SEN. KENNEDY's RETURN TO CHAIR LABOR & HUMAN RESOURCES COMMITTEE LOOKS LIKE BEST OPTION FOR DRUG INDUSTRY; SEN. METZENBAUM IS ALTERNATIVE

The pharmaceutical industry finds itself in the unexpected position of rooting for the return of its former nemesis Sen. Kennedy (D-Mass.) as chairman of the Labor & Human Resources Committee, following the net gain of eight Senate seats by the Democrats in the Nov. 4 elections.

The alternative to Kennedy is the outspoken drug industry critic, Sen. Metzenbaum (D-Ohio). Kennedy and Metzenbaum rank one-two in seniority among Democrats on the Senate committee with jurisdiction over health-related legislation. Both are understood to be interested in chairing the committee.

Metzenbaum has been fiercely independent in the health care area. His views often closely reflect the concerns of the Health Research Group and activist consumer organizations.

After delaying legislation until the eleventh hour, Metzenbaum cast the sole no vote against the Senate precursor of the post-1962 ANDA/patent extension law in August 1984.

In the 99th Congress, the Ohio Democrat blocked an animal drug ANDA bill because it contained patent extension provisions.

Metzenbaum has been an adamant critic of the drug export legislation. He almost derailed that bill in May of this year by tacking on an infant formula control amendment that was unacceptable to key pharmaceutical manufacturers. However, infant formula legislation eventually cleared the Congress as part of the anti-drug abuse law. In addition, the Ohio Democrat ultimately cooperated with sponsors of the export package in order to advance legislation authorizing funds for Alzheimer's disease research.

Kennedy's position towards the drug industry has moderated significantly from his drug investigatory hearings in 1974-1978. Over the last four years, he has worked closely with the industry on several pieces of legislation, including the drug export bill and protecting tax credits for operations in Puerto Rico.

The decision on the chairmanship is ultimately up to Kennedy, who was scheduled to announce his choice at a Nov. 8 press conference. As ranking Democrat on the health committee and the Democrat with overall Senate seniority on the Judiciary Committee, he may choose to chair either legislative panel. Kennedy has expresed interest in both positions and was said to be undecided as to which position he will select.

Both committee chairs offer attractive positions for visible criticism of the Reagan Administation during its final two years. The Judiciary Committee, however, may be the most attractive at the moment because of the possibility of further Reagan appointments to the Supreme Court. Kennedy played a major role in trying to hold up the nomination of William Rehnquist as the Chief Justice earlier this year.

One factor pulling Kennedy to the Labor & Human Resources Committee may be his staff's experience in that area. As ranking minority member on Labor & Human Resources, Kennedy already has in place a committee staff that understands current health issues. However, Kennedy's key staffer from the drug hearings, Larry Horowitz, is no longer with the committee.

Another drawing card for the health position is Kennedy's continuing interest in catastrophic health insurance. The health insurance issue could be a potent political subject for a Democratic controlled Congress in 1987-1988.

There may be an opening in the Reagan Administration for forcing the subject: HHS Secretary Bowen has favored catastrophic insurance plans in the past. At confirmation hearings in December 1985, Bowen suggested that acute and long-term catastrophic care could be provided under Medicare by a $12 increase in Part B monthly premiums.

The importance of the Democratic control of the Senate to the drug industry is highlighted by the threat of hearings on Rx drug marketing practices.

Chairman Dingell (D-Mich.) of the House Energy & Commerce Committee has warned of his interest in marketing hearings in reaction to the failed legislative efforts at a drug diversion/sampling bill in the 99th Congress.

With either Kennedy or Metzenbaum at the head of the Labor & Human Resources Committee, Dingell could expect support for a marketing investigation and subsequent legislation. Ironically, Kennedy, who examined the subject in intensive hearings in the 1970's, is probably the lesser threat to the industry.

Metzenbaum could be attracted to sampling and diversion by the action of his home state pharmacy board. Administrative procedures by the board led to a series of penalties and fines ("The Pink Sheet" July 28, T&G-7). The prospect of a Dingell-Metzenbaum combination on the drug sampling/diversion issue cannot be palatable to the drug industry. The new alignment could mean drastically altered prospects for pending health legislation from the 99th Congress.

Regardless of which senator heads Labor & Human Resources, a key question during committee selecting will be whether the Democrats decide to reinstate the Health Subcommittee.

In 1981, Sen. Hatch (R-Utah) disbanded the subcommittee to strengthen his control over all health issues as chairman of the full committee. Hatch also chaired the Judiciary Committee's Constitution Subcommittee, and Senate rules prevent committee chairmen from heading more than one subcommittee.

If Kennedy chairs Labor & Human Resources, it is likely he would similarly want complete control over health issues. In that case, he would not reinstate the health subcommittee. He also reportedly is seeking chairmanship of a subcommittee of the Armed Services Committee.

Tennessee Senator Gore, who was very active on health issues while in the House, is not expressing interest in a Labor & Human Resources Committee appointment. He has kept in touch with FDA matters and tried unsuccessfully to tack a bill to require Senate confirmation of the FDA commissioner onto legislation at the end of the last session.