UPI REPORT PART 3:
Part 3:
Sweet Corporate Victories
by: Gregory Gordon
WASHINGTON (UPI) In October 1982, Sen. Howell Heflin, D-Ala, proposed
an obscure amendment altering the laws covering U.S. patent extensions,
a move affecting only one company and one product, the artificial
sweetener, aspartame.
Without mentioning aspartame, which is sold under the name NutraSweet,
the senate passed the amendment to the Orphan Drug Act, extending G.D.
Searle Co.ís domestic monopoly on aspartame sales for another five
years, 10 months, and 17 days.
"We think itís an excellent amendment," remarked Sen. Orrin Hatch, R-
Utah, wrapping up a five-minute discussion on the Senate floor.
When the House approved the same language a month later, it all but
cinched another $3.5 billion to $4 billion in revenues for the Chicago-
based, Searle.
It helped Searleís stockholders sell the companyís assets, including
its lucrative NutraSweet division and the two domestic use patents, for
$2.7 billion to the Monsanto Corp. in the summer of 1985.
Sponsors of the measure found their campaign committee, enriched.
Heflinís 1984 reelection committee received contributions totaling at
least $9,000. from Searleís top officers and its political action
committee, more than any others among a long list of Searle
beneficiaries in Congress, federal Election Committee records show.
Hatchís committee received at least $3,000. the records show.
Heflin defended his sponsorship of the measure, saying Searle had been
victimized by regulatory delays that ate up most of its 17-year patent.
But a spokesman for the U.S. Patent Office said Heflinís legislation
marked one of only a handful of instances in the last three decades in
which a companyís patent has been extended by a private bill in
Congress.
It also provided a glimpse of the adeptness with which Searle,
Monsanto, and their lobbyists have guided the artificial sweetener
through the obstacles of government regulatory bureaucracies to capture
big financial rewards.
Headed by Donald Rumsfeld, the former Ford White House Chief of Staff,
Searle repeatedly demonstrated its political acumen on other front, too,
in the years prior to the sale to Monsanto.
In 1981, the company overcame a controversy-snarled, eight year review
process to win Food and Drug Administration approval for NutraSweet.
In 1984, Searle parried an assault on the sweetenerís safety from
Arizona food scientist, Dr. Woodrow Monte after hiring Arizona Gov.
Bruce Babbittís former chief of staff as a lobbyist. Searle officers
passed along campaign contributions of $2,000. to a key lawmaker, and
the company soon had won passage of legislation crushing Monteís efforts
to force tough state restrictions on the sweetener.
"I don't know of any company that has apparently covered all of its
bases as well as has Searle," said Sen. Metzenbaum (D-Ohio). "Whether it
has to do with the scientists or lawyers, or non-profit institutions, or
universities, or whatever; in every instance, I have found that they
have expended their dollars very carefully and very wisely, but without
apparent restraint as to the amount."
Indeed, besides Searleís hiring of up to a dozen lobbyists, UPI traced
nearly $200,000. in federal campaign contributions between 1973 and 1986
from its officers and political action committee.
The political intervention in the patent process drew the ire of
several small companies seeking to enter the aspartame market,
triggering charges that a corporate giant benefited from unjustified or
preferential treatment.
"I think its obvious they (Searle officials) used political muscle,"
Alan Kligerman, president of Lactaid, Inc., a New Jersey diet food
manufacturer, said of the patent extension. He said his firm had been
interested in manufacturing aspartame until the patent was extended, but
"Searle was well wired in."
"It is possible that they (the Senate) did not know what they were
passing," he said. "I don't know how they got that through, except with
the right phone calls."
"I would not hesitate to say," Metzenbaum said, "that the manner in
which that five-year extension of the patent rights was put through on
the floor of the U.S. Senate was totally inappropriate."
"It should not have been without the entire body being advised that,
that issue was going to be on the floor of the Senate."
Metzenbaum said that the Senate has an "alert" system under which all
legislation is cleared with individual senators before it is brought to
the floor, but the system was bypassed.
Jerry Ray, a spokesman for Heflin, asserted the offices of key
senators, including Metzenbaum, approved the measure before it went to
the floor. But Ray offered no explanation for the failure to fully
disclose the contents and impact of the measure.
