The NewsHour with Jim Lehrer

GWEN IFILL: Good evening. I'm Gwen Ifill. Jim Lehrer is off. On the NewsHour tonight: The news of the day; an update on new terrorism alerts in this country and in Saudi Arabia; a Newsmaker interview with the president of the Philippines; a report on scientific efforts to combat the SARS virus; and a look at the policy of legislating prescription drug prices.

NEWS SUMMARY

GWEN IFILL: The Department of Homeland Security raised the nation's terror alert status to orange today, for high risk. The move came as the FBI warned al-Qaida could strike again inside the United States. There was no specific target listed. But undersecretary for homeland security Asa Hutchinson said police should deploy additional officers, and watch large public gatherings.

ASA HUTCHINSON: We realize that this will cause them to implement enhanced security measures that will have a cost to it. But we expect them to make judgments based upon their knowledge of the threats and their own arena, and based upon their own security plans.

GWEN IFILL: The new alert also listed American and western interests overseas as possible targets. We'll have more on this story in just a moment. The U.S. and British embassies in Saudi Arabia will close for several days because of new threats of attack. The two nations will close their consulates as well. A message on the American embassy's web site today said, "Some strikes may be imminent." Wire service reports today said the Saudis have arrested three al-Qaida suspects in Jeddah. There was no word on whether they're linked to the car bombings in Riyadh last week that killed 34 people, including eight Americans. Israeli forces withdrew from a town in Gaza today. Over five days, they demolished homes and tore up streets to eliminate sites where Palestinian militants had fired rockets into Israel. After the pullout, several hundred Palestinians protested against the militants for making the town a target. In Washington, President Bush telephoned the new Palestinian prime minister, Mahmoud Abbas. A White House spokesman said Abbas promised to end acts of terror. The president also called Israeli Prime Minister Ariel Sharon. The U.S. Pressed the U.N. Today to vote as early as tomorrow on lifting the sanctions on Iraq. U.S. Diplomats introduced another draft resolution late Monday. Russia, France, and China had objected to earlier versions. But U.S. Ambassador John Negroponte said this was the "final form." And a State Department spokesman predicted it would win "substantial support."

RICHARD BOUCHER: We think this is the text that should be voted. The text is significantly and substantially complete. Whether... we'll just have to see if there is some last minute intervention which would cause us to change that, but at this point we think it is substantially complete and a fair and balanced text that does meet the concerns that we've heard.

GWEN IFILL: In Iraq today, the U.S. postwar administration said trash collection and some mail delivery has now resumed in Baghdad. And the World Health Organization announced the U.S. had authorized it to restore health services. The agency said only about 20 percent of the country's health care system is in working order. The World Health Organization also gave its preliminary approval to a global anti-tobacco treaty today. The treaty would ban or restrict cigarette ads, aim to reduce secondhand smoke, and make health warnings more prominent. The measure is expected to win final approval tomorrow in the WHO's full assembly. The Bush administration said on Sunday it would back the treaty without changes, a shift in previous policy. On Wall Street today, the Dow Jones Industrial Average lost two points to close at 8491. The NASDAQ fell one point to close at 1491. That's it for the News Summary tonight. Now it's on to a terrorism threat update, the president of the Philippines, the science of SARS, and legislating drug prices.

UPDATE - NEW THREATS

GWEN IFILL: Margaret Warner has the terrorism threat stories.

MARGARET WARNER: We begin with the heightened alert on the home front. Homeland Security Undersecretary Asa Hutchinson told reporters about it after briefing members of Congress on Capitol Hill.

ASA HUTCHINSON: This afternoon, Secretary Ridge spoke with governors and mayors and he continues to have those discussions with them; as he asked them to deploy additional police forces, to review their own security measures and particularly discussed with them the venues in which there would be large public gatherings. For all Americans, we recommend that you continue with your plans for work or leisure. The purpose of this announcement of course, is to alert our law enforcement community primarily so they can implement their security measures, and then secondly, to advise the American public of this increased alert level so that they can, themselves, be alert and vigilant because vigilance in and of itself is a deterrent to terrorist activity. Obviously we urge the American public, if they see anything suspicious, to call their local FBI Office. With that, I'll take any questions.

REPORTER: How specific was the warning about possible terrorist activity in the United States?

ASA HUTCHINSON: Well, as is the case in the past, when we have raised the alert level, there's been an increased specificity in terms of the threats that we hear, but not necessarily specific in terms of the target. And so that is the reason for the national increase in the alert level.

REPORTER: Was it as specific as the other threats that previously led to the terror alert being raised?

ASA HUTCHINSON: I don't think it would be appropriate to compare the intelligence that we have now versus the intelligence we had on previous occasions, but we have to rely upon the consensus of the intelligence community, their analysis of these circumstances, and certainly they see an increased threat presence now as compared previously prior to the bombings that we saw in Morocco and Saudi Arabia.

