[House Hearing, 108 Congress]
[From the U.S. Government Publishing Office]



 
 INTERNATIONAL PRESCRIPTION DRUG PARITY: ARE AMERICANS BEING PROTECTED 
                               OR GOUGED?

=======================================================================

                                HEARING

                               before the

               SUBCOMMITTEE ON HUMAN RIGHTS AND WELLNESS

                                 of the

                              COMMITTEE ON
                           GOVERNMENT REFORM

                        HOUSE OF REPRESENTATIVES

                      ONE HUNDRED EIGHTH CONGRESS

                             FIRST SESSION

                               __________

                             APRIL 3, 2003

                               __________

                           Serial No. 108-12

                               __________

       Printed for the use of the Committee on Government Reform


  Available via the World Wide Web: http://www.gpo.gov/congress/house
                      http://www.house.gov/reform

                      U.S. GOVERNMENT PRINTING OFFICE
                             WASHINGTON : 2003

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                     COMMITTEE ON GOVERNMENT REFORM

                     TOM DAVIS, Virginia, Chairman
DAN BURTON, Indiana                  HENRY A. WAXMAN, California
CHRISTOPHER SHAYS, Connecticut       TOM LANTOS, California
ILEANA ROS-LEHTINEN, Florida         MAJOR R. OWENS, New York
JOHN M. McHUGH, New York             EDOLPHUS TOWNS, New York
JOHN L. MICA, Florida                PAUL E. KANJORSKI, Pennsylvania
MARK E. SOUDER, Indiana              CAROLYN B. MALONEY, New York
STEVEN C. LaTOURETTE, Ohio           ELIJAH E. CUMMINGS, Maryland
DOUG OSE, California                 DENNIS J. KUCINICH, Ohio
RON LEWIS, Kentucky                  DANNY K. DAVIS, Illinois
JO ANN DAVIS, Virginia               JOHN F. TIERNEY, Massachusetts
TODD RUSSELL PLATTS, Pennsylvania    WM. LACY CLAY, Missouri
CHRIS CANNON, Utah                   DIANE E. WATSON, California
ADAM H. PUTNAM, Florida              STEPHEN F. LYNCH, Massachusetts
EDWARD L. SCHROCK, Virginia          CHRIS VAN HOLLEN, Maryland
JOHN J. DUNCAN, Jr., Tennessee       LINDA T. SANCHEZ, California
JOHN SULLIVAN, Oklahoma              C.A. ``DUTCH'' RUPPERSBERGER, 
NATHAN DEAL, Georgia                     Maryland
CANDICE S. MILLER, Michigan          ELEANOR HOLMES NORTON, District of 
TIM MURPHY, Pennsylvania                 Columbia
MICHAEL R. TURNER, Ohio              JIM COOPER, Tennessee
JOHN R. CARTER, Texas                CHRIS BELL, Texas
WILLIAM J. JANKLOW, South Dakota                 ------
MARSHA BLACKBURN, Tennessee          BERNARD SANDERS, Vermont 
                                         (Independent)

                       Peter Sirh, Staff Director
                 Melissa Wojciak, Deputy Staff Director
              Randy Kaplan, Senior Counsel/Parliamentarian
                       Teresa Austin, Chief Clerk
              Philip M. Schiliro, Minority Staff Director

               Subcommittee on Human Rights and Wellness

                     DAN BURTON, Indiana, Chairman
CHRIS CANNON, Utah                   DIANE E. WATSON, California
CHRISTOPHER SHAYS, Connecticut       BERNARD SANDERS, Vermont 
ILEANA ROS-LEHTINEN, Florida             (Independent)
                                     ELIJAH E. CUMMINGS, Maryland

                               Ex Officio

TOM DAVIS, Virginia                  HENRY A. WAXMAN, California
                      Mark Walker, Staff Director
                  Beth Clay, Professional Staff Member
                          Mindi Walker, Clerk
                     Tony Haywood, Minority Counsel

                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on April 3, 2003....................................     1
Statement of:
    Hubbard, William K., Senior Associate Commissioner, Food and 
      Drug Administration, accompanied by John Taylor, Chief, 
      Enforcement Group..........................................    21
    Wennar, Elizabeth A., president and CEO, United Health 
      Alliance, principle, Healthinova; Andy Troszok, vice 
      president, standards, Canadian International Pharmacy 
      Association; and Robert M. Hayes, Medicare Rights Center...    90
Letters, statements, etc., submitted for the record by:
    Burton, Hon. Dan, a Representative in Congress from the State 
      of Indiana,
        AARP bulletin............................................    75
        Prepared statement of....................................     6
    Hayes, Robert M., Medicare Rights Center, prepared statement 
      of.........................................................   113
    Hubbard, William K., Senior Associate Commissioner, Food and 
      Drug Administration:
        Prepared statement of....................................    33
        Web site posters.........................................    23
    Troszok, Andy, vice president, standards, Canadian 
      International Pharmacy Association, prepared statement of..   105
    Wennar, Elizabeth A., president and CEO, United Health 
      Alliance, principle, Healthinova, prepared statement of....    94

 INTERNATIONAL PRESCRIPTION DRUG PARITY: ARE AMERICANS BEING PROTECTED 
                               OR GOUGED?

