The NewsHour with Jim Lehrer

JIM LEHRER: Good evening. I'm Jim Lehrer. On the NewsHour tonight Betty Ann Bowser reports on the Florida fires; two former prosecutors debate a judge's rebuke of Independent Counsel Kenneth Starr; Tom Bearden chronicles the war between generic and brand name drugs; and four former officials assess the President's China trip impact on US interests. It all follows our summary of the news this Thursday.% ? NEWS SUMMARY

JIM LEHRER: Wildfires burned out of control in Florida today. Thirty-five thousand people were evacuated from Brevard and Velusia Counties near Daytona Beach. At least 80 homes and businesses were destroyed overnight. Police closed more than 125 miles of Interstate 95 from Jacksonville south to Titusville, near Cape Canaveral. Officials said they do not have enough equipment or manpower to battle the fires. Three firefighters have been injured, but no deaths have yet been reported. High temperatures and strong, gusting winds are expected to continue to spread the flames. We'll have more on this story right after the News Summary. The US unemployment rate was 4.5 percent in June, up .2 percent from a 28-year low in May and April. Today's Labor Department report blamed part of the rise on the General Motors strikes. Linda Tripp testified for a second day before a federal grand jury in Washington. Her first appearance was Tuesday. The panel is investigating the Monica Lewinsky matter. Tripp is the Pentagon employee who tape-recorded conversations with Lewinsky about an alleged relationship with President Clinton. We'll have more on the Starr investigation later in the program. President Clinton arrived in Hong Kong today. It's the final stop of his nine-day China tour. He pledged US support for the revival of Asian economies and said Hong Kong was vital to the future of China, Asia, and the United States. We'll have more on this story later in the program. Nigeria granted freedom to all political prisoners today. The United Nations Secretary-General Kofi Annan made the announcement after meeting with Nigeria's new military ruler and other African presidents in Nigeria. No date was given for the release of the estimated two hundred and fifty to two hundred and eighty prisoners. CNN today retracted a report that claimed US troops used nerve gas on American defectors during the Vietnam War. The story also appeared in Time Magazine. CNN's chairman apologized to its viewers and to the military for serious faults in the reporting of the story. Time issued a similar apology. There was not official word on action taken against any CNN personnel, but the Associated Press reported that at least three producers involved in the story were leaving CNN and the correspondent, Peter Arnett, had been reprimanded. Courts-martial were recommended today for two US Marine fliers involved in the Italian Alps tragedy. Their fighter jet clipped a ski gondola line in February. All 20 people in the cable car fell to their deaths. A military judge in North Carolina said today the pilot and the navigator should face criminal charges, including negligent homicide. A preliminary investigation determined they were flying too low and too fast. The military judge also recommended charges be dropped against two other officers in the back seat of the plane. The commanding general of Marine Corps Forces Atlantic will make the final decision about all four. The Pentagon confirmed today a US missile fired at an Iraqi radar site missed its target. It was launched Tuesday by an American fighter jet. There were conflicting accounts of where it landed. US officials said the plane opened fire after Iraq radar targeted outside planes patrolling the southern no-fly zone. And that's it for the News Summary tonight. Now it's on the Florida fires; Kenneth Starr's mandate; generic versus brand name drugs; and how the US interest fared in China.% ? FOCUS - FLORIDA ON FIRE

JIM LEHRER: Betty Ann Bowser reports on the fires of Florida.

BETTY ANN BOWSER: This is what firefighters have been trying to stop for nearly two months. Thousands of wildfires, started by lightning, nursed by extremely high winds, burning virtually everything in their way. Yesterday and today more than 70 new fires spawned by record dry drought conditions sprung up all over North Florida. One hundred and forty miles of Interstate 95 are closed down to traffic from Jacksonville to Cocoa Beach. More than 35,000 people were evacuated from their homes, some in the dead of night.

MARK THORNTON: We's just scared, wakin' up, you know, 2 o'clock in the morning, go outside, and you can't even see a foot in front of you. That's how smoky it was.

BETTY ANN BOWSER: Mark and Teresa Thornton and their two daughters were rousted when a fire at the northern Florida town of Mims, started moving toward their home. They had less than five minutes to get out.

THERESA THORNTON: I went ahead and grabbed the Beanie Babies last night.

BETTY ANN BOWSER: Those are toys for the children.

THERESA THORNTON: Yes. These are the kids' toys. Some more pictures I had grabbed this morning, and clothes, all my important papers, dog food, water for the dog.

BETTY ANN BOWSER: For now, the Thorntons are safe, but they don't know when they can return to their home.

THERESA THORNTON: It's very scary, especially the way the wind was doing today, it's circling, so who knows where it will go next. And it's burning underground, so you might not visibly see it, but it could still be there. We have that fact, that worry, so we're scared to go back.

BETTY ANN BOWSER: Since Memorial Day Weekend, hundreds of firefighters from all over the country have been doing battle with thousands of wildfires, they have destroyed nearly 300,000 acres of public and private forest land from Tallahassee all the way to the resorts along the Atlantic Ocean. Every single county in the state has been affected in the worst fire disaster here in 50 years. More than 150 homes have been destroyed, but so far no lives have been lost. Firefighters have been working in record-breaking heat above 95 degrees for weeks. Toby Richards is a U.S. Forest Service firefighter from New Mexico. He's been on the line for 20 days.

TOBY RICHARDS: If you're not taking lots of breaks and drinking lots of water, you're not going to last very long. The first day we got here we thought we could just pound line out all day and we lasted about two hours, and we had people dropping like flies. We're fighting fires in places that are usually knee deep in water, and there's no water out there, so all the fuel that these fires are consuming is just so dry that it's burning a lot hotter than it normally would.