REPORTER: Are there specific targets that you are most concerned about?

ASA HUTCHINSON: I will not mention any particular areas of concern. We have to evaluate the specificity of the intelligence that we receive. It was not specific enough in reference to a particular target to mention that. And so it is an enhanced threat level based upon the intelligence of what we see overseas, but it is a national reference that we have to be concerned about, and that's why the increase in the national alert level.

REPORTER: Are there particular types of attacks you are concerned about? Car bombs, for instance? We've heard or read recently that car bombs would be the most likely kind attack that we would see.

ASA HUTCHINSON: Well, we obviously have to look at what they have done most recently in overseas bombings. And al-Qaida remains the principal threat, but the threats also emanate from other anti-U.S. terrorist groups, regional extremist organizations and even ad hoc disgruntled groups or individuals not connected with existing terrorist organizations. The use of tactics similar to those that we've seen in recent terrorist attacks have to be considered; they cannot be discounted. Those would include use of small armed equipped assault teams, large vehicle born explosive devices and suicide bombers. This is not to indicate this is going to happen in the United States. But when we see a pattern of activity overseas, directed at United States targets, we certainly have to be aware that there remains that potential of use of those type of tactics here in the United States. Thank you very much.

MARGARET WARNER: For more on the new alert level, we're joined by Phil Shenon of the "New York Times."

And, Phil, welcome back to the program. What are your sources telling you about where this intelligence is coming from that triggered this higher alert?

PHILIP SHENON: It's more of the same intelligence we've been talking about since 9/11. You know, every day the National Security Agency and other intelligence agencies gather information from intercepted telephone calls, faxes and e-mails suggesting communication among al-Qaida folks and other terrorist organizations. There has been a lot of this chatter over the last several days. The intelligence agencies of the United States were tasked over the last 48 hours to determine whether or not this chatter and the evidence gathered from the attacks in Saudi Arabia and Morocco suggested there might be a domestic threat as well. And the response that got back today is that yes, there is that possibility which led to the raising of the terrorist alert.

MARGARET WARNER: Was there much debate internally about whether to do this given the higher cost that, of course, it will incur?

PHILIP SHENON: There was some debate as there has been in every one of these situations of the last two years. But apparently when the intelligence agencies reported back today, there was a consensus that this was the thing to do.

MARGARET WARNER: The statement we just heard Asa Hutchinson read was pretty specific about some of the methods that might be used. Assault teams, large car/truck bombs, suicide bombers. Have they heard or overheard plotters talking about that, or does it simply reflect what happened overseas this past ten days?

PHILIP SHENON: I think more the latter situation. What we had in Saudi Arabia and Morocco was the use of these sorts of the small arms assault teams, the use of explosives placed in trucks or in SUV's, and the fear is that perhaps if there are al-Qaida cells in this country or other terrorists, they might follow the same method in this country.

MARGARET WARNER: And the same question really about the mention of soft targets; by that I suppose that means non-government targets. Again, one, is that new, and two is that overheard conversations or again based on what happened overseas?

PHILIP SHENON: I think a bit of both. But this conversation about soft targets is one that the United States Government has been having for a long time now. And in virtually every one of these instances in which the threat alert has been raised, there has been mention of soft targets. I think the last go round, there was a lot of concern that perhaps hotels or restaurants or air conditioning systems in large buildings might be attacked. So I think those are the same sorts of target soft targets we are talking about now.

MARGARET WARNER: The statement also said that it is not just from al-Qaida, but what the other government called other anti-U.S. terrorist groups, even disgruntled individuals. Who are they talking about there?

PHILIP SHENON: I did ask that question specifically of folks in the government and they say they're talking about Hamas and Hezbollah. There has long been concern that at some point those two groups might try to export their terrorism to the United States. It's a continuing concern and something they wanted once again to focus on in this alert.

MARGARET WARNER: So what visible difference will we see, will ordinary Americans see?

PHILIP SHENON: Well, I think when people head to airports or to train stations or to bus stations, or to national monuments during the course of the Memorial Day Weekend, they will probably see additional security measures. This is something that we have seen repeatedly since 9/11. This is something the American public I think is increasingly used to and they're going to see the tightened security that they've seen in the past.

MARGARET WARNER: Finally, does this warning reflect a conclusion on the part of U.S. Intelligence and law enforcement that al-Qaida is truly reinvigorated, not just overseas, but also here?

PHILIP SHENON: I think they are quite clear that it is reinvigorated overseas, or certainly that its sympathizers are reinvigorated and they're trying to stage attacks to make clear that al-Qaida still exists. I don't think they're nearly so clear on what al-Qaida's capabilities are in this country. And just today Tom Ridge, the homeland security secretary, was speaking with great confidence about how much better prepared the United States is to deal with the threat of terrorism from al-Qaida and other groups.

MARGARET WARNER: So this warning is really a situation of better safe than sorry.