                              ----------                              


                        THURSDAY, APRIL 3, 2003

                  House of Representatives,
         Subcommittee on Human Rights and Wellness,
                            Committee on Government Reform,
                                                    Washington, DC.
    The subcommittee met, pursuant to notice, at 2:03 p.m., in 
room 2157, Rayburn House Office Building, Hon. Dan Burton 
(chairman of the subcommittee) presiding.
    Present: Representatives Burton, Gutknecht, Sanders, 
Tierney, Duncan, Watson, Cannon, Shays, and Cummings.
    Staff present: Beth Clay and John Rowe, professional staff 
members; Mark Walker, staff director; Nick Mution, press 
secretary; Mindi Walker, clerk and legislative aide; Tony 
Haywood, minority counsel; and Jean Gosa, minority assistant 
clerk.
    Mr. Burton. Good afternoon. A quorum being present, the 
Subcommittee on Human Rights and Wellness will come to order.
    I ask unanimous consent that all Members' and witnesses' 
written and opening statements be included in the record. 
Without objection, so ordered.
    I ask unanimous consent that all articles, exhibits, and 
extraneous or tabular material referred to be included in the 
record. Without objection, so ordered.
    Congressman Gil Gutknecht has been a leader in the House on 
drug reimportation issues and has agreed to join us today.
    I appreciate your being here, Gil, so much.
    Mr. Gutknecht. Mr. Chairman, I appreciate your having this 
hearing.
    Mr. Burton. Thank you. And I ask unanimous consent that 
Congressman Gutknecht be permitted to serve as a member of the 
subcommittee today. Without objection, so ordered.
    We will have also Congressman Joseph Crowley, we believe, 
and Congressman John Duncan, who is from the full committee, 
here I guess some time before too long. Congressman Crowley 
we'd like to be able to serve, as well. Congressman Duncan is a 
member of the full committee but not our subcommittee, and we 
want to allow him the courtesy of being here.
    Given that this is the first hearing of the subcommittee, 
all my colleagues aren't here, but I will mention them. We're 
going to have Chris Cannon of Utah, Congressman Chris Shays of 
Connecticut, and Congresswoman Ileana Ros-Lehtinen of Florida 
on our subcommittee, and on the Democrat's side of the aisle 
we'll have Diane Watson as the ranking minority member and 
Congressman Bernie Sanders of Vermont and Congressman Elijah 
Cummings of Maryland, who will also be serving. During my 
tenure as chairman of the full committee, each of these Members 
was very active and involved in our health oversight hearings, 
and I am very pleased that they are going to be joining me on 
this subcommittee.
    It is often the case that Congress acts as a fulcrum 
seeking to find the appropriate balance between opposing 
parties on key policy discussions. The subject of today's 
hearing is no different. On one side of the debate is the 
importance of preserving the free enterprise system. The 
pharmaceutical industry tells us that it now takes between $500 
and $800 million to bring a drug to market.
    We are also being joined by Mr. Tierney.
    This estimate is a bit misleading, though. While the actual 
costs of research and development on bringing a single drug to 
market can be high, the actual dollar figure is much less. Only 
10 to 30 percent of the products in development actually make 
it to the marketplace, so companies add the cost of failed 
products into the R&D of drugs that ultimately are approved; 
thus, the American consumer, by and large, shoulders the cost 
associated with drug research and development.
    On the other hand, Congress must consider the needs of 
American consumers to have access to safe and affordable 
prescription drugs. As many as 108 million Americans have one 
or more chronic health conditions such as diabetes, high blood 
pressure, asthma, and heart disease, and many require 
prescription drugs to manage these conditions. Of Americans age 
50 to 64, 75 percent are on at least one resource drug, and 14 
percent of women age 65 are on five prescription drugs in any 
given week.
    As we all know, the price of prescription drugs is higher 
in the United States than in any other country in the world. As 
one mechanism to address this issue, in the year 2000 Congress 
overwhelmingly passed and the President signed into law the 
Meds Act to allow U.S. consumers, pharmacists, and wholesalers 
to purchase FDA-approved prescription drugs on the 
international market. However, the FDA has never implemented 
this law.
    Today's hearing is focusing only on consumers' access to 
prescription drugs purchased from Canadian pharmacies. One of 
the witnesses we will be hearing from today is Mr. William 
Hubbard, Senior Associate Commissioner of the FDA. Mr. Hubbard 
was quoted in the media 2 weeks ago as saying that anyone 
facilitating Americans importing prescription drugs from Canada 
faced potential civil and criminal liability. He went on to say 
insurance companies and health plans that pay for prescription 
drugs purchased outside the United States may be violating the 
law.
    Now, you know, that sounds pretty strong, but, you know, I 
want to take a couple of words that he said. He said they faced 
potential--potential. Nevertheless, the civil and criminal 
liability scared people. And then he went on to say, ``those 
who aid and abet a criminal violation of the act or conspire to 
violate the act can be found criminally liable.'' And he also 
said that those who aid and abet may be violating the law. He 
said, ``Insurance companies and health plans that pay for 
prescription drugs purchased outside the United States may be 
violating the law.''
    Well, the law was pretty clear. It was passed by Congress 
and signed by the President, but the President had some 
concerns about making sure that the FDA was watching what was 
coming in. And that's what we want to ask about today--whether 
or not the FDA is working with the Canadian Government to make 
sure that the drugs coming into this country are safe.
    It is my understanding that the drug companies in Canada 
are policed very, very stringently, and so in some cases their 
dealing with the pharmaceutical industry up there is even 
tighter than what the FDA here in the United States does.
    He went on to state that, ``We, the FDA, believe that 
virtually all drugs imported to the United States from Canada 
by or for individual U.S. consumers violate the U.S. law.'' 
We're going to ask about that today because the law is pretty 
clear. What the FDA has not done is they have not worked with 
Canada, and so they are saying that their interpretation is 
that, because the FDA hasn't worked with Canada and checked 
these drugs out one at a time or checked with their counterpart 
in Canada, that the consumers are violating the law.
    I, for one, am very puzzled about this. How can the FDA 
officials feel that Americans are violating U.S. law when 3 
years ago this law was signed by the President? And this bill 
clarified that it was legal for Americans to purchase 