Ray quoted Heflin, Chairman of the Senate Ethics Committee, is saying
Searle representatives never mentioned campaign contributions in asking
him to sponsor the amendment.
Heflin said he has "supported all patent restoration bills" because
regulatory delays have created "a chronic problem" in which companies
get so little use out of their 17-year patents, they are reluctant to
put money into research.
Heflin said, in Searleís case, "almost 35 percent of the patent term
had been used on a long series of administrative hearings, trials, and
appeals (in) which, in the end, the corporation finally prevailed. To
not restore some of the patent term lost would unfairly penalize them."
G.D. Searle sought an extension of its patent on grounds that the Food
and Drug Administrationís handling of its aspartame approval petition
was "an unparalleled instance of unnecessary regulatory delay, which
worked a great injustice to Searle".
Critics argue that, to the contrary, the FDA suspended its 1974
approval allowing Searle to market the sweetener because of evidence the
companyís animal studies were flawed and the results were misrepresented
to the FDA in the early 1970's.
The evidence prompted FDA chief counsel Richard Merrill to ask the U.S.
Attorneyís office in Chicago to open a grand jury investigation into
possible fraud by the company. While a grand jury investigated similar
allegations related to Searle drug products, no such inquiry was ever
begun into the aspartame testing. But the FDA was concerned enough about
Searleís research to appoint two task forces, a university research
group, and a Public Board of Inquiry to review various studies.
In 1981, shortly after taking office, FDA commissioner Arthur Hull
Hayes, Jr. overturned the three-man Board of Inquiry and approved sale
of NutraSweet in dry foods. Two years later, Hayesí deputy, Mark
Novitch, approved the use of aspartame in soft drinks.
Kligerman dismissed as "crap" Searleís contention it had been
victimized by the FDA bureaucracy, which delayed a decision from 1975 to
1981.
"The FDA had reason for doing this," Kligerman said of the intense
review process. "It was not an unnecessary delay. It was Searleís fault
this happened."
For Purification Engineering, Inc. of Columbia, Md., which raised money
from private investors and built a plant solely to manufacture aspartame
for Searle, the congressional action ultimately turned out to be
devastating.
Gary Calton, a senior vice president for Purification Engineering, said
that on Jan. 4, 1985, Searle notified the firm its contract would not be
renewed. Seven months later, the firm was sold to Rhone-Poulenc Co., a
French firm.
"My company would have been worth a great deal more if it had not been
for that (patent) extension," Calton said. (Note: Searle sold The
NutraSweet Co. to Monsanto in 1985) Calling the action unfair, he said,
"I don't think Congress should go around passing laws making G.D. Searle
rich any more than they should go around making me rich."
Searle officials declined to discussed the patent extension, but a
company lobbyist, former White House official William Timmons, said the
company "felt there was an injustice" in the delays following
aspartameís 1974 approval. He said the company "took an advocacy role by
talking to a lot of members of Congress".
In May of 1984, FEC records show Heflinís reelection committee received
$1,000. donations from Daniel Searle, the chief executive officer of the
giant pharmaceutical company; his wife, Dain; William Searle, Searleís
brother who was a company director; William Searleís wife, Sally;
Suzanne Searle Dixon, a sister of the Searles; and her husband, Wesley
Dixon, who also was a company director.
Heflin also received $1,000. from William Searle prior to the general
election, and $2,000. in Searle PAC contributions, FEC records show.
On November 1982, a week after his reelection and a month after
praising the amendment in the Senate chambers, Hatchís committee
received $2,000. in contributions from top Searle officers, the records
show.
Sen. Robert Byrd (D-W.Va.), who brought the amendment up for a vote on
Heflinís behalf, also received a $1,000. campaign contribution from
Daniel Searle on Sept. 25, 1981.
Hatch received contributions of $1,000. each from Daniel Searle, Wesley
Dixon, and William Searle on Nov. 11, 1982, days after he was reelected
to a second term in which he continued as chairman of the Labor and
Human Resources Committee that oversees the FDA.
As chairman of the panel until last January, Hatch repeatedly blocked
Sen. Metzenbaumís calls for new hearings into the safety of NutraSweet.