PHILIP SHENON: I think it's prudence. And, as I say, this is certainly not the first time we have been through this drill and I'm certain it's not the last time.

MARGARET WARNER: All right. Phil Shenon, thanks very much.

PHILIP SHENON: Thank you.

MARGARET WARNER: Now, the latest from Saudi Arabia. We spoke earlier with Peter Finn, foreign correspondent for the "Washington Post," who's in Riyadh.

Peter Finn, welcome. Shutting down the British, German, and U.S. embassies seems like a pretty drastic step. What do your contacts there... what are they telling you about how dire they think the threat really is?

PETER FINN: They believe that there is a major and imminent threat from possible suicide truck bombings in Saudi Arabia. And that's from both Saudi and U.S. officials. Security across the city... or

across the capital, Riyadh, where I am, has visibly intensified. There are more roadblocks. There are police visible at hotels, in the diplomatic area, in the area where expatriates live. So they clearly believe that something is possibly coming and coming very soon.

MARGARET WARNER: Where is the information coming from?

PETER FINN: Potentially two sources. The Saudi ambassador to the U.S., last night and early this

morning, meeting with foreign reporters, spoke about a large or a high degree of "terrorist chatter." And that's their shorthand for communications and movements by terrorists. And they say that the noise

level from that is close to what it was just before the bombings in Riyadh eight days ago. Secondly, we have learned tonight that three people... two or three people-- we're still seeking further details here-- were arrested in Jeddah yesterday and may have been linked to the cell tied to the bombings on the residential compounds. The interrogation of one or more of those suspects may have intensified their fears.

MARGARET WARNER: How many al-Qaida operatives and how many cells do the Saudis think are active in the kingdom now after those bombings?

PETER FINN: Saudi officials say they believe there are three cells that are... do have the ability to communicate with each other to some extent, and numbering a hard core of 50 or so operatives. U.S. officials broadly agree with that, but put the figures somewhat higher. They think there are two,

possibly up to five cells, and the numbers may be in the low hundreds: 100, 200, maybe 300. But no one thinks that there are thousands of al-Qaida people here, although the number of sympathizers clearly

is higher than either of those two estimates.

MARGARET WARNER: Where do the Saudis think these cells are, "a," getting their recruits, and "b," getting their weapons and explosives?

PETER FINN: Well, some of these cells are composed of people who were in Afghanistan and returned to

Saudi Arabia after the U.S. attack on Afghanistan. And they then have done some further recruiting here,

linking into older veterans of Afghanistan and al-Qaida and the body of people here who are sympathetic to what al-Qaida stands for. The weapons and explosives, the Saudis believe, largely come across the border from Yemen, which is a long, porous, and difficult border to patrol. And there is increased cooperation between Saudi Arabia and Yemen.

MARGARET WARNER: You reported yesterday also that the Saudis believe some of the bombers' weapons came from the Saudi National Guard.

PETER FINN: Yes, but we don't want to overstate that. What was going on with that was that a number of individuals were involved in illegal weapons sales, and they were doing this for financial reasons, not out of any kind of ideological commitment. If someone had the money, they were willing to sell a weapon.

And they sold weapons to people who turned out to be al-Qaida, but they also sold weapons to

others who simply wanted weapons and had the money. It's embarrassing. It's also particularly painful

because a member of the National Guard was killed during the assault on the residential compound.

MARGARET WARNER: Finally Peter, we keep reading that the cooperation on the investigation level is better than it has been in the past. What does that mean?

PETER FINN: In the past, the FBI and the Saudi interior ministry have clashed over the amount of access they were willing to give the FBI, whether that be documents, the ability to interrogate suspects, even the ability to submit questions so the Saudis could ask the suspects what the FBI wanted

to know, that's been problematic. There has been a change. The... Prince Bandar last night

showed us a folder of materials, photocopies of the ID's of those... some of the members of the cells, some of their written communication that the Saudis have found, that they were turning all of

this over to the U.S. They also did not rule out the possibility that the U.S. might question some of these people. And there has been a sea change here. People are saying that the Saudis finally recognize that

al-Qaida is an internal threat to Saudis and foreigners alike, when in the past they saw al-Qaida as an external menace that at most would target U.S. military installations which, in any case, are very well

protected. So now, with this... with blood on the streets of Riyadh, they want and need U.S. cooperation.

And I think both sides are professing themselves extremely happy with the way things are going here now.

MARGARET WARNER: Peter Finn, thanks a lot.

PETER FINN: You're welcome. Thank you.

NEWSMAKER

GWEN IFILL: And now, to the Philippines. President Gloria Macapagal Arroyo, a staunch supporter of the administration's war on Iraq and against terrorism, came to Washington this week for meetings with President Bush.

PRESIDENT ARROYO: Thank you, President Bush.