BETTY ANN BOWSER: This is normally the rainy season in Florida, but this summer Forest Service officials say the soil is almost as dry as a desert. The dryness index for a desert is 800. The earth here is 780 and climbing. Add to that unusually high winds and the heat and the result is the wildfires that have been springing up every day. This is the firefighting command center in Tallahassee, the state capitol, where local state, federal, and military officials use a computer system to track the movement of fire. They also project weather conditions on big screens and closely monitor wind conditions. Craig Fugate runs the Fire Response Center for the state of Florida.

CRAIG FUGATE, Emergency Response Coordinator: We don't know when this is going to end. Obviously it will end at some point. That will be when we get enough rain to reduce the fire threat. Until we get those rains and it's statewide and we get good saturation in the soils, the fire threat remains.

BETTY ANN BOWSER: Normally, this time of year there wouldn't be so much as a breeze blowing over this pasture. The grass needed to help spring calves put on weight would be cowboy-boot high. But the drought and extreme heat mean there isn't enough grass for grazing. The cows are two to three hundred pounds underweight, so when they go to market, they may not bring good prices. State-wide Florida's Department of Agriculture says livestock producers have lost $172 million. Along with raising cattle, farmer Richard Barber of Levy County in North Central Florida, grows peanuts. Even though he has irrigation, that crop is now in trouble too, because there's been no significant rainfall in four months.

RICHARD BARBER, Farmer: Oh, man, we were in trouble from March 19th. Like I told you, I watered all these crops, every one of them, I started planting my peanuts in April, April 7th, and we had to water with these irrigations to get those seed to germinate, to come out of the ground. So we've been working almost around the clock.

BETTY ANN BOWSER: Only 1/3 of the farmers in Florida have irrigation systems like Barber's, so many will have crops that are a complete loss. Statewide, agriculture officials say farmers have suffered $135 million in crop damage. And Levy County Extension Agent Anthony Drew says some farmers may not survive.

ANTHONY DREW: The heat, the wind, the drought conditions that we've had here in this area, having two and a half inches in a period of time that we normally have thirteen and a half inches, April, May, and June, have all come together to make this one of the toughest seasons that anybody can remember around here in producing a crop. Basically, I'm afraid that we're going to lose some producers this year.

BETTY ANN BOWSER: Not only are Floridians living through the driest summer on record. It's also the hottest ever. That combined with smoke produced by the fires has created air pollution. The smoke is so thick even miles from fire zones that drivers have to turn on their headlights to see where they're going. The haze frequently obscures the sun. As much as 15 or 20 miles from the fires the air smells bad, makes the eyes burn, and when inhaled can cause health problems. Dr. Roberto DiNicolo is an allergist in Daytona Beach who's seen a sharp increase in the number of patients with breathing problems.

DR. ROBERTO DiNICOLO, Allergist: They complain of more asthma problems, shortness of breath, wheezing, coughing, phlegm production, burning sensation in the lung and in the nose. And it seems as time goes on and the level of exposure continues and it compounds there are more and more sick people now, because it has given the lung time to develop a lot of inflammation and irritation so that now these flare-ups are more frequent and they're more long lasting.

BETTY ANN BOWSER: Officials have ordered a ban on fireworks for the 4th of July weekend. But they are worried what the weekend may bring.

CRAIG FUGATE: Weekends we get more starts from human activity. Most of them are accidental. We do see a little bit of an increase in arson fires on the weekend, so we are anticipating as we come over a long period of time, we are going to have a lot more people doing outdoor activities, it just increases the chances of accidental fire starts.

BETTY ANN BOWSER: There is a note of irony to all of this. It is hurricane season in Florida, a time of year most residents approach with fear. But this summer many people will tell you they would welcome a tropical storm.% ? UPDATE - STARR'S MANDATE

JIM LEHRER: Now a federal judge's review from Independent Counsel Kenneth Starr. Yesterday, Washington Judge James Robertson dismissed ten counts of tax evasion of former Justice Department official Webster Hubbell, his wife, accountant, and tax lawyer. The judge said Starr had violated an immunity agreement for indicting the four. He said a subpoena for Hubbell's records was "the quintessential fishing expedition. The independent counsel freely admits that he was not investigating tax-related charges when he issued it. Mr. Hubbell was therefore turned in the primary informant against himself." Judge Robertson said in open court last week Starr's reasoning in this matter was scary. He also said in his written opinion Starr had no jurisdiction to investigate the Hubbell tax charges in the first place.

JIM LEHRER: Now the perspectives of two former federal prosecutors. Henry Hudson was the U.S. attorney for Northern Virginia during the Reagan and Bush administrations. Bruce Yannett was an assistant U.S. attorney in the District of Columbia and also worked with independent counsel Lawrence Walsh on the Iran-Contra investigation.Mr. Yannett, taking these points one at a time, first, was Judge Robertson correct in dismissing these charges?

BRUCE YANNETT, Former Federal Prosecutor: Well, I think it was definitely a courageous decision, Jim. It's a well reasoned opinion. I don't want to predict what the court of appeals would do with it when Mr. Starr appeals it. It is certainly, I think, is well reasoned and a sound opinion, and I think the right results.

JIM LEHRER: Why did you say courageous? Why was it courageous?

BRUCE YANNETT: Well, because it's rare for a judge to throw out a prosecution in its entirety. And given the highly public nature of this particular case and the stakes involved in the case I think it's a courageous decision.

JIM LEHRER: Mr. Hudson, courageous and sound?

HENRY HUDSON, Former Federal Prosecutor: I think it's a courageous decision, Jim, but there were two components to this decision. One dealt with the immunity and one dealt with jurisdiction. I think with respect to immunity, I believe Ken Starr may very well have violated that immunity that he gave to Web Hubbell. That immunity prohibits them from using the information from him, or any information derived from it. A strong argument there, well founded opinion. But the other side is the jurisdictional issue, and I think there, Jim, there was a very strong argument that even though Ken Starr wasn't looking for tax evasion charges, in the course of finding out whether or not Webster Hubbell received so-called hush money, he legitimately stumbled on an offense that was directly involved with Webster Hubbell. So I think there's going to be problems in the court of appeals on that. They may very well reverse on that side of the decision.

