"This most recent study strengthens the case for reviewing the investment and payout policies of endowments in the context of tax reform.  Taxpayers and students deserve to understand what they're getting in return for the tax benefits awarded to these institutions.  These endowment managers should consider the challenge presented by the President in his state of the union speech and expand educational opportunities by making college more affordable for more students

"It's good to see that university endowments are starting to recover.  Unfortunately, the recoveries aren't leading to significantly higher payouts.  There are more than 62 institutions with endowments greater than $1 billion and more than half of them are private, tax-exempt charities.  The trends in endowment payout rates show that, even in a good economy, the wealthiest institutions hardly ever exceeded a payout of 5 percent.  The trends also show that my concerns about a 5 percent payout rate being a ceiling rather than a floor are valid.  Private foundations have to pay out at least 5 percent every year, and that's become a ceiling for them.

"These same billion-dollar endowments are also making significantly greater investments in alternative strategies when compared to their smaller counterparts.  These alternative strategies include illiquid investments such as hedge funds and private equity funds, many of which are likely offshore.  They also include investments in commodities and distressed debt.  These strategies may be legal but they're not necessarily responsible.  And when the economy declined and students and their families needed the most tuition assistance, many of these institutions raised tuition and lowered endowment payouts because they couldn't liquidate their investments in these alternative strategies."

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Grassley re-introduces bill to apply health care reforms to White House and administration leaders, and equitably in Congress

Previous legislative initiatives by Grassley to establish accountability in Congress and the administration were rebuffed, both in 2009 and 2010, by the Democratic Majority Leader in the Senate.  "As a result, the health care reforms driven by President Obama and Senator Reid do not apply to President Obama and top administration officials or to the powerful congressional leadership staff who helped to make the overhaul the law of the land," Grassley said.  "The message to grassroots America is that health care reform is good enough for you, but not for us."

Grassley said that now that a new Congress has started, Senate leaders have another chance to make things right and should act immediately to pass his Health Reform Accountability Act.  "Until the health care overhaul is repealed and replaced with reforms that have broad-based support, the majority leadership in the Senate and the administration ought to make sure they are required to live under the health care law they put on the books."

Grassley started his accountability effort in September 2009, when the Finance Committee, where he served as Ranking Member, was acting on its reform proposal.  Committee members approved a Grassley amendment to have members of Congress and all congressional staff obtain their health insurance through the same health insurance exchanges where health plans for the general public would be available.  After the bill left committee and during the closed-door reworking of the legislation in the Senate Majority Leader's office, Senate committee and leadership staffs were exempted from the requirement.

In December 2010, when the carve-out was discovered, Grassley and Senator Tom Coburn offered an amendment to restore the requirement for all congressional staff and also to statutorily require the President, the Vice President, top White House staff and cabinet members to get their health insurance through the newly created exchanges.  The amendment did not apply to federal employees in the civil service.  The Grassley-Coburn amendment was never brought up for a vote.  The legislative fix also was not included in the final manager's amendment, controlled by the Senate Majority Leader, on Christmas Eve, when the Senate passed the legislation that ultimately became law.  Grassley made another attempt to have the special carve-out removed during Senate consideration of the health-care reconciliation bill in March 2010.  Again, he was rebuffed.  Grassley filed the same free-standing legislation introduced today immediately following final passage, but it has never been brought up by the Senate Majority Leader, who controls the calendar and Senate businesss.

Grassley said the motivation for his initiative is simple:  public officials who make the laws or lead efforts to have laws changed should live under those laws.  "It's the same principle that motivated me to pursue legislation over 20 years ago to apply civil rights, labor and employment laws to Congress," Grassley said.

That previous Grassley crusade met success in 1995, when President Clinton signed into law Grassley's Congressional Accountability Act.  Before then, Congress had routinely exempted itself from major laws, including the Age Discrimination in Employment Act of 1967, the Americans with Disabilities Act of 1990, Title VII of the Civil Rights Act of 1964, the Employee Polygraph Protection Act of 1988, the Fair Labor Standards Act of 1938, the Family and Medical Leave Act of 1993, the Federal Service Labor-Management Relations Statute, the Occupational Safety and Health Act of 1970, the Rehabilitation Act of 1973, the Veteran's Employment and Reemployment Rights at Chapter 43 of Title 38 of the U.S. Code, and the Worker Adjustment and Retraining Notification Act of 1989.  All 12 of those laws now apply to Congress, thanks to Grassley's reform legislation.

Today, Grassley also is working to make sure Congress lives up to the same standards it imposes on others with legislation such as his Congressional Whistleblower Protection Act.