GWEN IFILL: Her visit included a rare full-dress state dinner at the White House. At the top of the agenda: Efforts under way in both countries to stop terrorist attacks. A series of bombings have killed more than 200 people in the Philippines during the last year. Officials there have blamed the attacks on Muslim separatist groups Abu Sayyaf, and the Moro Islamic Liberation Front, which operates on the southern island of Mindanao. The U.S. has lent military aid and advice in the conflict. Just before leaving for the U.S., Arroyo authorized strikes against suspected terrorist cells in the southern region of the Philippines. Today, she sat down for an interview.

GWEN IFILL: Madam President, welcome.

PRESIDENT ARROYO: Thank you.

GWEN IFILL: The Philippines and the United States have been described as very staunch allies, certainly were in the war on terrorism and in the war in Iraq. Could you describe the nature of that relationship?

PRESIDENT GLORIA MACAPAGAL ARROYO, The Philippines: You know, the Philippines and the U.S. have had a strong relationship with each other for a very long time now. We have a shared history. We have shared values, democracy, freedom, and we have been in all the wars together in modern history, the World War, Second World War, Cold War, Vietnam, Korea, now the war on terrorism.

The war on terrorism has made our relationship even closer. Even before 9-11, the Philippines was already fighting terrorism in Southwestern Philippines. That's why when 9-11 happened, we could understand the pain. And the Philippines was one of the first countries to joint the International Coalition Against Terrorism.

And in a way it also benefited the Philippines, because what used to be a lonely fight now became an international fight, and we had friends to help us in our own fight. We had the U.S. to help us. We had our neighbors to help us, because of the recognition that terrorism is not one country's fight alone. Of course, each country, especially Asia, must be more responsible now for its own political and economic security. Nonetheless, terrorism knows no borders and therefore we should have regional and international partnerships to fight terrorism, and this is the context in which the relations between the U.S. and the Philippines have become stronger today.

GWEN IFILL: Last week, of course, there were bombings in Saudi -- Saudi Arabia and Morocco which were attributed, or at least linked in first analysis to Al-Qaida. Do you think that the back of Al-Qaida or of other terrorist organizations which have been operating in the Philippines, for instance, do you think the back has been broken?

PRESIDENT ARROYO: We take great interest in what happened in Riyadh because Filipinos died in that bombing incident.

GWEN IFILL: Of course.

PRESIDENT ARROYO: And what it tells us is that while there has been progress in the war on terror, the war isn't over yet, and therefore, we still need to continue to do our international, regional and bilateral partnerships to fight terrorism.

And we have to realize that if we're going to win this war, we have to have a comprehensive approach, and that's why I also appreciate the partnership of the U.S. in helping us alleviate poverty in Mindanao, where the terrorists are being recruited, because while we don't say that poverty is the cause of terrorism, what we say is that poverty feeds terrorism, as terrorism feeds poverty because it takes away resources.

GWEN IFILL: That's what you meant yesterday at the White House when you said they were twin evils.

PRESIDENT ARROYO: Yes, yes.

GWEN IFILL: So what can the United States do to address both of those evils, not just one? For instance, the United States has been involved in attempting at least, and then withdrawing, to sending troops to help you fight terrorists in the Southern Philippines. How does that address your other needs, your economic needs, your needs to alleviate poverty?

PRESIDENT ARROYO: Well, the United States has also been helping us very much in alleviating poverty, especially in Mindanao, which as I said, where the breeding grounds of terrorism are. And I believe that with this kind of comprehensive approach, fighting terrorism directly through military assistance, and fighting poverty that makes terrorism operate more successfully, then we will be able to defeat this threat once and for all.

GWEN IFILL: Shortly before you left to come to the United States, you authorized strikes against the Moro Islamic Liberation Front.

PRESIDENT ARROYO: Yes. Yes.

GWEN IFILL: The President specifically mentioned that suspected terrorist group yesterday in his remarks. Where do you think--what progress do you think you have made in trying to stem that wave of terror?

PRESIDENT ARROYO: Well, what I said before I left was that I was ordering the military to launch aerial and artillery attacks on embedded terrorist cells, whatever is the proper noun that they're carrying. There were specific terrorist attacks that happened in the Philippines in the last few weeks, Koronadal, Shohorna, Igoia, one small city and two small towns, but nonetheless, nonetheless, innocent people were killed, and we could directly trace where the assailants came from, so I have ordered the military to run after them to take punitive action against them.

GWEN IFILL: And where stands the action against Abu Sayyaf?

PRESIDENT ARROYO: The Abu Sayyaf just lost their last two hostages, because they were able to escape, and it just shows that the Abu Sayyaf is almost a spent force. And I think that it is time that we concentrate now on making sure that the Abu Sayyaf doesn't grow again, doesn't recruit again, and recruitment comes from the poor people of Solor and Basilan, who feel great economic exclusion. So it is important to address the ancient economic exclusion, poverty, socio-economic grievances. That is the final solution, at least for the Philippines, to the problem of terrorism.

