HHS Secretary Bowen wrote an Oct. 7 letter opposing the vaccine compensation bill, industry supporters are hopeful that he will recommend that the President sign the omnibus measure. HHS has long advocated the package's health planning provisions, which revoke the certificate-of-need program regulating hospital construction and equipment purchases. Furthermore, the American Medical Association the American Academy of Pediatrics, and other health professional organizations endorse the omnibus bill. To rally support, lobbyists for the bill hired the public relations firm Hill & Knowlton to place a full-page ad in Oct. 27 editions of the New York Times. The ad is signed by a coalition of 40 health care associations and companies. Lederle, which had objected to the vaccine bill during Hill progress, did not sign the ad. However, the company released a statement saying that it supports the entire legislative package. Lederle has been very active on the export bill. The bill got two favorable editorials from The Washington Post, but a strong statement against the bill by The Wall Street Journal on Friday, Oct. 24 chilled the short public relations campaign. The Journal challenged Reagan to make the bill a test of the constitutionality of the line-item veto by signing the act and striking out the vaccine section. Hatch and Waxman plan a press conference on Oct. 28 to draw more attention to the bill. Another aspect of the strategy for getting the legislation signed is the upcoming elections. Proponents are trying to tie the bill to important Senate races for control of the upper chamber. Two of the key races involve Rep. Zschau (R-Calif.), who is challenging Sen. Cranston (D-Calif.) for his Senate seat, and Sen. Hawkins. Reagan traveled to Florida with Hawkins Oct. 23-24 to campaign; she might be able to persuade the President that her re-election chances would be helped by his signing the only major bill she has been directly involved with during her Senate tenure. During the week of Oct. 27, Reagan is traveling to California, where he will stump for Zschau. The Republican congressman hails from Silicon valley and is identified with the export bill.

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