prescription drugs internationally. But we're only talking 
about Canada today, and we're talking about Canada because they 
are our neighbor and because a lot of seniors, well over a 
million Americans--and most of them are seniors, I believe--are 
buying their pharmaceuticals from Canada.
    We're a country with three branches of government--
judicial, executive, and legislative. It is not the FDA's job 
to make law. It is not the FDA's job to make law. It is 
Congress' job to pass laws and the executive branch to sign 
them and they're to enforce them, and it is their 
responsibility to implement the laws that Congress passes, and 
that includes the Meds Act, which was signed 3 years ago. So 
far the FDA has shirked its responsibility in this area, and 
this needs to change. The FDA claims they cannot implement this 
law because they cannot assure the safety of the products being 
shipped into the United States.
    I understand that the gentleman from the FDA brought a 
bunch of drugs in from countries around the world where they 
were counterfeits, but they weren't from Canada. We were 
talking about Canadian drugs. It is very well policed up there 
by their drug agencies.
    I believe that the FDA needs to do some innovative, out-of-
the-pillbox thinking. Health Canada's regulatory model offers 
safeguards to ensure the safety of products for Canadians. Last 
week, Mr. Hubbard told me that he was not aware of a single 
incident that an American had been harmed by a product 
purchased in Canada. They did mention one in Oregon--one in 
Oregon. We have found that aspirins and other drugs sold over 
the counter in this country cause more problems than one in 
Oregon caused by a Canadian pharmaceutical.
    Obviously, if the FDA wanted to find a solution to 
implementing the law they could, and I am pleased today that we 
are going to be hearing from a number of people. Congressman 
Roger Zion was going to be with us, but unfortunately I guess 
he has a health problem and he's not here today. We'll also 
hear from Mr. Robert Hayes of the Medicare Rights Center in New 
York; Dr. Elizabeth Wennar from the Coalition for Access to 
Affordable Prescription Drugs; and Dr. Andy Troszok, the vice 
president of standards for the Canadian International 
Pharmacists Association. They'll be giving us information on 
their perspective, and he will be giving information from the 
Canadian perspective.
    Earlier this year GlaxoSmithKline sent letters to Canadian 
pharmacies threatening to suspend shipments to them if they 
continued to sell drugs to American consumers. Now, the reason 
they did that was because they don't make as much money in 
Canada. They still make a profit, but they don't make as much 
money in Canada as they do here in the United States. In fact, 
I don't think they make as much money selling drugs any place 
in the world as they do here in the United States. So what they 
were doing is they were fighting this on the issue of profit 
and loss.
    It's interesting to me that the FDA at almost the same time 
was saying that they had concerns about drugs coming in from 
Canada. You might wonder why the FDA would be bringing the 
subject at the same time that GlaxoSmithKline was trying to 
stop selling drugs to pharmaceutical companies in Canada 
because they don't make as much profit. GlaxoSmithKline seems 
to be using strong-arm tactics.
    Now, this is kind of interesting because GlaxoSmithKline, 
during very tough economic times last year, had a 15 percent 
growth rate, and I believe Congressman Sanders said they made 
$10 billion. Is that what you said, they had $10 billion in 
sales?
    Mr. Sanders. Just $9 billion, Mr. Chairman.
    Mr. Burton. Just $9 billion. And their CEO is making $20 
million a year.
    Just last week a member of their firm told me that even 
with Canada's price controls GlaxoSmithKline makes a profit, 
just not as much as they make in the United States. So I have 
cosponsored legislation with Congressman Sanders and 54 other 
legislators--and we believe we'll have a lot more--that will 
institute monetary fines on pharmaceutical companies that 
reduce access of Americans to lower-cost drugs via the Internet 
from Canadian pharmacies. And I hope the FDA will try to work 
with the Canadian Government to make sure that they are in 
concert with us as far as importing drugs to the United States.
    I invited Mr. J.P. Garnier, the chief executive officer of 
GlaxoSmithKline to testify at the hearing today; however, he 
declined to participate or even to submit testimony. Had I 
still been chairman, I would have subpoenaed him, but the Chair 
of the committee chose not to subpoena him, so we'll have to 
make do with
an empty chair when we start questioning GlaxoSmithKline. His 
unwillingness to participate at the subcommittee today I think 
speaks volumes.
    I want to thank you all for coming. I look forward to 
hearing from our witnesses.
    [The prepared statement of Hon. Dan Burton follows:]
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    Mr. Burton. I now recognize the minority member, 
Congressman Diane Watson. Since she is not here, I'll go ahead 
and recognize Mr. Sanders. Mr. Sanders.
    Mr. Sanders. Mr. Chairman, thank you very much for holding 
this important hearing. And the truth is, we owe you a real 
debt of gratitude because there are not many Members of 
Congress who are prepared to stand up to the most powerful 
lobby in this country, and that is the pharmaceutical industry. 
This is a huge issue, and I really do thank you for holding 
this hearing.
    The high cost of prescription drugs and what that is doing 
to the health and well-being of Americans and senior citizens 
is something that I have been involved with for many, many 
years. In 1999, in order to help Vermont citizens, I led the 
first effort to take constituents over the Canadian border to 
purchase medicine at a fraction of the price that they were 
paying in the United States. And I will never forget as long as 
I live the women who were with me who were struggling with 
breast cancer and who purchased tomaxaphin, Mr. Chairman, which 
is a widely prescribed breast cancer drug, for one-tenth the 
price, 10 percent, the same, exact medicine. And these women, 
many of whom did not have a lot of money, could not believe 
that.
    Several years ago I introduced reimportation legislation. I 
know Mr. Gutknecht and I have worked together on various pieces 
of legislation in that area which would have allowed Americans 
to purchase FDA-approved drugs anywhere in the world. While a 
variation of this legislation was passed in Congress and, as 
you indicated, is still in existence, we've got to work out 
some of those loopholes that remain in there. And, as you've 
just indicated, you and I and others are working on legislation 
to stop Glaxo and other companies from limiting their supplies 
to Canada. We have 54 cosponsors on that legislation.
    Let me briefly describe what this problem is, what we're 
talking about today, and why this hearing is so important.
    More and more Americans are dependent upon prescription 