JIM LEHRER: On the jurisdictional side.

HENRY HUDSON: The jurisdictional side.

JIM LEHRER: Now, explain what that means.

HENRY HUDSON: Here's how that could be affected. Jim, with respect to the immunity issue, only Webster Hubbell himself has so-called standing. In other words, he's the only one whose right was violated. So if the court of appeals reverses and sends it back on the jurisdictional issue. That'll mean it will revive the indictment with respect to Mrs. Hubbell and the two accountants but Webster Hubbell.

JIM LEHRER: Okay. But the jurisdiction thing, the judge made the point in his opinion. Mr. Yannett, how would you go at the jurisdiction question? I'll let you explain that.

BRUCE YANNETT: Okay. The independent counsel is not a normal prosecutor. The independent counsel exists to investigate allegations of criminal wrongdoing by executive branch officials, and it is a limited jurisdiction office, and what the court said here was that Mr. Starr originally had jurisdiction to investigate the Whitewater matter. And under the independent counsel law, along with that authority, comes the authority to investigate any obstruction of his investigation, any acts of obstruction of justice, of his investigation. And what the court said was that Mr. Starr went too far, because the tax case that he brought against Mr. Hubbell had nothing to do either with the Whitewater matter, which was the original jurisdiction grant, or with the obstruction of justice that he was supposedly investigating, so it was one step removed from any authority he had. And what the court said was that the three judge special court which authorized the independent counsel did not have the authority to allow him to investigate these tax charges, because that could only come from the attorney general, like Ken Starr did in the Monica Lewinsky situation, where when he stumbled upon the Monica Lewinsky situation, he went to the attorney general, and the attorney general then authorized it, which makes lawful the Monica Lewinsky investigation.

JIM LEHRER: So you would agree with Judge Robertson and disagree with Henry Hudson that Kenneth Starr did the wrong thing, right?

BRUCE YANNETT: I think that's right, and I think that's right, and I think the Lewinsky situation shows that Ken Starr knows the right way to do it. When he stumbled upon this tax investigation, as Henry just pointed out, in the course of investigating the obstruction, what he should have done is at that point then gone to the attorney general and said I've come across evidence of a tax violation, either authorize me to pursue it, or you, the Department of Justice, should pursue it.

HENRY HUDSON: But, Jim, what Ken Starr would say to that, is that the money that Webster Hubbell received on which he should have paid federal tax, was a part of kind of a conspiracy among people to pay him off so he would not cooperate. To him it was an integral part of an overall conspiracy that involved obstruction of his investigation. It's on the margin, Jim, but, nonetheless, it's sufficiently well grounded that there's a rational argument that was part of his mandate.

BRUCE YANNETT: But, Jim, the important point, I think, there is that at no time has Ken Starr made that public allegation. Nowhere in the Hubbell indictment does it charge Mr. Hubbell or any of the other individuals with obstruction of justice, and at no time has he brought such an indictment against anyone as to this conduct, so it may have been his original theory in investigating it, but he certainly hasn't tied it to any obstruction.

JIM LEHRER: What about the point that's been made, Mr. Hudson, that what this all was about was an attempt to punish Hubbell for not cooperating with Kenneth Starr in this other matter?

HENRY HUDSON: Well, Jim, I'd be less than candid with you if I didn't concede that obviously Ken Starr's motive here was to try to get Webster Hubbell's cooperation. He believes he's a treasure trove of information on President Clinton.

JIM LEHRER: Thus far he hasn't said what Ken Starr wants him to say.

HENRY HUDSON: But you know, whether it's Webster Hubbell or Henry Hudson that evades $800,000 in taxable income, there was a factual basis here. He should have been charged. I think maybe the motive was to get his cooperation, but there was a factual basis for what he did and it was proper, Jim.

JIM LEHRER: Based on your experience, Mr. Hudson, is this a legitimate way to go about a prosecution?

HENRY HUDSON: Jim, there are many times during the course of prosecuting cases where you're forced to use other criminal charges to get cooperation. You know, people who have never been involved in criminal prosecution don't understand what a tough business this is. You have to understand the White House in large measure and Webster Hubbell have set the rules of engagement. This is not the typical case where you have full cooperation. They have been resistant at every move and, therefore, these kind of hardball tactics have been necessary to get to the truth.

JIM LEHRER: Hardball tactics necessary, Mr. Yannett?

BRUCE YANNETT: Well, I would agree with Henry up to a point. Certainly in some cases hardball tactics are appropriate. But it seems to me that the Starr office at every step, at every turn opts for the hardest tactic and the most aggressive approach available. I'm not saying that they act illegally or cross the line necessarily, but they have treated this from the beginning as an extremely aggressive prosecution, and, you know, Henry as a former United States attorney was an aggressive prosecutor, but there even have been times along the way I know where Henry has raised questions and been skeptical about some of the steps the Starr office has taken.

HENRY HUDSON: Well, I don't dispute that whatsoever. I mean, I don't agree with everything that Mr. Starr has done, but you have to remember the White House has not been forthcoming. They have used every means possible to resist and Starr has had to react accordingly. That's why you have the aggressive approach here, Jim.

JIM LEHRER: Mr. Yannett, back to the immunity question, there are two parts to this, and the immunity question which you all seem to agree on, but what about Judge Robertson's point? It wasn't in his written statement; it was in open court last week, where he said the use-the way Kenneth Starr went about this was scary. Would you agree with the use of that word?

BRUCE YANNETT: I think what Judge Robertson was getting at, Jim, there was that what the Starr office had done was served a grand jury subpoena on Mr. Hubbell that essentially asked for all of his financial records for a three-year period and then in the course of looking at those, after having given him immunity for getting those records, then stumbled upon this thing about which they had no knowledge before, and turned around and used it against them, in violation of the immunity order. And I think what Judge Robertson was referring to there was that if you allow a prosecutor to serve a broad-based fishing expedition, as he called it, and using an immunity grant, and then turn it around and use whatever he finds against you, that there are no limits on what a prosecutor can do. And that's the scary element I think he was referring to.

