Posted 18 April 2004
(Editor's note: UPI Investigative Reporter Gregory Gordon spent eight months examining industry research into popular artificial sweetener, NutraSweet and the Food and Drug Administration's handling of the product permeating the diet food and drink markets. Here is the third in his three-part report.)
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.'s domestic monopoly on aspartame sales for another five years, 10 months, and 17 days.
"We think it's 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 Searle's stockholders sell the company's 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.
Heflin's 1984 reelection committee received contributions totaling at least $9,000. from Searle's 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.
Hatch's 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 Heflin's legislation marked one of only a handful of instances in the last three decades in which a company's 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 sweetener's safety from Arizona food scientist, Dr. Woodrow Monte after hiring Arizona Gov. Bruce Babbitt's 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 Monte's 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 Searle's 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 Searle's 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 Administration's 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 company's 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. Attorney's 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 Searle's 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, Hayes' deputy, Mark Novitch, approved the use of aspartame in soft drinks.
Kligerman dismissed as "crap" Searle's 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 Searle's 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 aspartame's 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 Heflin's reelection committee received $1,000. donations from Daniel Searle, the chief executive officer of the giant pharmaceutical company; his wife, Dain; William Searle, Searle's brother who was a company director; William Searle's 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, Hatch's 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 Heflin's 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. Metzenbaum's 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 Heflin's 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 measure's 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 NutraSweet's safety.
The ensuing events, Monte charged, "reflected exactly what Searle has been doing all along. They've 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, Monte's 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 Searle's 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. Babbitt's 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 State's 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 colleagues' campaigns.
Barr and Arizona State University Regent William Reilly contacted the school's president, J. Russell Nelson, and Academic Vice President Jack Kinsinger to inquire into Monte's 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 Monte's 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.
Monte's 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, 99o 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 DHS's 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 Mathis' 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 Monte's knowledge of an upcoming CBS story critical of the FDA's 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 "didn't 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., Searle's vice president for corporate communications.
Charles Greener who said he was "unaware" of Rep. McEwen's 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 company's 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 Ford's chairman of the Civil Aeronautics Board. Robert Shapiro, Robson's 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 Rumsfeld's 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 Searle's 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 company's 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 Searle's 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 what's in NutraSweet."
True, bananas, milk and NutraSweet all contain phenylalanine, one of 21 amino acids that form the "building blocks" of protein. But that doesn't 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, "That's 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,' 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, who's 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.