But we have to tie that up with our international efforts because while it--while poverty aggravates terrorism, there is still the international connection and we have to break down and break apart terrorist cells wherever they are and also cut off the flow of funds between them.

GWEN IFILL: Let's talk about something else the president mentioned yesterday. He said he was elevating the Philippines to the level of non-NATO ally. What is the significance of this? Does that put you in the position, for instance, to be able to pursue contracts for Iraqi rebuilding?

PRESIDENT ARROYO: The contracts for Iraqi rebuilding are commercial contracts. I think being in the Coalition of the Willing puts us in the radar screen, but we also have to compete with other countries that are in the Coalition of the Willing, but the Philippines is a country that has produced world class skilled workers that we have seen all over the world. They are probably our best asset, and of course, we intend to extend their services to the reconstruction of Iraq. We would like to be able to help Iraq with the use of our skilled workforce rebuild its economy.

So the meaning of being a major non-NATO ally is not with regard to that, but rather with regard to having first preference in defense assistance. It's a similar relationship as what the United States has with countries like Israel and Egypt, and Australia.

GWEN IFILL: You have decided not to run for reelection, last I checked, in 2004. Why not?

PRESIDENT ARROYO: I feel that if I am freed of the burden of politics, then I can do more and I can take more unpopular decisions. I can have as my guidance for decision whatever is right, not whatever is popular. And I would like to be able to spend the rest of my tenure building a legacy of improving our economy so that we can create more jobs for our people, healing the deep divisions in society that the Philippines is still suffering, because we have undergone major turmoil, political turmoil since the year 2000, and also working to modernize our electoral system so that we will become more politically mature in the 21st century.

GWEN IFILL:Well, let's talk politics for just a moment. In the time that has passed since the war in Iraq, your popularity has not exactly taken off on wings. It's sunk somewhat. What do you--

PRESIDENT ARROYO: It sunk before the war in Iraq when I took what was a very unpopular decision of--unpopular with the Filipinos, of joining the Coalition of the Willing, but it has recovered now.

GWEN IFILL: It has recovered now.

PRESIDENT ARROYO: Yes.

GWEN IFILL: So you won't rethink your decision to run?

PRESIDENT ARROYO: You know, I want to--I want to do my, my governance freed of the burden of politics, so I don't want to talk politics at all.

GWEN IFILL: Okay. When you leave here to go back home, what will you be able to say that you achieved in your trip here to visit the United States -- because obviously it wasn't just your meeting with the President, but members of your Cabinet meeting with members of his Cabinet and business leaders as well?

PRESIDENT ARROYO: I would say that we were able to define the relationship within our two countries toward something that is suitable for the 21st century, a modern relationship, revitalized and maturing. We look at the world and analyze the world, and see what we can do that is in line of our mutual interest and also in line with, you know, what the whole world needs, because this is a world where we really have to all work together.

GWEN IFILL: Does the potential for terrorism, something you can't predict, something you can't really prepare for in any specific way, does that threaten to derail those kinds of hopes and dreams you have?

PRESIDENT ARROYO: Well, we've been, I think, quite successful in addressing terrorism in the Philippines. We've been quite experienced in that. We have more experience than many other countries, and so I believe that especially with the attacks that we're doing now, with the punitive action we're doing now on the terrorist lairs, I think that, that great progress has been done, but as long as there's terrorism in the world, the work is not yet over because terrorism knows no boundaries and can strike anywhere, any time, and that's the reason why we must constant cooperation with one another. Exchange of information is crucial, and of course, making sure that terrorism does not spread like a contagion, because it will spread like a contagion if we do not address the breeding grounds of terrorism, at least as far as all these South East Asia is concerned, which is just the great poverty that exists in many areas of our country and our region.

GWEN IFILL: Madam President, thank you so much for joining us.

PRESIDENT ARROYO: Thank you.

FOCUS - RESEARCHING SARS

GWEN IFILL: Still to come on the NewsHour tonight, seeking answers to SARS in the laboratory, and controlling drug prices.

Susan Dentzer has the SARS story. Our health unit is a partnership with the Henry J. Kaiser Family Foundation.

SPOKESMAN: Can you kind of scan those in?

SUSAN DENTZER: Here at the National Institutes of Health in Bethesda, Maryland, researchers have been hard at work for weeks on potential vaccines for SARS.

SPOKESPERSON: Did this just not match?

SUSAN DENTZER: The work began in mid-March, just as global health authorities were issuing their first alerts about the SARS outbreak. The research is possible because of an unprecedented global effort to gather information about the SARS virus quickly.

SPOKESMAN: But then your next one up is...

SUSAN DENTZER: Dr. Gary Nabel directs the vaccine research center.