JIM LEHRER: Do you agree with that?

BRUCE YANNETT: I do. Actually I do, because you are, in effect, saying to someone you have no choice, you have to give me these records, because I've given you immunity, and then saying but I can use whatever is in them against you, and so you are forcing a person, in effect, to testify against himself in violation of the Constitution.

JIM LEHRER: Scary, Mr. Hudson?

HENRY HUDSON: Well, in the interest of intellectual honesty I will say I disagree with Ken Starr's argument on this, but here is the way Ken Starr would explain it. He says that there are two types of immunity here. One is testimony immunity, and the other is immunity from production of documents. He says he gave Webster Hubbell immunity with respect to testimony and derivative use of that but not immunity with respect to the documents. I've never heard of such a division, but that's Mr. Starr's argument.

JIM LEHRER: Is he going to win that one, do you think?

HENRY HUDSON: I don't think so.

JIM LEHRER: Is he going to win this whole thing when it goes to the appeals court?

HENRY HUDSON: I don't think that Starr will get a reversal on the immunity issue. I think that it's well grounded, well reasoned opinion; however, again, I believe on the jurisdictional issue, you're going to find that he's going to reverse Judge Robertson, it's going to come back, and Mrs. Hubbell and the two accountants are probably going to have to go to trial on these charges.

JIM LEHRER: Mr. Yannett, a prediction, please, sir.

BRUCE YANNETT: I certainly agree with Mr. Hudson that there won't be a reversal as to the immunity. I think the jurisdictional argument is closer, although I think it's a well reasoned opinion. It's important to point out that even if there is a reversal on the jurisdiction and the other three people go to trial, they aren't people who-even Mr. Starr, I think would allege-have any knowledge as to Mr. Clinton, so that phase of the case will essentially be over.

JIM LEHRER: Okay. Gentlemen, thank you both very much.

BRUCE YANNETT: Thank you.FOCUS - DRUG BATTLE

JIM LEHRER: Still to come on the NewsHour tonight generic drugs versus brand names and US interests in the China trip. Tom Bearden has the drug story.

TOM BEARDEN: Dr. Leah Ray Maybry keeps very close taps on Norman Phillips.

DR. LEAH RAY MAYBRY: And you haven't eaten more sweets, changed the diet-not any increased stress-

TOM BEARDEN: Phillips has an irregular heartbeat and takes a blood-thinning medication called Coumadin.

DR. LEAH RAY MAYBRY: He says he's having a little bit of bleeding from his gums-

TOM BEARDEN: Phillips must be monitored closely. If his blood gets too thin, he might begin bleeding uncontrollably.

DR. LEAH RAY MAYBRY: He gets a little bit off. Then we have to really monitor him. And he said that he had noticed that his bleeding-he cut his finger, and it was a little bit longer, and he started to bleed from his guns.

TOM BEARDEN: Coumadin is extremely dose sensitive. Small changes can have unpredictable results. Drugs like Coumadin are called Narrow Therapeutic Index or NTI drugs, meaning dosage is critical to effective treatment.

DR. LEAH RAY MAYBRY: We're going to stay where we are on the prescription. We're going to monitor that Coumadin very closely, and right now we're going to check the urine just to be sure if you have any evidence of blood in your urine, then we might drop it back again.

TOM BEARDEN: Dose sensitivity is at the heart of a new Texas law. Passed last session, the law requires pharmacists to double check with physicians before using the generic equivalents of NTI drugs. Dr. Maybry supports the legislation.

DR. LEAH RAY MAYBRY: What we're talking about is the best care for the patient, and if the physician has said that you may substitute on that prescription, all we're asking is to let us know, so we won't have to be concerned is our patient infected, are they getting sick, are they not taking their medicine, what has happened to maybe change the blood level.

TOM BEARDEN: A number of medical groups, including the American Medical Association, also support the legislation. But in recent hearings in Texas the new law sparked heated debate.

SPOKESPERSON: Nearly everyone in this room can be accused of being motivated by money. And that's why they're here, and that is where their interest lies and motivation lies.

TOM BEARDEN: Critics charge the law isn't designed to protect patients; it's designed to protect the profits of brand name companies like DuPont-Merck, the makers of Coumadin.

SPOKESPERSON: DuPont-Merck's efforts are not about protecting safety. What this is about is protecting their market share, and it's not hard to understand why. DuPont-Merck's brand name, Coumadin generates about $535 million a year.

TOM BEARDEN: Generic drug makers claim it's part of a national campaign by major pharmaceuticals, a campaign to erect barriers to the use of much cheaper generic competitors, whose use has more than doubled in recent years.

SPOKESMAN: The proposed rule will discourage substitution of generic drugs and will increase costs for consumers and for the state of Texas through increased Medicaid costs.

TOM BEARDEN: Generic drug makers can copy a brand name drug once that product's patent expires. The generic version is then submitted to the FDA for approval. Generics are cheaper, because their makers don't need to pay for research and development. That appeals to patients and their insurers. Currently in Texas, prescription forms require a doctor to specify whether the prescription must be filled with a brand name drug, or if a generic substitution can be made. The new law says that even if the physician explicitly authorizes substitution, a pharmacist refilling a dose-sensitive NTI prescription can't switch to a generic without again asking the doctor if substitution is allowed. Recently, generic drug maker Barr Laboratories received approval from the Food & Drug Administration to market the first generic substitute for Coumadin, which is the most prescribed blood thinner on the market. Barr's product, Warfarin, is 20 to 30 percent cheaper than Coumadin. Bruce Downey is the president and CEO of Barr Labs.

BRUCE DOWNEY, President, Barr Laboratories: What the legislation in Texas tries to do is place a second barrier. That is, once the physician has filled out this form saying generic substitution is required, this legislation will send the patient or the pharmacist back to the doctor and say, Doctor, did you really mean it? And we think that that extra burden is one that will really prohibit or prevent the substitution of our products.