drugs to maintain their health and well-being and to keep 
themselves alive. At the same time, more and more Americans 
simply cannot afford the outrageously high prices that the 
pharmaceutical industry is charging them. While Americans pay 
by far the highest prices in the world for their medicine, the 
pharmaceutical industry, which receives huge tax breaks and 
subsidies from the U.S. Government, continues to be the most 
profitable industry in this country and provides huge 
compensation packages to their CEOs. In 2001, the industry's 
profit as a percentage of revenue, Mr. Chairman, was 18.5 
percent. Not too many businesses that you and I know make 18.5 
percent profit.
    I will submit information for the record on the 
compensation issue, but I would point out here, for example, 
that C.A. Hinebold, Jr., former chairman and CEO of Bristol 
Meyers Squibb in 2001 received total compensation of over $150 
million in 1 year. Elderly people all over this country are 
suffering and in some cases dying because they cannot afford 
the high cost of prescription drugs. One executive receives 
$150 million in 1 year from one of the largest drug companies 
in this country.
    In addition, in order to protect their profits and make 
certain that nothing is passed in Congress which protects the 
American people and lowers the cost of prescription drugs, the 
industry has spent hundreds of millions of dollars in the last 
few years on campaign contributions, lobbying, and advertising. 
If you can believe it, the industry has over 600 paid 
lobbyists, including former top leaders of the Democratic and 
Republican parties, in their payroll in order to stop Congress 
from doing anything to lower the cost of prescription drugs and 
protect the American people.
    Mr. Chairman, in recent years Americans have begun to 
express their disgust and anger with the pharmaceutical 
industry and with the high cost of prescription drugs by 
utilizing the marketplace. When they understand that they can 
purchase the same exact medicine in Canada for up to 90 percent 
less than they are paying at home, they are beginning to flock 
into that market. Estimates are, as you have indicated, that up 
to 1 million Americans are either going across the border to 
buy their medicine or are using the Internet. In recent years, 
dozens and dozens of new international Internet pharmacies have 
sprung up in Canada to serve that market.
    And what has been the response of the pharmaceutical 
industry to that reality? Have they said, ``Well, maybe we 
should stop ripping off the American people and lower our 
prices?'' The answer is no. Their response, as you have just 
indicated, is to say, ``Uh-oh, we had better do something about 
the fact that more and more people are going to Canada, and 
what we want to do is close that border, close that opportunity 
for Americans to buy safe and affordable prescription drugs in 
Canada.''
    As you indicated, quite appropriately, I don't think it was 
a coincidence that on 1 day Glaxo says, ``We're going to limit 
the supplies to Canada,'' and then a few days later guess what 
happens, the FDA suddenly says, ``Oh, we are really interested 
in this issue, really concerned about the safety issue.'' The 
argument that the drug companies and their allies--including, 
I'm afraid to say, the FDA--are giving is that they are 
concerned about the safety issue and their desire to protect 
the health and well-being of the American people.
    In my view, this position is absolutely false and without 
merit. The truth is that all of the medicine being provided to 
Americans by registered pharmacies in Canada is highly 
regulated and that the Canadian pharmaceutical drug regulatory 
system is quite as strong as what exists here in the United 
States.
    Interestingly--and you made this point, Mr. Chairman--
despite the fact that some 1 million Americans who are now 
buying medicine in Canada, there is not, to the best of my 
knowledge, one instance in which adulterated or unsafe medicine 
has been sold to an American. But if the FDA is interested in 
health and safety, then let me tell you what you may want to 
take a hard look at.
    Today in the United States one out of five Americans are 
not taking the medicine that their doctors prescribed because 
they cannot afford that medicine. One out of five. That, Mr. 
Chairman, is a huge health and safety issue. In fact, I intend 
to ask the GAO for a study to give us an estimate of how many 
Americans are dying because they cannot afford the outrageously 
high cost of prescription drugs that are being charged.
    I also want to know in that study how many Americans are 
seeing a deterioration in their health and an increase in 
suffering because they can't afford the medicine that they 
desperately need. My guess is that the answer will be thousands 
of Americans are dying, tens of thousands of Americans are 
seeing the deterioration in their health care because they 
can't afford the high cost of medicine. And meanwhile the FDA 
is running to worry about medicine coming in from Canada where 
zero Americans have been negatively impacted. Now, why is the 
FDA working with the drug companies to stop Americans from 
buying medicine in Canada?
    And let me just speak for myself on this issue. I think the 
answer is obvious. I think that the drug companies are now 
asking for payback time. They have contributed huge amounts of 
money to the political process to protect their profits, and 
now they are calling in those chips, and I think that this is 
sad and it is outrageous.
    Mr. Chairman, let me conclude by simply saying that if you 
and I think that the situation is bad today, think about what 
is happening right now in America. In Vermont, in 
Massachusetts, in Oregon, all over this country, because of 
huge deficits that State governments have, they are cutting 
back on the subsidized prescription drug programs that exist 
right now.
    I will introduce into the record a newsletter from a senior 
citizen center in Medford, MA. And what the senior citizen 
center says is that in Massachusetts the State program is no 
longer welcoming seniors into the program, and if you want to 
get reasonably priced prescription drugs go to Canada. And now 
what the FDA is saying to those elderly people who are going to 
be thrown off of their State programs, ``You've got an option. 
You could die. You get sick. But you can't get safe and 
affordable drugs from Canada.'' That is an outrage.
    I thank you very much, Mr. Chairman, for holding this 
hearing.
    Mr. Burton. Thank you, Mr. Sanders.
    Mr. Duncan.
    Mr. Duncan. Well, thank you very much, Mr. Chairman. I will 
be very brief. Let me first say that I appreciate very much you 
calling this hearing on this issue that is so very, very 
important to so many Americans at this time and has grown by 
leaps and bounds in importance every day and every year in this 
country. And I want to commend you, Mr. Chairman, because you 
have a consistent record of calling for hearings and trying to 
do things about the problems that are of greatest concern, I 
think, to average Americans throughout the Nation.