DR. GARY NABEL: We went from having a virus that caused disease in earlyMarch to the point where there actually was a growing virus in cell culture a month later, and then literally within a couple of weeks afterwards, the DNA sequence was becoming available.

SUSAN DENTZER: Dr. Anthony Fauci heads the Allergy and Infectious Disease Institute. He says those initial steps have paved the way for a multiyear effort to develop the tools for battling SARS.

DR. ANTHONY FAUCI: Now, when you have all that information, then that gives you a real jump start on things like making diagnostic tests, screening drugs, straining antiviral drugs, and taking the first crude steps toward making a vaccine.

SUSAN DENTZER: The United States isn't the only place where such work is going on. Government and private labs around the world are also engaged. Still, many early discoveries have in fact been made here, especially at the Centers for Disease Control and Prevention in Atlanta. Dr. Pierre Rollin heads a CDC Section that helped to identify the SARS virus in late March. He and his colleagues did that by injecting samples taken from sick patients into a special cell culture to see what would result.

DR. PIERRE ROLLIN: You can see the normal cell all around, and in the middle, this gap where the cell disappeared. And so that clearly is something going on, killing the cell.

SUSAN DENTZER: Other CDC scientists then examined the virus under an electron microscope, and saw the telltale crown of so-called corona viruses. These are a family of viruses that cause disease in a range of animals, and about 30 percent of all common colds in humans.

DR. LARRY ANDERSON: Ultimately, when we get the labs, we're going to know how many are actually SARS corona positive and how many aren't.

SUSAN DENTZER: Dr. Larry Anderson heads the CDC branch in charge of respiratory viruses. With the virus's identity in hand, his group immediately set to work decoding the microbe's genome. That was completed by early April. It showed that SARS was a whole new type of corona virus, different from the two types already known to affect humans and a third type that sickens animals.

DR. LARRY ANDERSON: SARS genetically looks like it would be sufficiently distinct to be a fourth cousin in this family of corona viruses.

SUSAN DENTZER: Having the virus's genetic sequence made it possible for CDC researchers to take other important steps. First came the development of several diagnostic tests to detect the virus in the body or to find antibodies suggesting its presence. Dr. James Hughes heads the National Center for Infectious Diseases at the CDC.

DR. JAMES HUGHES: It's very important to have a diagnostic test for this previously unrecognized infection for a number of reasons. First and foremost right now, what we need is a test that we can use for public health purposes and for disease surveillance purposes so that we can identify suspect cases, classify them as "suspect," "probable," or "confirmed."

SUSAN DENTZER: A second step was launching a cooperative multi- agency research effort to look for drugs that could be used to treat SARS patients.

DR. JAMES HUGHES: There is an effort now in collaboration between CDC, Food and Drug Administration, the National Institutes of Health, and the Department of Defense to evaluate candidate antiviral drugs to try to see if there is a currently available drug or drugs that have activity against this virus.

DR. ANTHONY FAUCI: We're in the process of screening a wide array of compounds that already exist on the shelf, some of which are approved drugs, some of which are drugs that have just been developed but went nowhere down blind alleys. You go and you determine if it has activity in the test tube against the SARS corona virus. If it does and it's a drug that's already developed, well, then you've hit the jackpot. You're lucky.

SUSAN DENTZER: Fauci says the jackpot hasn't been hit yet. But the screening effort has shown preliminary evidence that one existing antiviral drug, known as interferon beta, blocks the SARS virus in cell cultures in a lab dish. And in the journal "Science," researchers in Germany reported that still another experimental antiviral drug might be able to stop the virus from replicating in the body. Perhaps the most critical research now under way aims to develop a SARS vaccine. Without an effective vaccine, there's almost no deadly infectious disease that has ever been eradicated or rendered less of a threat to humanity.

DR. ANTHONY FAUCI: I think ultimately we'll get it. And the reason I say that is that greater than 90 percent of people who get infected with the SARS virus, their own body's immune system is able to completely clear the virus from the body. It gives me hope that we can develop a vaccine, that we're going to be able to boost the body's immune system enough so that when it gets challenged with SARS, it can protect itself against that.

SUSAN DENTZER: At NIH, researchers are testing two different vaccine approaches. They say it may take them six months or more to determine whether the strategies work. Animal and human testing would then follow. That means that in the best of all worlds, a vaccine may not be available and licensed for use in humans for two to three years.

DR. GARY NABEL: History would suggest that it is possible to generate immunity to this virus, but there are some corona viruses that are more challenging than others, and I think as we study this virus in the laboratory, we very quickly begin to understand how much it mutates, how much it's like the viruses that we could contain in the past. So we're in a situation where we're receiving a lot of new information in real time, and we have to be prepared to adjust in real time.

SUSAN DENTZER: Researchers hope to develop those disease-fighting tools in time to prevent thousands more deaths from SARS.

FOCUS - PRICING DRUGS

GWEN IFILL: Now, how the states are moving to make prescription drug coverage affordable. Ray Suarez has that.