TOM BEARDEN: Austin pharmacist Doc Hayes agrees.

DOC HAYES, Pharmacist: If we have to call a doctor again for just another question on something, right now it takes us twenty-four to forty-eight hours to get a response back from a doctor's office, and it's going to put more pressure on our time, more pressure on the doctor's time, and it's just going to cause a lot of problems.

TOM BEARDEN: Barr Labs says 20 states have considered legislation similar to Texas. But only two others, Virginia and North Carolina, passed such laws. In each state both DuPont-Merck and Barr Labs lobbied heavily. DuPont-Merck declined our request for an interview for this story because of an antitrust suit filed by Barr. But the brand name industry's trade association defends the initiative at the state level. Alan Holmer is president of the Pharmaceutical Research & Manufacturers of America.

ALAN HOLMER, PHRMA: When you have a patient that is stabilized on a particular medication, that may be one with a narrow band of that Therapeutic Index, under those kinds of circumstances, we do think that it's important that before that patient is switched, that there be a conversation with a doctor about that, one, to make sure that the doctor approves that decision. Equally importantly, it's tremendously important that the doctor know that that switch has occurred.

TOM BEARDEN: But the Food & Drug Administration disagrees. In January, the FDA sent out a "Dear Colleague" letter reminding medical professionals that an FDA-approved generic drug is interchangeable with the brand name drug. Dr. Roger Williams oversees the division that reviews generic drug approval for the FDA.

DR. ROGER WILLIAMS, Food & Drug Administration: When we saw this kind of momentum rising at the level of the states that said draw in the health care professional, our feeling was that that didn't have a strong science and technical reality to it. And what we wanted to do was set the record straight. And our opinion, as we expressed in that letter, was that these products can be used interchangeably without the health care professional being involved in the decision.

TOM BEARDEN: The brand name drug companies have never undertaken such a campaign before. Why now? Generic drug makers say it's because the use of generics has soared, taking profits away from brand name companies. In 1984, generics made up only 18 percent of prescriptions written. In 1997, that number jumped to 50 percent. Industry analyst Hermant Shah says it's also because the patents are soon expiring on a host of highly profitable drugs like Prozac and Claritin.

HERMANT SHAH, Drug Company Analyst: $25 billion worth of brand name products will be going off patent, so I think you're going to see major legislative battles over the next two to three years. Generic companies will try to plug this legal loophole, and brand name companies will not only try to prevent generic companies from doing so, but also try to attempt extension of patents of some of these key brands.

TOM BEARDEN: Bruce Downey says state legislatures aren't the only battlefront. He says regulatory fights are being waged as well. When Downey's Barr Laboratories created a generic version of the drug Premarin, the makers of that drug, Wyeth-Ayerst Laboratories, petitioned the FDA not to approve it. Premarin is an estrogen compound that millions of women take to deal with menopause and to prevent osteoporosis. It's the most prescribed drug in America. Premarin is made from the urine of pregnant horses and contains natural compounds not found in Barr's synthetic product. Wyeth-Ayerst Laboratories argued that the Barr product shouldn't be approved because it is not identical to Premarin. Dr. Michael Dey heads up the generic business unit for Wyeth-Ayerst.

DR. MICHAEL DEY, Wyeth-Ayerst: The issue at hand was the generic product, which did not have the same active ingredient as Premarin, was not considered the same under the law, and therefore, were putting women at risk, unnecessary risk, of taking a drug that had not undergone clinical safety and trials.

TOM BEARDEN: Downey says Wyeth-Ayerst never considered those compounds to be active ingredients until it was convenient to do so and accuses the company of looking for ways to keep competition out of the marketplace.

BRUCE DOWNEY: Premarin and its related products generate over a billion dollars a year in sales at branded prices, and the American consumer paying that whole bill. Wyeth-Ayerst has been extremely successful in manipulating the system to keep generics at bay.

TOM BEARDEN: But the FDA agreed with Wyeth-Ayerst and did not approve Barr Lab's generic estrogen. Other companies are making similar challenges in the general drug approval process. The FDA's Dr. Roger Williams says those battles are draining the agency's resources.

DR. ROGER WILLIAMS: We have seen some fairly vigorous attempts in recent years to sort of impede the generic substitution process.

TOM BEARDEN: The brand name companies are also looking at a third front, the US Congress. They're talking to lawmakers about the need to strengthen patent protection. They say they need additional patent-protected revenue because that income makes it possible to bring important new products to the market. Research-based companies say sophisticated technologies have made the cost of drug research astronomical. It now takes about $500million to research and conduct the required clinical trials to get approval for a new drug.

ALAN HOLMER: Patents are the lifeblood of our industry. Without patents there wouldn't be pharmaceutical innovation in the first place, without pharmaceutical innovation there wouldn't be a research-based industry, and without a research-based industry, there wouldn't be a generic industry.

TOM BEARDEN: Ironically, many of the brand name companies have responded to the demand for generics by creating generic products of their own, but their financial success has been mixed. Given the fact that there is an enormous amount of money at stake for both sides, the battle is likely to continue in state legislatures, before the FDA, and in Congress.% ? FOCUS - DIPLOMATIC VIEWS

JIM LEHRER: Finally tonight, how US interest fared in President Clinton's China trip. We begin with a report on the President's day from Spencer Michels.

SPENCER MICHELS: The President's last day on the Chinese Mainland began with Mr. Clinton taking a boat tour of the Li River near the city of Guilin, an area that was polluted but has been restored to environmental health. The focus today was on the environment. The presidential party glided past some of China's most spectacular scenery. But the pictures of beautiful limestone peaks and rich forests belied the intense degradation of China's air and water. The environment pollution has coincided with China's development as an industrial economy, fueled largely by coal. After the boat tour, the President spoke to a group of Chinese environmentalists and local residents. He pledged to help China avoid the same mistakes he said the United States made during its early period of industrial growth.