    Mr. Gutknecht has given me a publication--he gave it to me 
a few days ago--that said that the CBO, the Congressional 
Budget Office, has estimated that American seniors will spend 
over $1.8 trillion on prescription drugs over the next 10 
years. And I can tell you that this is a problem that is of 
concern to more than just seniors. While they buy the highest 
percentage of the drugs in this country, still the younger and 
middle-aged people are having to spend many, many billions on 
prescription drugs, and then also baby boomers see what is 
happening to their parents who are going through medical 
problems and are thinking about some of these problems and 
their retirements and so forth themselves, possibly for the 
first time.
    I have come here today to try to learn a little bit more 
about this. I'm not the expert on this problem that you are, 
Mr. Chairman, and Mr. Gutknecht, who has done such great work, 
and Mr. Sanders, but I will tell you that I have seen in many 
different industries the more highly regulated an industry 
becomes the more it ends up being controlled by the big giants, 
because when the rules and regulations and red tape become so 
strangling, the small businesses and medium-sized businesses 
just don't have a chance. And I think that most people at least 
have the impression in this country that the FDA and the drug 
industry is controlled by a few big giants, very much to the 
detriment of the consumers in this country.
    And I can tell you this is one of the major--this is one of 
the very top concerns of my constituents in Tennessee. And I 
don't represent some Appalachian poverty district; I actually 
represent a district where the economy is pretty good and 
average incomes and so forth that are about the national 
average or maybe even slightly above. And I can tell you that 
something is going to have to be done.
    I look forward to working with you, Mr. Chairman, and Mr. 
Sanders and Mr. Gutknecht to try to see what we can do to do 
something for the American people in regard to these drug 
prices that in many cases have become almost outrageous or 
obscene in some ways.
    I yield back the balance of my time.
    Mr. Burton. Thank you very much, Judge Duncan.
    Mr. Tierney.
    Mr. Tierney. Thank you, Mr. Chairman. Mr. Chairman, thank 
you for your graciousness in allowing me to join you today, 
even though I am not on this particular subcommittee. I think 
you know of my interest, as well as the interest of the other 
Members here, all of whom I congratulate, along with yourself, 
for that prolonged and constant interest that I think is 
focusing the light on this issue that cannot be shut out.
    We have to stay persistent on this and we have to move on 
this. Mr. Sanders' comments were right on the money from 
beginning to end, and he has been a champion of this, as have 
you, Mr. Chairman.
    We have, amongst the Members that are here at this 
subcommittee meeting today and others in the Congress, a number 
of bills addressing the cost issue on prescription drugs. 
Whether it is preserving access to safe, affordable Canadian 
medicines that was recently filed and many people have signed 
onto it, or whether it is Tom Allen's H.R. 1400 that talks 
about having prescription drugs for all seniors at a price that 
is no higher than the average drug in Canada, France, United 
Kingdom, Spain, Italy, or Japan--however we try to come at this 
problem, we seem to be getting more and more people signing on 
because all of the factors that Mr. Sanders and you addressed 
in your opening statements are becoming more and more evident.
    Not too long ago another subcommittee of this Government 
Reform Committee, one on which I do sit, had hearings in 
Boston. Chairman Shays, Mr. Lynch, I, and others were at that 
hearing and had members of the Veterans Administration in to 
testify about the program that they run, how they purchase 
prescription drugs for veterans and the enormous savings that 
are involved in doing it the way they do it because they are 
able to buy for such a large market and negotiate for the 
companies. We do that for veterans. We do that for Native 
Americans. We do it in medicine. And but for the resistance of 
the prescription drug companies and their champions, we could 
do it for Medicare, and that would solve an issue for a lot of 
seniors who are otherwise shut out of affordable prescription 
drugs and run into all of the circumstances enumerated in Mr. 
Sanders' statement.
    I think the most disturbing part of this is the continual 
drum beat we hear from the industry and from those who are, in 
my estimation, much too close to the industry, although they 
are supposed to be regulating them and having oversight over 
them, and that is this drum beat for market forces.
    The fact of the matter is that this is an industry that 
does not operate under pure market forces and the public is 
finally catching onto this, and I think as we move forward 
people are going to realize that there has to be a quid pro 
quo. There are patents that these companies get and they hold 
them for a substantial number of years, which essentially gives 
them a monopoly. That is not a pure market force. That is 
something that the public at large, through its representatives 
in government, give to those companies to encourage them to 
invest in research, to encourage them to develop prescription 
drugs, and to make and return a reasonable profit for their 
efforts.
    In addition to that, by some estimations they receive 
almost one-half of their research and development moneys 
through the National Institute of Health and other Government 
sources, and yet they want to talk about an open and free 
market.
    Fact of the matter is that this Congress is derelict in its 
duties if we don't start demanding back for those things that 
the American public has given them--patents, given them 
research moneys and cooperation in every other way, providing 
through taxpayers money an FDA program that enhances the value 
of their products by having a system that establishes what is 
safe. It is taxpayer money and it is inuring to the benefit of 
that company, of those companies.
    For all of those reasons, we ought to be able to demand 
that they make a reasonable profit, and certainly that we don't 
impinge on the abilities to have good research and development 
for more prescription drugs that will be of assistance to 
people. But we ought to be able to set up a system that 
protects research and development through some regime and 
allows a reasonable profit while at the same time insisting 
that, in return for all the benefits this industry is getting, 
the American people get a fair, affordable price and that they 
can access these necessary medical prescription drugs.
    Mr. Chairman, I just want to end on that note and thank you 
again and all the other Members that are here today for their 
continued insistence on this. Sooner or later we will put 
together a majority and it will be tripartisan in this body and 
we will get the American people so riled up that something will 
have to be done.
    The FDA, if you really want to put your efforts toward 