RAY SUAREZ: At a time when prescription drug costs are rising and many Americans have no drug insurance coverage, some states are stepping in to help. A controversial program in Maine got a boost yesterday when the Supreme Court allowed it to go forward after a legal challenge. The Maine plan, also known as Maine Rx, pressures pharmaceutical companies to offer discounts on prescription drugs for the state's uninsured. The products of companies that don't comply would require state approval before they could be prescribed for Medicaid patients. Many other states around the nation are now preparing their own programs.

For more, we turn to Kevin Concannon, the former commissioner of Maine's Department of Human Services, who helped shape Maine Rx. He is now director of the Iowa Department of Human Services. And Marjorie Powell, senior assistant general counsel for the Pharmaceutical Research and Manufacturers Association of America, also known as PHARMA. The group opposed the plan.

Kevin Concannon, how was Maine Rx designed to work and what would it accomplish?

KEVIN CONCANNON: Well, it was really designed to provide prescription drug discounts to some 325,000 Maine people who do not have prescription drug insurance. By the states allowing them to enter into a program where they would get a card from the state, it would be, they could take it to any drugstore in the state, and we would finance that discount by negotiating with the drug companies to obtain a discount similar to the Medicaid program, which, on average, runs in the 20-25 percent range. And there was lots of interest and motivation in this in Maine because we're bordered by two Canadian provinces where the same medications in the U.S. are available there for considerably less.

RAY SUAREZ: So this was meant to capture a larger population than simply the Medicaid program.

KEVIN CONCANNON: Exactly. The relationship to Medicaid is we know that there are people with conditions, chronic conditions, if they do not take the kind of life sustaining medications, they'll have that catastrophic stroke or heart attack and be so debilitated, they'll need a full Medicaid program. The rationale in Maine was let's use Medicaid to help the 325,000 residents of the state who do not have prescription drug insurance.

RAY SUAREZ: And if a company was not willing to negotiate on the rates, you could effectively keep that drug out of Maine?

KEVIN CONCANNON: Well, the option was given to the Department of Human Services to subject that drug to something called prior authorization. Before a physician or a prescriber could prescribe it, they would have to try an alternative drug if one were available. Certainly it has been my intent, and I would suspect going forward the intent of anyone running the program, not to prior authorize medications for this there are not good alternatives. But as we know now in the drug market there are many look alike drugs, me too drugs, they're called. And they have different levels of effectiveness and very different levels of cost, and this was really a very powerful incentive for the states to use to encourage the manufacturers to give us that Medicaid level discount, which is still a smaller discount, by the way, than is available to our Canadian neighbors to the North and the East.

RAY SUAREZ: Marjorie Powell, your association, PHARMA took Maine to court, what were your objections to the way the program was structured?

MARJORIE POWELL: Our primary objection to the Maine Rx legislation the way as it was enacted in the statute by the legislature is that it used Medicaid patients, the sickest, poorest people in the state of Maine, as the leverage to get discounts for not just the uninsured in Maine, but the statute actually said every Maine resident and we thought that that was bad public policy and bad public health care for the Medicaid patients in the state of Maine. We challenged the program because we didn't think that was consistent with the federal Medicaid law, which says that Medicaid is to benefit Medicaid patients.

RAY SUAREZ: By a six to three ruling, the justices united to, in effect, let the program take effect as it was designed. But is this fight over?

MARJORIE POWELL: Actually, that's not exactly what the court said. They technically sent the case back to the first circuit in Boston, which will send it back to the district court where the district court then is directed to, one, find out what the secretary of Health and Human Services, the head of the Medicaid program nationally, thinks about the Maine Rx program, whether it would be consistent with the federal Medicaid objectives and then, two, to weigh the burdens on Medicaid patients with any benefits that might accrue to Medicaid in Maine from the operation of this program. So the case is not yet settled.

RAY SUAREZ: Well, is there anything in the way that the opinions were written that gives PHARMA some encouragement as it continues its legal road?

MARJORIE POWELL: Well, we think that several of the opinions are fairly encouraging because a number of the Justices did recognize that there will be a burden placed on Medicaid patients and potentially a burden on Medicaid providers, those physicians and pharmacies that have to contact the state and go through several steps in order to get permission to prescribe a drug that their Medicaid patient needs. But until the court actually looks at evidence, it's not clear what the court is going to do.

RAY SUAREZ: Kevin Concannon, what did you make of the four separate opinions, the six/three ruling? Where does it leave the design that you helped create?