PRESIDENT CLINTON: This week we have made important new progress. We will provide China assistance to monitor air quality. We will increase our support for programs that support renewable energy sources to decrease China's dependence on coal.

SPENCER MICHELS: The final leg of the President's trip took him to Hong Kong. And Air Force One was one of the first passenger planes to land at the city's new airport. The President was met chief executive Tung Chee-Hwa. The Hong Kong leader then hosted a reception in the President's honor. He complimented Mr. Clinton for improving Sino-US relations.

TUNG CHEE-HWA, Chief Executive, Hong Kong: On the world stage, despite mounting interest group pressure and ongoing differences between China and the United States, you have courageously stepped forward to lay the foundation for a strategic partnership between the two countries.

SPENCER MICHELS: Inside, Chinese officials and business leaders drank toasts to Mr. Clinton, while outside a small group of pro-democracy activists burned an American flag protesting President Clinton's trip. They criticized his human rights stance.

LEUNG KWOK-HUNG, Human Rights Activist: We want to show the anger of us towards Mr. Bill Clinton's so-called human rights diplomacy, you know. He just gives lip service; he doesn't care about the people in the third world.

SPENCER MICHELS: Tomorrow, the President will meet Hong Kong business leaders and local politicians, including democracy advocates, and he'll hold a wrap-up news conference.

JIM LEHRER: Phil Ponce takes the story from there.

PHIL PONCE: We now get four views on the diplomatic side of the China trip from four veteran American diplomats: John Holdridge was the number two official at the US Mission in Beijing in the Nixon and Ford Administrations, serving under then US Liaison to China, George Bush; Winston Lord was Ambassador to China during President Regan's second term, he also served as Assistant Secretary of State in President Clinton's first term; James Lilley was Ambassador to China during the Bush Administration; and Paul Wolfowitz was the Assistant Secretary of State for East Asian and Pacific Affairs during the Reagan Administration. Gentlemen, welcome.John Holdridge, were US interests advanced by President Clinton's trip to China?

JOHN HOLDRIDGE, Former Deputy Chief of Mission, China: Very definitely, in my opinion. It seems to me that we have removed some of the clutter in our relationship, some of the tensions that had cropped up over the last year, especially since 1989, June 3/4th. And that now we can get back to doing business with China on a much more reasonable and less intense basis.

PHIL PONCE: Paul Wolfowitz, good results for the US as Mr. Holdridge says?

PAUL WOLFOWITZ, Assistant Secretary of State: I think there were gains and there were losses, but, frankly, I think the President paid far too high a price for this trip. I don't think you'd have to have a nine-day odyssey to the middle kingdom that ignored our democratic allies in the region, that took a poke at democracy in Taiwan and that frankly threatens the consensus in this country on the delicate issue of Taiwan just for a few hours on Chinese television, although I think those hours were very useful for American interests.

PHIL PONCE: Winston Lord, was the trade-off worth it, as Mr. Wolfowitz suggests it was not?

WINSTON LORD, Former U.S. Ambassador, China: I think the trade-off was worth it. Let me make a couple of comments. I don't agree with Mr. Holdridge about 1989 being clutter. I think we have to recall 1989. It's very important. But I do agree with him and disagree with Paul that, on balance, our interests were advanced. I think the President defused some criticism by a fairly strong performance on human rights, reaching the Chinese people, although we have to see whether the Chinese people are as well treated as the President was. And he's enabled us-I think is John Holdridge's point-to focus on his larger gender. There's been a debate as if it's just money versus morality. But we have the environment. We have the South Asian nuclear crisis. We have the Korea problem. We have crime, narcotics, the Asian financial crisis. These are important issues that we have to address. Finally, with respect to Paul's point, I am disturbed the President did not go to Japan. This is the longest trip any President has ever taken to any country for bilateral purposes. He should have gone to Japan, but I don't believe we're going to shift off actions, nor should we. And finally on Taiwan I would note that President Li has lauded the President's performance in China so he couldn't have done too badly on Taiwan.

PHIL PONCE: James Lilley, picking up on the Japan point, was it a mistake for the President not to go to Japan?

JAMES LILLEY, Former U.S. Ambassador, China: Oh, I think that Japan is the linchpin of our security policy in Asia, and I think the Chinese were working very hard on the President to get him to say something in China that was derogatory towards Japan. And I think somebody did actually criticize the Japan role, which wasn't exactly a perfect role. But you don't want to play into their hands in this sort of Japan bashing thing. But I would like to add just one comment. I think, of course, you have to look at the visit on three levels. First is the glitz and the hype. And on that he gets very high marks. It was done very well. He turned it around. It started out badly with the visas, and then they had the press conference, and then Peking University and the Shanghai cranes, and oh, boy, it was real glitz, it was "Wag the Dog," it was big stuff. I think on the second level of creating a climate, as John suggests, for getting into the serious issues may be a C or a B. They begin to move towards the issues, but they didn't engage really in them. And when you get in the issues, themselves, they dealt with environment; they dealt with anti-crime, anti-terrorism, anti-drugs, and these are important issues. But the real ones, as Winston says, are North Korea, India, Pakistan, the Asian meltdown, stability in Taiwan. And these are the most important ones. And I don't think much was done there.

PHIL PONCE: John Holdridge, do you agree that some of the bigger issues were not touched, or at least were not fruitful, as far as the US position?

JOHN HOLDRIDGE: I think they were not made public. I think that a lot went on that we have not yet heard from. But I think that the discussions must have been very fruitful, because the presidents from both countries seemed to be very pleased with it. And I think that that shows that we have made progress. But now we're in a situation, as I mentioned before, where we can address these difficulties and differences between us in a very logical and a very even basis, where before we had such suspicions on the part of China and so many people in the United States regarding China that we weren't able to get anywhere. But now I think we're in a much better situation.