Prior to his reelection, Hatch also received $2,500. in contributions
from the soft drink PAC.
Rep. Henry Waxman (D-Calif.), who sponsored the Orphan Drug Act
covering research for treating rare diseases and who carried Heflinís
patent amendment to the bill in the House, received $1,500. in campaign
contributions from the soft drink PAC, including $500. two days before
the measureís introduction in the House.
Like Heflin, Waxman made no mention of aspartame in describing the
Senate amendments to the drug act on the House floor.
Searle also flashed its political prowess after Arizona scientist
Woodrow Monte stirred up a furor in 1984 by publicly assailing
NutraSweetís safety.
The ensuing events, Monte charged, "reflected exactly what Searle has
been doing all along. Theyíve been buying their way into the hearts and
minds of America. They've been using their financial acumen to get their
way."
Within months, legislative rules were swept aside one day in early 1985
and, in a swift, subtle maneuver without notice to the public, Monteís
campaign for state regulations on the sweetener was sidetracked.
Monte was a leading national advocate in the drive to block marketing
of NutraSweet until his own credibility was damaged in 1984 with
disclosures he had invested in "put options" that would have earned
profits if Searleís stock dropped.
He now concedes his options trading was a mistake, but denies it
influenced his research.
Monte said he was convinced in 1983, when the FDA okayed use of
NutraSweet in carbonated beverages, that the sweetener would break down
into poisonous quantities of methyl alcohol in diet sodas left in the
Southwest sun.
Monte, director of the Food Science and Nutrition Laboratories at
Arizona State, and two consumer groups petitioned the Arizona Dept. of
Health Services to ban the sweetener.
Monte said his rat studies had shown that chronic ingestion of methyl
alcohol causes brain damage similar to that in humans suffering from
Multiple Sclerosis, including seizures, amnesia, optic neuritis,
numbness, and dizziness. In the desert heat, Monte said, methanol
degrades faster into toxic methyl alcohol.
Searle and FDA officials have argued that aspartame contains too little
methanol to pose a health hazard.
When Monte and the consumer groups pressed their legal challenge for
more than a year, Searle flexed its muscle: The company dispatched a
coterie of lobbyists to the state capitol, among them Andrew Hurwitz,
Gov. Babbittís former Chief of Staff; prominent Arizona lobbyist Charles
Pine; company lawyer Roger Thies, and another company official, David
West.
Between August 23, and Sept. 21, 1984 company officers Daniel Searle
and his brother-in-law, Wesley Dixon, each contributed $1,000. to the
campaign of State House Majority Leader Burton Barr, later a GOP
candidate for governor, reports to the Arizona Secretary of Stateís
office records show.
Campaign disclosure forms show revealed that, during the same period,
several House Republicans received contributions from the Committee to
reelect Barr, including State Reps. Don Aldridge, Karen Mills, and Jan
Brewer, all among the Health Committee members who voted 13-0 to pass
the measure affecting NutraSweet. The trio received $1,500., $1,000. and
$750. respectively from Barr, who for years has enhanced his influence
by donating to colleaguesí campaigns.
Barr and Arizona State University Regent William Reilly contacted the
schoolís president, J. Russell Nelson, and Academic Vice President Jack
Kinsinger to inquire into Monteís public attacks on NutraSweet,
published reports said. Kinsinger insisted that the issue caused no
delay in his decision to grant Monte tenure. Barr did not return phone
calls.
When Monteís first petition was rejected and he filed for
reconsideration, Hurwitz wrote a letter offering legal advice to the
Dept. of Health Services (DHS) about its response, and sent copies to
Barr and aides to Gov. Babbitt.
In April of 1985, about the same time Monte and his associates finally
were to be granted a hearing before the state agency on their petition,
they learned that the Arizona Legislature had used a rare maneuver to
change the law, without public notice to bar state regulation of FDA-
approved food additives. The measure passed under the misleading title
of a toxic waste bill.
Monteís campaign to ban NutraSweet in Arizona prompted the State Dept.
of Health Services to conduct a study to determine how much NutraSweet
soft drinks degraded in high-temperature conditions. The study,
completed in July 1984, found that methanol levels were highest (9.4
ppm), in Diet 7-Up samples stored the longest time in the warmest
temperature, 99? F heat.