KEVIN CONCANNON: We were deeply very much encouraged by it not only for Maine people but for people across the country in all 50 states. Just this afternoon I left Governor Villsach here in Des Moines, and we're very encouraged by that and interested in the state extending the kind of access to discounted prescription drugs that are available now only in a few places in the U.S.. And I know there are 28 states that filed an amicus brief with Maine. With all due respect, I think my view of what the court said, they were not persuaded this was going to be harmful to Medicaid patients. Maine is an example, and many other states in the country currently subject their Medicaid medications to the practice of prior authorization. Florida, for example, was sued by the manufacturers on that very issue. And the federal court has upheld the legitimacy of it. So I think prior authorization carefully done, carefully executed, actually can help people by making sure they're getting the medications that are best for them but also are cost beneficial. In the case of the Maine Rx case I think what's encouraging across the country this very day -- day one after the Supreme Court decision -- is the interest of states in saying let's look again at what we may do for the millions of people in our country literally, not just elderly people, but people of all ages who do not have prescription drug insurance, yet who have chronic conditions.

MARJORIE POWELL: Ray, let me also remind people or tell people who don't know, that Maine actually has had, was one of the first states approximately 25 years ago, to establish a program to help seniors with chronic conditions who were low income afford their medications. And as nearly as I can tell, all of the innovative pharmaceutical companies were participating in that program on a voluntary basis, giving discounts back to the state for what was called Drugs for the Elderly program. That program had been expanded over a number of years and was providing, and I understand is still providing services to a number of people in Maine. There are a variety of states that have similar kinds of programs to make prescription drugs affordable to seniors who don't yet have a Medicare drug benefit.

RAY SUAREZ: Well, what do the versions that you can live with look like that makes them different from what Maine is trying to do?

MARJORIE POWELL: Well, actually one of the problems with Maine is that it was using Medicaid as the leverage to get discounts from pharmaceutical companies. But companies are providing discounts and free drugs in a variety of settings; for example a number of the companies have discount cards for seniors and disabled people who are eligible for Medicare, which they see as an interim until Congress passes a Medicare drug benefit. In addition, the companies participate in various state pharmacy assistance programs that are operated in, I think twenty-six or twenty-eight states now. And companies have free drug programs for people who cannot afford their medications --patient assistance programs, all of which within the pharmaceutical industry are now available on a web site wwww.helpingpatients.org.

RAY SUAREZ: Kevin Concannon, you were you trying to get in with a response?

KEVIN CONCANNON: Well, what I was going to say was the program Marjorie has referred to is true it has been in effect in Maine since 1976 but it was a much narrower program and indeed there were drug manufacturers who did not participate. It had at its height about thirty-three or thirty-four thousand people. Within a year of implementing a program similar to Maine Rx, we had over 114,000 people in a very small state. So there is tremendous need that is going unmet. Many of these programs that Marjorie just referred to are very cumbersome to access. Speak to any physician's office about the so-called beneficial programs available through the manufacturers. It requires a lot of time in the physician office to fill it in. It is very complicated. Patients are uncertain. They get it for a limited period of time but they don't know about six months from now or a year. So I don't think that's quite the answer by any means. Programs like Maine Rx and the Healthy Maine Prescription Program that was also sued by the pharmaceutical manufacturers were very popular with all of the physician in the state, with pharmacists up and down the state who like the program, and yet they were shut down really by the manufacturers who don't like the use of the Medicaid program as a lever, basically. It is not harming Medicaid patients. It's helping people similarly situated who do not have prescription drugs whose incomes may be slightly above that. I think it's....

RAY SUAREZ: Your response Ms. Powell?

MARJORIE POWELL: The court is going to be asked to address the question of whether this program will impose a burden on Medicaid patients that is sufficient to outweigh any benefit to Medicaid. But there is evidence from a number of other state programs that are trying to impose severe restrictions on Medicaid patients' access to prescription drugs. Former Commission Concannon mentioned the Florida program, but the Florida Legal Services brought a lawsuit challenging the state of Florida because Medicaid patients were not getting any medications in a number of instances. And I understand that they are working toward a settlement of that which will provide an appeal process and information for Medicaid patients who don't get their drugs about why they didn't get them and what they can do to appeal that. We think it's very important that Medicaid patients have access to the drugs they need, particularly Medicaid patients who are stabilized on drugs that they've been taking for a number of years for chronic conditions: Heart disease, diabetes, and that those drugs not be switched because the doctor doesn't have time or can't get permission from a state agency.

RAY SUAREZ: Ms. Powell, Mr. Concannon, thank you both.

KEVIN CONCANNON: Thank you.

MARJORIE POWELL: Thank you.

RECAP

GWEN IFILL: Again, the major developments of the day: The Department of Homeland Security raised the terror alert status to orange, for high risk. The move came as the FBI warned al-Qaida could strike again inside the United States. And the U.S. and British embassies inSaudi Arabia closed for several days because of new threats of attack there. And the U.S. pressed the U.N. to vote as early as tomorrow on lifting the sanctions on Iraq. U.S. diplomats said they believe there is substantial support for the idea on the Security Council. We'll see you online and again here tomorrow evening. I'm Gwen Ifill. Thank you and good night.