PHIL PONCE: Paul Wolfowitz, has that level of suspicion gone down?

PAUL WOLFOWITZ: Well, in terms of the atmospherics, perhaps, but I think there was an awful lot of make-believe on this, as symbolized by the great hype that was given to this agreement that we wouldn't target missiles on one another. It's an agreement that no one can check on anyway and could be changed within 10 minutes. It's not meaningful. And then we talk about we have partnership with this country when, in fact, we have a lot of deep disagreements with them. Winston Lord mentioned South Asia. We act as though China was the key to solving the problem in South Asia when, as a matter of fact, China has been giving not only missile technology but nuclear weapons technology to Pakistan and putting a lot of pressure on India. And then when we had a meeting a few weeks ago, last month, to talk about the South Asian problem, the US proposes Japan and Germany should come, and China says, no, they can't come, that's a strategic partnership? It is not. And to pretend that it is, is misleading the American people, and to simply have a good atmosphere is not a way to solve problems.

PHIL PONCE: A strategic partnership in the works, Winston Lord?

WINSTON LORD: No. I agree with Paul, and that's a bad phrase to use. Strategic partnership is what we have with Japan, which shares our values, which China doesn't, which is a treaty ally, which China is not, and which is still more important to us economically. But I do think on these big issues it's a process, it's a reason to engage China. You can't expect breakthroughs in any one summit. You've got to keep working on it. I agree, for example, that China was a contributing factor to the nuclear race in South Asia, but they're now taking a more constructive role. Let me add another point, though, about the hype. I think there's been a little bit too much hype. And now all of us, as former government officials, have been spinning summits in the past are all guilty of it. This could come back to haunt the administration. They should let the successful visit speak for itself, but to call it historical on a par with Nixon's visit or that 600 million people were watching TV, they don't need this, and we're going to have to see how the Chinese people are treated once the President leaves. And there's some stylistic points that bother me. Why isn't he having his picture taken with Martin Li when he's in Hong Kong, a democracy activist? Why didn't he mention Wang Dan, the Beijing University student who was in jail and exiled when he spoke to the Beijing University students? Why wasn't he firmer in response to these planted questions, by the way? All those student questions were either planted by the government or pleasing to the government so they could further their career. And why wasn't he tougher on the visas? Why didn't he mention Taiwan in his speech when he's talking about the spread of freedom in Asia? These are some stylistic points that I'm a little concerned about, but I want to come back to my bottom line, so I'm not misunderstood. I think the Presidenton the whole gets high marks, and I think he's advanced our interests.

PAUL WOLFOWITZ: Phil, the one important thing-I think the only important thing in this visit-and I don't diminish the importance-was the President talking about freedom. He tended to avoid the word democracy, by the way, but he talked about freedom. He talked about open, prosperous China, in China to the Chinese people. But this was not done as a favor to the United States. It was done, obviously, and it's a good thing, because the Chinese leadership want to send a message to their people, that that's the direction they're moving in. And, frankly, it's very helpful for them to have a leader of the world's greatest democracy, in effect, say, yes, that's the direction you're moving in, and we understand your need for stability. I think it's all a rather hopeful direction. But the United States shouldn't have had to gone on bended knee to get that kind of a performance. We shouldn't have had to pay a price for it. And we did pay a price for it, with Japan, with Taiwan, with India, and I think, in general, respect for American prestige in Asia.

PHIL PONCE: James Lilley, did one side get more out of the exchange than the other?

JAMES LILLEY: Well, I think probably the Chinese came out somewhat ahead.

PHIL PONCE: How so?

JAMES LILLEY: Well, they actually got Clinton to buy on to what their position on Taiwan. They moved him on it. But they also gave him a chance to talk to the Chinese people.

PHIL PONCE: And that was the trade-off.

JAMES LILLEY: This was the trade-off. But let me just make one more point. If you talk about success and you say that the leaders are happy, therefore, there must have been accomplishments, I can tell you these things work on two levels. First of all, both leaders wanted a success and the propaganda organs on both sides, the spin meisters in the White House, and the Communist Party's propaganda apparatus went out and made it a success. Underneath, when they started dealing with issues, there were good, hard strokes between the two sides. The Chinese were not going to give on proliferation unless we linked it to armed sales to Taiwan. The Chinese were very, very tough on theater missile defense, absolutely not. It will not be deployed in East Asia, although they had fired missiles in 1996. They laid down a lot of tough markers, and I think that we've got a lot of work to do still, and I think that we've got a lot of work to do still, and I don't think you should look at the two leaders smiling and patting each other on the back and saying this is a successful mission.

PHIL PONCE: John Holdridge, following--

WINSTON LORD: If could I intervene here for just a second on that, I think Jim is right about those points, about tough negotiating, but I would disagree with him on the Taiwan question. As I say, he can't be holier than President Li, number one. Number two, the president's reiterations were policies going back 25 years in two cases, and another case several years consistent with that policy, and actually it portrayed the fact that China didn't get what it wanted in Taiwan, it didn't get a fourth communiqu , didn't get new formulations, it didn't get an assurance that US/Japan treaty doesn't cover Taiwan. It didn't get a limit on American sales. So the Chinese were spinning this. It was no new change in the US position, and Taiwan and others, friends of Taiwan, and I'm one of them, but Taiwan has fallen into the propaganda trap of Beijing and inflated this, and as President Li said, the President did not change our position.

PHIL PONCE: John Holdridge, what do you think the Chinese got out of this?

JOHN HOLDRIDGE: Certainly prestige. I think they must have strengthened Jiang Zemin's hand, but they also got something from Taiwan on us, but on the other hand, people have talked about what the President said on Taiwan it was not a new position that goes all the way back to Henry Kissinger's first meeting with Zhou Enlai in July 1971, when he declared that the United States did not support two Chinas, one China, one Taiwan, or an independent Taiwan, and a logical conclusion from that is that the United States would not support Chinese Taiwan's entry into any kind of an organization, which required a national entry, a national position in order to be a member of that organization. So there's no change on that one, and that was just simply put out there in terms of reaffirming a position, which we've had for a long time, which is very necessary.