Present and former Arizona state officials have told UPI that the study
concerned DHS officials enough that they discussed a NutraSweet ban.
But Norman Peterson, manager of the DHSís Office of Chronic Disease and
Environmental Health Services, said that the agency concluded that "the
FDA address the methyl alcohol question and had all sorts of supporting
data. We had no basis for saying that the data they had presented in
support was not correct or adequate."
Another source said Peterson was distressed enough that, during a
meeting attended by DHS director Donald Mathis, he proposed being
allowed to recommend that pregnant woman, and children, limit their
consumption of NutraSweet.
Peterson would not confirm the episode, but recalled that he "was upset
about the fact that there were so many unanswered questions".
Mathis, who since left the agency, said he was satisfied that it
"wouldn't be humanly possible" to ingest levels of NutraSweet that would
produce a toxic reaction.
In September 1984, Monte and his associates file suit to force the DHS
to impose storage and labeling requirements or ban NutraSweet
altogether. But a proposed settlement under which the agency would hold
a public hearing was scuttled because it lacked the approval of Mathisí
successor, Lloyd Novick.
After more negotiations, the DHS agreed to hold a hearing. But before
it could take place, the issue was killed by the legislative change.
House Speaker James Sossaman later admitted that the GOP-controlled
House violated its own rules in passing a so-called "strike all"
amendment. Chairman Bart Baker of the Health Committee engineered the
action, in which an existing bill was stripped, replaced with the
NutraSweet language and brought to a vote without the required 24 hours
public notice.
For Monte, the development was all the more staggering after he had
gotten into a jam over his stock purchase. Monte said that, after
reviewing files at the FDA and consulting with his lawyer in 1983, he
invested less than $2,000. on Searle options, hoping to raise money to
support his costly legal battles against the sweetener. He said he ended
up losing $1,224.
Lawyer Rick Faerber also invested in part, he said, because of Monteís
knowledge of an upcoming CBS story critical of the FDAís approval of
aspartame. He said stock analysts had phoned Monte inquiring about his
Arizona petitions and apparently got the idea the developments would
depress the stock value.
Faerber said he regrets telling Monte that he "didnít think there was
anything wrong" with investing, particularly because pro-NutraSweet
forces apparently learned of their dealings. CBS employees also bought
"put options" but a Securities and Exchange Commission investigation did
not lead to any charges.
Shortly after news stories about the investment appeared, Rep. Bob
McEwen, (R-Ohio), assailed CBS and Monte for "irresponsible reporting
and conflicts of interest" in a brief speech on the floor of the U.S.
Senate. McEwen charged that the "false report" about NutraSweet was
aired solely for profit.
But in his speech, Rep. McEwen did not mention that his top assistant
Charles Greener, is the son of William Greener, Jr., Searleís vice
president for corporate communications.
Charles Greener who said he was "unaware" of Rep. McEwenís floor speech
until after it occurred, said his father never has handled NutraSweet
matters and that McEwen did not know any Searle officials.
The success of the Searle family business, founded 80 years ago, is all
the more astounding when compared to the companyís predicament in 1977
when it plucked Rumsfeld as its president. Facing a company mired in
debt, Rumsfeld, a native Chicagoan and former Illinois congressman,
quickly hired three other outgoing Ford Administration officials to join
him.
As executive vice president, he named John Robson, a former partner in
the law firm of Sidley & Austin who had served as President Fordís
chairman of the Civil Aeronautics Board. Robert Shapiro, Robsonís
special assistant at the Transportation Department, was tapped as
general counsel. Rumsfeld also hired William Greener, Sr., who had been
a spokesman in the Ford White House and Rumsfeldís chief spokesman at
the Pentagon.
The pharmaceutical company suddenly was being run by lawyers and
politicians.
Stomaching a $28 million net loss in his first year, Rumsfeld slashed
Searleís operations, selling off more than 30 subsidiaries worth more
than $400 million.
Before Rumsfeld could mount a full scale effort to lift a FDA freeze on
the sale of NutraSweet, Searle was hit with serious new problems. Suits
filed on behalf of 780 women, alleged the companyís Copper 7
intrauterine device had caused them to develop pelvic inflammatory
disease, an infection of the reproductive tract that can lead to
sterility, even death.