As far as the health care law, as it stands today, because of the amendment Grassley included in the Finance Committee bill, at least members of Congress and their personal office staffs will be required to obtain their health insurance coverage through the newly created health care exchanges, when the law takes full effect in 2014, instead of the Federal Employees Health Benefit Program.

In March 2010, the White House announced that the President planned to participate in the health insurance exchanges in 2014.  Grassley said at the time that the move effectively endorsed his legislation.  "I appreciate it, but the principle of living under the law shouldn't be voluntary for political leaders."

The companion bill to the legislation filed today by Grassley was introduced last week in the House of Representatives by Representative Michael Burgess of Texas.  It's H.R.360.

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"There is definitely a lack of accountability to the American people when members of Congress receive an automatic pay raise without a yes-or-no vote," Grassley said. "If members of Congress think they deserve a raise, they should have the guts to vote publicly for it."

Grassley has consistently worked to stop automatic pay raises for members of Congress since he has been in Congress.  Grassley has also recently been part of the successful efforts to block the scheduled congressional pay raise for 2010 and 2011.

The legislation would eliminate the automatic pay increase and require any provision included in a bill that would increase congressional pay to receive a roll-call vote in the Senate before it can pass. Under current law, members of Congress automatically receive an increase each year based on a cost-of-living-adjustment, unless the Congress takes action otherwise, as it did for 2010 and 2011.

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KOHL, GRASSLEY: STOPPING "PAY-FOR-DELAY" DEALS ESSENTIAL TO LOWERING RX DRUG COSTS

Bipartisan effort to speed less expensive generic prescription drugs to market

WASHINGTON, D.C. - U.S. Senators Herb Kohl and Chuck Grassley have reintroduced legislation limiting pay-for-delay settlements used to keep lower-cost generic drugs off pharmacy shelves.  Under these pay-off agreements, brand name drug companies settle patent disputes by paying the generic drug manufacturer in exchange for a promise that it will keep its generic version of the drug off the market. Kohl and Grassley's "Preserve Access to Affordable Generics Act" will stop this anti-consumer practice by presuming these deals illegal, and giving the FTC the authority to stop them.

"Generic drugs save consumers and the federal government money, to the tune of billions of dollars a year. But in order to freeze out competition and delay entry of low cost generic drugs for consumers, brand-name drug companies pay-off generic manufactures to keep their products off the market.  It is past time to put an end to these backroom deals and pass this bipartisan legislation," Kohl said.

"These agreements between generic and brand name pharmaceutical manufacturers are only serving to line the pockets of the companies.  When people across the country are having a hard time making ends meet, this wheeling and dealing simply delays the entry of lower priced medicines into the marketplace, leaving consumers on the short end of the stick," Grassley said.

A compromise version of this legislation passed the Judiciary Committee in late 2009 and was included in the Financial Services and General Government Appropriations bill reported out of the Senate Appropriations Committee last year. Final passage of the bill stalled when the House and Senate failed to agree on an Omnibus Appropriations package last month.

The Federal Trade Commission has estimated that stopping these types of settlement agreements would save consumers at least $35 billion over the next ten years, and provide significant cost savings in the amount of $12 billion over ten years for the federal government, which pays approximately one-third of all prescription drug costs. A recent CBO report estimates that the federal government could save $2.68 billion over ten years, should this bill become law

Despite the FTC's opposition to pay-for-delay patent settlements, two 2005 appellate court decisions have permitted these payoffs.  In the two years after these two decisions, the FTC has found nearly half of all patent settlements involved payments from the brand name from the generic manufacturer in return for an agreement by the generic to keep its drug off the market.  According to a study by Pharmaceutical Care Management Association (PCMA), health plans and consumers could save $26.4 billion over the next five years by using the generic versions of 14 popular drugs that are scheduled to lose their patent protections before 2010.

Brand-name drug companies and generic manufacturers routinely enter into settlement agreements to end drug patent litigation, but until 2005, none of them included pay-for-delay provisions. From 2000 to 2004, companies assumed such agreements violated antitrust law.  But in 2005, following three courts of appeals decisions that prevented the FTC from taking action on behalf of consumers, pay-for-delay settlements became commonplace. In the four years following these court decisions 63 out of 194 patent settlements had provisions in which the brand name drug company made payments to the generic manufacturer in exchange for the generic manufacturer agreeing to delay entry of generic competition.  In 2009, there were a record 19 pay-for-delay settlement agreements that kept generics off the market.

Last Congress, Kohl served as chairman of the Senate Judiciary Subcommittee on Antitrust, Competition Policy, and Consumer Rights. Grassley is the incoming Ranking Member of the Judiciary Committee.

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