PHIL PONCE: Just by what of information what the President said, his quote was, We don't support independence for Taiwan or two Chinas, or one Taiwan, one China, and we don't believe that Taiwan should be a member in any organization for which statehood is a requirement. And that was the three "no's"--

PAUL WOLFOWITZ: And its new policy in the attempt to pretend it is a new policy is wrong. I remember in 1983--

WINSTON LORD: Well, it's not new policy. That's ridiculous. It goes back 25 years.

PHIL PONCE: Mr. Lord, I'll let Mr. Wolfowitz make his point, and I'll get back to you, sir.

PAUL WOLFOWITZ: The Chinese said they wanted to join the Asian Development Bank, and we had to throw Taiwan out of the bank. And we said, well, how about a name change? And I remember at the time all the China experts in the State Department said China will never accept a mere name change for Taiwan. They'll insist on throwing Taiwan out of the bank. But, in fact, we told China that there was no way we would throw Taiwan out of the Asian Development Bank. And ultimately they agreed on an arrangement for a name change. During the old days, the old Soviet Union, you had Bielorussia and Ukraine who were certainly part of the Soviet Union and were members of the United Nations. I don't think the United States should be getting into the middle of this in precluding anything that the two entities can agree on. And that has always been our position, which is that anything they agree on we can support.

PHIL PONCE: So you're saying the United States may have undercut some flexibility in the relationship.

PAUL WOLFOWITZ: And in the process I believe we have shaken political confidence in Taiwan, and it's made-going to make it more difficult for them to deal as we'd like them to deal with Beijing.

PHIL PONCE: I promised Winston Lord to get back to him on this. Sir.

WINSTON LORD: Yes. I yield to no one on my strength of affection and respect for Taiwan and I fought for any change not being made in our position, and it hasn't been made. The US position still is that Beijing and Taiwan can work out representation fine, but you cannot be for a one China policy and then support another state in the UN. But the point is that this is not new and we shouldn't let Beijing get propaganda gains by inflating this. And I just say President Li seems a lot more relaxed than Paul does.

PHIL PONCE: Mr. Lilley, a very last question in the time we have left. Bottom line, is the US/China relationship better now?

JAMES LILLEY: Yes. I think certainly the atmospherics are better but all of the tough questions are still on the table, and I would say that we did notgive in, as Winston said, on these positions that the Chinese pushed. This is just the first round of 150-round fight, though, and it may come back at you.

PHIL PONCE: And with that I thank you all very much.% ? ESSAY - SUBVERSIVE BEAUTY

JIM LEHRER: Finally tonight essayist Roger Rosenblatt considers the new addition to the Natural History Museum in New York.

ROGER ROSENBLATT: Apart from showing beauty and intelligence, the new Hall of Biodiversity at the American Museum of Natural History is also subversive. It stands like a fifth column at the center of ambitious Manhattan and is a counterweight to all the individual appetites that make up America's symbolic island. The Hall of Biodiversity carries a message antithetical to western capitalism in its diorama of a portion of the central African rain forest, in its assemblage of over a thousand examples of species mounted along a hundred foot wall like all of biology's general store, in its electronic bio bulletin board that gives up to date news of the earth, such as El Nino. The Hall of Biodiversity states clearly that rampant individualistic actions made by the dominant species, us, will destroy the earth in a sixth extinction. In short, we must learn to live with one another or die. If this idea seems an irritating whine out of a 1960's sensibility, it is because the word "biodiversity" came along at the same time as similar sounding and meaningless notions like multiculturalism. But there is nothing politically correct about biodiversity. It is merely correct. The structure of living things depends on careful cooperation. In the old hierarchical model, human beings were at the top of the chart, and, in fact, we remain there in the sense that the future of the chart is in our hands. The survival of imperiled species is up to us. When we walk through the hall of biodiversity and see the lovely intricacies of which the earth is made, we begin to grasp how great is the assignment. Gratification is the supreme deity in the West. It must be so, or we would not build shopping malls. On any morning on any night see all Americanists move deftly through the world of appetites that he himself has created, peering at this and that, buying this and that, and most of all, yearning for this and that. The substance of western capitalism, after all, is not gained but the desire to gain, and the engine, the driving force of western capitalism, is the magnificent hue and the magnificent need, the solitary, restless individual who, though no longer dress like a cowboy, still swaggers onto the prairie of things to consume in search of individual gratification, always just a few aisles out of reach. But here, in the Hall of Biodiversity, the cowboy is forced to park his six gun and to mingle with others. That's the beauty of this shopping mall. Nothing is for sale but existence. Nothing is to aspire to but existence. The purpose of museum exhibits is to teach a public something that it does not already know. And what the public who visits the Hall of Biodiversity doesn't know is that it is the exhibit. When the human species enters here and joins all the other species in the room, the guilty party has arrived. Yet, the larger and more generous idea of the exhibit is that the guilty part is also the responsible party on whom everything else depends. A species capable of creating a Hall of Biodiversity is also capable of acting on its purposes. To do this requires giving up lusty individualism, which is a subversive idea. But so is the rest of life. Look at it-hidden, nuance, delicate, subtle, a work of art so brilliantly subversive it could be gone before you know it. I'm Roger Rosenblatt. % ? RECAP

JIM LEHRER: Again, the major stories of this Thursday, wildfires burned out of control in Florida. Thirty-five thousand people were evacuated from homes in Brevard and Velusia Counties near Daytona Beach. US unemployment went up .2 percent to 4.5 in June, after its 28-year low in May and April. And courts-martial were recommended for two Marine fliers whose jet cut a ski gondola line in Northern Italy, causing the deaths of 20 people. We'll see you on-line and again here tomorrow evening with Shields & Gigot, among others. I'm Jim Lehrer. Thank you and good night.