Before the suits could be settled, Searle sold out to Monsanto.
The huge, St. Louis-based chemical company and its officers were
promptly met with stockholder suits alleging they had failed to explore
potential safety problems with Searleís biggest moneymakers- Copper 7
IUD and NutraSweet.
Rejecting criticism of the acquisition, Earl Harbison, Jr., executive
vice president of Monsanto and Chairman of the Board of its Searle
pharmaceutical subsidiary, said in October 1985, that Monsanto "studied
this situation (Copper 7 litigation) very closely prior to acquiring
Searle, including consultations with independent physicians".
"We satisfied ourselves with the safety and efficacy of the product," he
said.
Since then, Copper 7 has been pulled off the market. Some lawyers
likened the resulting legal morass to the failure of the Dalkon Shield
that drove the Richmond-based A.H. Robins Co. into Chapter 11 bankruptcy
protection.
But a former Monsanto official, who requested anonymity, said that as
part of the sale agreement, Searle set aside reserves to cover the IUD
lawsuits. Thanks to NutraSweet, Searle family members Daniel and William
Searle and their sister, Suzanne Searle Dixon, to date appear to have
walked away unscathed from all the crises and legal battles.
And even if NutraSweet were proved hazardous, the purchase agreement
provided "no escrow, reserve or holdback for liability stemming from the
potential health hazards attributed to the NutraSweet product line,"
says one lawsuit filed by Chicago lawyer Robert Holstein on behalf of a
Monsanto stockholder.
And Rumsfeld emerged from his nine years with the company in solid
financial condition. Securities and Exchange Commission records show
that for his guiding the sweeping turnaround, he earned more than $ 2
million in salaries and more than $1.5 million in bonuses between 1979
and 1984.
"Banana plants don't make NutraSweet," the television announcer noted
wryly, and the image of an exotic bird perched in a jungle tree filled
the screen.
"Neither do cows," said the voice, as the camera cut to a robust-
looking heifer wagging its tail. "But they might as well. If you've had
bananas and milk, you've eaten whatís in NutraSweet."
True, bananas, milk and NutraSweet all contain phenylalanine, one of 21
amino acids that form the "building blocks" of protein. But that doesnít
tell the whole story. Dr. Richard Wurtman, a neuroscientist at the
Massachusetts Institute of Technology, says that because NutraSweet
lacks other important amino acids normally found in foods, the brain
absorbs unusually high levels of phenylalanine that could increase the
likelihood of epileptic seizures.
Referring to an ad proclaiming that the body treats the ingredient of
the artificial sweetener "no differently than if they came from a peach
or a string bean or a glass of milk," Wurtman said, "Thatís not true."
Dr. Louis Elsas, director of medical genetics at Emory University,
groans at the industry arguments that eating or drinking NutraSweet
(aspartame) is just like eating a hamburger.
"Phenylalanine is a known toxin to the brain,í Elsas said. "Aspartame
is phenylalanine, and drinking aspartame is like drinking phenylalanine
as an individual amino acid."
A spokeswoman at the New York offices of Ogilvy and Mather, the lead ad
agency on the sweetener account for the Chicago-based NutraSweet Co.,
declined comment on the allegation. The drumbeat of NutraSweet
advertisements has been steady. Beverage Industry, a trade publication,
labeled the NutraSweet blitz "probably the largest advertising campaign
ever designed around a product ingredient."
Industry sources say that since 1984, The NutraSweet Co. alone has
spent $30 million to $40 million a year on advertising, and ads by diet
soft drink manufacturers and other companies, whoís products carry the
swirl trademark of the sugar-free sweetener, would easily send that the
figure past $100 million a year.
The campaign has worked to make NutraSweet a household word.
Football stars Joe Montana and Dan Marino and boxer Marvin Hagler have
pitched products containing the artificial sweetener on television.
Former Democratic vice presidential candidate Geraldine Ferraro has
appeared in advertisements endorsing a product containing NutraSweet, as
have numerous celebrities, including Bill Cosby, Raquel Welch and Billy
Crystal.
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