safety, my request of you is don't tell us how you can't bring 
prescription drugs in over the Internet and don't tell us how 
you can't reimport them; tell us how you are going to take 
action to protect the efforts of the American people to use the 
Internet and to reimport at affordable prices until the 
prescription drug companies are otherwise brought into the fold 
and made to produce drugs that are accessible and reasonably 
priced.
    Thank you very much.
    Mr. Burton. Would the gentleman yield?
    Mr. Tierney. I certainly would yield.
    Mr. Burton. One thing that I meant to say in my opening 
remarks is that we are going to pass a prescription drug 
benefit paid for by the taxpayers of this country before too 
long, and when we do that I want to make sure that the 
taxpayers, who are going to be paying for an awful lot of these 
prescription drugs, are getting the best price that they can, 
because it is paid for by all the taxpayers, not just the 
people getting those prescription drugs.
    So I am very, very concerned that once we pass that 
prescription drug benefit the pharmaceutical companies, who 
charge more here in the United States than any place in the 
world, are going to be loading all that profit on the back of 
taxpayers with the complicity of the Food and Drug 
Administration, and that really, really bothers me because 
you've got one agency that is paid for by the taxpayers getting 
money from the taxpayers, and then the taxpayers funding not 
only them, who is supposed to be their watchdog, but they are 
also funding the profits from the pharmaceutical companies.
    Mr. Tierney. Reclaiming my time, those are excellent 
points. You know, we've had legislation filed here. A notable 
thing is how long the industry resisted putting this program 
into Medicare because they didn't want any constraints on their 
ability to charge. And we had various pieces that came to the 
floor of the House. One provision, in fact, had language that 
would disallow any effort to control price, and another 
provision in a separate bill that would insist that, in fact, 
if it went in Medicare, that Medicare did use some means of 
trying to bring these prices under.
    Either these insurance companies have left totally without 
any regulation at all are going to bankrupt individual seniors 
one by one by one, or if they get into some system where the 
Government assists in the purchase of prescription drugs for 
seniors or others and there are no controls on the price and 
the profits that they can get while they're getting all these 
other benefits from the taxpayers' money, they will bankrupt 
this Government in one large chunk. So we have an obligation 
here specifically and particularly while we are producing such 
benefit for them through public taxpayer dollars to make sure 
that the regulation is there.
    This is one instance where I think my friends on both sides 
of the aisle here understand that some regulation is necessary 
and Congress ought to get about the business of deciding what 
is appropriate.
    I yield back.
    Mr. Burton. Mr. Gutknecht, you have been a champion of this 
for a long time, and so we are joining your cavalry.
    Mr. Gutknecht. Mr. Chairman, I just would like to also 
thank you on behalf of Mr. Sanders, and especially myself who 
have essentially been laboring in this vineyard for a very long 
time. It has been very difficult to get some of the committee 
chairmen to take this issue seriously, and it is a very serious 
issue. It is huge.
    When you look at the numbers, as the gentleman from 
Tennessee mentioned, our own Congressional Budget Office 
estimates that seniors, alone, will spend $1.8 trillion on 
prescription drugs over the next 10 years.
    I've got a chart, if we can have that put up. I'll just 
point out--and these are not my numbers. They are a number of 
independent groups. This is from the Life Extension Foundation. 
You all have a little copy of this chart in the little handout 
I put out. I'll just point out a couple of things.
    The differences between what American consumers pay and 
what consumers in the industrialized world pay for the same 
drugs--just look at the first four. Augmentin is a very 
commonly prescribed drug. The U.S.' average price for a 30-day 
supply is $55. In Canada that is $12, and in Europe the average 
price is $8.75. Cipro, a drug that we learned a lot about when 
we had anthrax here in these buildings, the average price in 
the United States is almost $88, the average price in Canada is 
$53, and in Europe that same drug sells for $40.
    Incidentally, let me mention, Mr. Chairman and Members, 
that these drugs are essentially made in the same plants under 
the same FDA approval, so we're not talking about something 
different in Europe and Canada. These are the same drugs under 
the same FDA approval.
    Glucophage, a very important drug for diabetes, in the 
United States, according to Life Extension Foundation and their 
research, about $124 for a 30-day supply. That same drug in 
Canada is $26, and in Europe the average price is $22. We're 
talking about enormous differences.
    Mr. Sanders and I may not agree on everything, but we agree 
that there is something wrong with a system that allows those 
huge disparities, and in his discussion Mr. Sanders mentioned 
the drug tomaxaphin, a very important anti-cancer drug. Most of 
the basic research, most of the cost was done by the NIH. The 
bulk of the costs that were ultimately shouldered by the 
pharmaceutical company that patented it were for attorneys and 
for marketing, not for research and development. That's a very 
important drug for women here in the United States, and it is 
an example where we pay disproportionately more for the same 
drug, even though the drug was developed principally at 
taxpayer expense.
    The arguments we are going to hear and we have heard 
consistently are about safety, but these are just specious 
arguments. Once you get below the surface and scrape off that 
thin veneer, you find out that it is, in fact, first and 
foremost the Food and Drug Administration, and every day this 
country imports millions of pounds of food.
    Let me give you some examples. Last year the estimate is we 
estimated--we are told that we brought in 331 million pounds of 
apples. We brought in 19 million pounds of blueberries into the 
United States. We brought in 1.2 billion pounds of asparagus. 
We brought 64 million pounds of strawberries into this country. 
We imported over a billion pounds of cantaloupes. The reason I 
mention that is, according to the FDA's own studies--and the 
FDA ultimately is responsible for the health and safety of 
those products coming into the United States--by their own 
estimates of these fruits and vegetables coming into the United 
States, their own tests, 2 percent of these products are 
contaminated with food-borne pathogens, including things like 
salmonella. Now, salmonella can kill you, and yet what is the 
FDA's response to foods coming into the United States? Almost 
nothing.
    And Mr. Sanders is absolutely correct--the FDA keeps very 
good records, and as far as we can tell there has not been a 
single death related to importing of legal prescription drugs 
into the United States. As a matter of fact, the only real 
example that we can find where you have adulterated drugs was 
done by a pharmacist in Kansas City, MO, not in Alberta, 
Canada, not in Mexico, not in Europe. It happened in Kansas 
City, MO. That pharmacist, Robert Courtney, is currently 
serving a 30-year sentence in a Federal penitentiary.
    So the idea of safety it seems to me is grossly overstated. 
And I want to make this point, and it is made by Steve 
Shondelmeyer, who really is the top expert in the United States 
on pharmacies and pharmaceutical costs. He is a professor at 
the University of Minnesota, and this is a quote I hope you'll 
remember--``A drug that you cannot afford is neither safe nor 
effective, and we are forcing too many seniors, too many 
Americans to make a choice they should not have to make because 
they cannot afford the drugs that are available.''
    Finally, let me just say--and I've already spoken longer 
than I should. But again Mr. Sanders is correct--this is not an 
issue between Republicans and Democrats. This is not even an 
issue between right and left. This is an issue of right versus 
wrong. It is wrong to force American consumers to pay the 
world's highest prices, because, after all, we are the world's 
best consumers.
    The real answer it seems to me is to open up markets, to 
de-fang the FDA, to allow American consumers to have access to 
world-class drugs at world market prices. We should not permit 
our own FDA to stand between American consumers and lower drug 
prices. It is not really a matter of shame on the 
pharmaceutical industry, but for Members of Congress it is a 
matter of shame on us. We have allowed this system to exist. It 
is time for us to do something about it, and when we do we can 
save American consumers upwards of $600 billion over the next 
10 years.
    Again, thank you, Mr. Chairman, for having this hearing. 
This is an important beginning. I think it is going to yield 
important results for American consumers.
    Thank you very much.
    Mr. Burton. Thank you for all your work, Mr. Gutknecht. 
You've done a great job in the past and I know you will 
continue.
    Mr. Cannon.
    Mr. Cannon. Mr. Chairman, thank you for holding this 
hearing. It is a very important hearing. I apologize that I 
can't be here longer, but I did want to ask unanimous consent 
to submit an opening statement for the record and some 
questions for the record.
    Mr. Burton. Sure. No problem.
    Mr. Cannon. Thank you very much. I'll stay here as long as 
I can.
    Mr. Burton. Without objection.
    Mr. Shays.
    Mr. Shays. Thank you, Mr. Chairman. Mr. Chairman, I want to 
thank you, as well, for holding this hearing. I'm sorry I 
didn't get here to hear the comments of my other colleagues, 
but I want to say to Mr. Gutknecht he is a real hero to me on 
this issue. And I realize there are reasons why it exist, but 
we need to find a solution, and I hope he pursues this. I 
believe that we should be having a debate on this issue on the 
floor of the House. I think it is disgraceful, frankly, that we 
haven't had the kinds of hearings we should on this legislation 
and that we haven't been debating it in a very meaningful way. 
And let us learn from that debate, but in the bottom line for 
me prices are too expensive in the United States, too cheap 
elsewhere. I think that because of price controls I think 
prices probably need to come up a little bit overseas, they 
need to come down over here. And I think this legislation is a 
way to help force that issue.
    Mr. Burton. Thank you very much, Mr. Shays.
    Ms. Watson.
    Ms. Watson. Mr. Chairman, I would like to thank you very 
much, and as we begin this inaugural hearing of this newly 
created Subcommittee on Human Rights and Wellness, let me first 
say that I look forward to working with you and all of the 
other members of this subcommittee to conduct meaningful 
oversight of Government operations in the area of health and 
human rights within our jurisdiction.
    As the ranking minority member, let me also commend you for 
choosing an important issue to start with. We appreciate it.
    The problem of discrimination in the pricing of U.S. 
pharmaceuticals is well documented, and it is of enormous 
consequences to millions of Americans who need affordable 
access to prescriptive drugs. Americans pay substantially more 
for prescriptive drugs than purchasers in other countries, and 
the problem is particularly acute for our Nation's uninsured 
seniors. Because Congress has failed to establish a Medicare 
prescriptive drug benefit, seniors who do not have private 
prescription drug coverage must pay for prescription drugs out 
of their pockets. Research by the minority staff of the 
Government Reform Committee has shown that seniors in 
Congressional Districts across the country pay twice as much 
for prescriptive drugs as their counterparts in other 
countries. For some drugs, they pay as much as 10 times as 
their foreign counterparts.
    For these American seniors and the rest of America's 40 
million uninsured, this can mean having to choose between going 
without food on the one hand or going without their medicine on 
the other.
    Lower drug prices abroad have led millions of Americans to 
purchase drugs from foreign sources. Internet pharmacies, the 
subject of a recent full committee hearing, facilitate these 
transactions, and their recent proliferation has raised serious 
concerns about whether American consumers can receive 
appropriate medical supervision.
    Mr. Chairman, despite the incessant pharmaceutical industry 
complaints to the contrary, research by the committee's 
minority staff demonstrates that international pricing 
disparities are not explained either by the duration and the 
cost of the FDA approval process or by the disproportionate 
U.S. research and development cost. It is within our power to 
correct this problem if we have the will to do so.
    So today we have an opportunity to hear the perspectives of 
the FDA, GlaxoSmithKline, and representatives of interested 
professional and consumer organizations, including former 
Representative Roger Zion, chairman of the 60 Plus Association. 
I want to thank all of our witnesses for appearing before us 
today, and I look forward to hearing their views on pending 
legislative proposals and any other measures they might suggest 
to bring before us.
    Thank you so much for allowing us this opportunity.
    Mr. Burton. Thank you, Ms. Watson.
    I look forward to working with you as well as Mr. Sanders 
and Mr. Tierney and Mr. Shays and the judge and, of course, Mr. 
Gutknecht.
    Mr. Hubbard, would you and Mr. Taylor please approach the 
table and stand to be sworn?
    Do you swear to tell the truth, the whole truth, and 
nothing but the truth, so help you God?
    Mr. Hubbard. Yes.
    Mr. Burton. Be seated. Do you have an opening statement, 
Mr. Hubbard?
    Mr. Hubbard. Yes, Mr. Chairman. We have written testimony, 
but I'll make a few opening remarks, if I may.
    Mr. Burton. OK.

STATEMENT OF WILLIAM K. HUBBARD, SENIOR ASSOCIATE COMMISSIONER, 
   FOOD AND DRUG ADMINISTRATION, ACCOMPANIED BY JOHN TAYLOR, 
                    CHIEF, ENFORCEMENT GROUP

    Mr. Hubbard. As you noted, I'm accompanied today by Mr. 
John Taylor, the Chief of our Enforcement Group at FDA.
    As you know, the emergence of the Internet has given 
consumers a new tool to carry out commerce in a number of ways. 
One of those uses, the purchase of prescription drugs, offers 
convenience, but also particular risk to unknowing consumers. 
Seniors in particular are using the Internet to purchase their 
medications from sites offering lower prices and are even 
traveling to other countries for that purpose, as well. There 
is no doubt that some drugs can be obtained more cheaply from 
foreign Internet sites and from foreign prescriptions; however, 
I should note that generic drugs, while less expensive in the 
United States than in many other countries--indeed, 7 percent 
less expensive in the United States than in Canada, and our new 
Commissioner, Mark McClellan, has made getting generic drugs on 
the market for seniors and others a high priority. In fact, he 
tells us frequently that we need to get cheaper drugs to 
patients, but we need to do it safely.
    We certainly understand consumer concerns about the high 
cost of drugs. We all know that. But please understand that 
FDA's principal job is to ensure the safety of the drugs. We 
are not a price agency. And we are very concerned about the 
trend toward foreign purchase of drugs, and we'd like to give 
you a few examples today of why we are concerned.
    Here on the dais--and I believe you have a hard copy--are 
some posters of some Web sites. This first one looks like a 
very legitimate site with a picture of a physician, a 
pharmacist there, and it looks very American, it looks very 
legitimate. It says, ``Your source for high-quality, FDA-
approved medication.'' So our investigators have traced this 
site to its source. It's in Thailand.
    The second one, if Sarah could flip for us, is again a site 
offering the drug Acutane, and Acutane is a drug that has very 
serious restrictions in this country because of its potential 
to cause severe birth defects. It is marketed under what we 
call a risk management program, in which very careful warnings 
are given for it not to be taken by women of child-bearing age 
or women who are pregnant. This site also talks about FDA-
approved products and mentions that the products were made in 
New Jersey. This site is in Thailand, as well, and the drugs 
that we have purchased from this site come with no warnings to 
pregnant women.
    The third site I will mention sells Viagra, and it, 
interestingly, even gives its address. It is at 164th Street in 
Miami Beach, FL. But, in fact, our investigators have found 
this site is in Israel.
    We have other sites that we have given you in hard copy 
that all sell drugs from Canada, and these sites, when our 
investigators pursued where they were, they found they were 
registered in Barbados. Now, they also say they are in Canada, 
but the point is we don't know where they are and we have no 
way to reach to them to learn where they are. And if we don't 
know where they are, we don't know where they get their drugs.
    [The information referred to follows:]
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    Mr. Hubbard. Let me show you, Mr. Chairman, just a few of 
the drugs that people buy from these sites. This is one we took 
out of the mail yesterday at Dulles Airport. That's what the 
patient gets--a bag of pills. It doesn't even give a name of 
the drug, no warnings.
    Mr. Burton. Where did that come from?
    Mr. Hubbard. It came from the International Mail Facility 
at Dulles Airport. It was purchased, we believe, over the 
Internet and mailed to an individual whose name I will not 
mention in Ashford, VA.
    Mr. Burton. But where did it come from?
    Mr. Hubbard. This drug--the return address it does not 
show, I'm afraid, although I have others that do show. I won't 
bring all of these out, but let me give you just one example. 
The return address on this one is Bangkok, Thailand, addressed 
to a person in Durham, NC. Apparently this was addressed to a 
person with a female name, and apparently she has bought some 
estrogen, some female drugs. But she has also purchased a drug 
called phenesteride. This drug is only for men. It is so toxic 
that if a pregnant woman even handles the pill from this box 
she could cause severe birth defects in her child, and this 
seal has been broken. This stuff is crumbling out of here.
    So these are the sorts of things that people really get, 
Mr. Chairman, when they go on these Internet sites. None of the 
drugs that we got from the airport yesterday appear to have 
been made in the United States. They all have no labeling or 
foreign labeling and appear to be from sources other than the 
United States or North America.
    Now, we are told that some of the drugs that come from 
Canada are, in fact, perfectly safe, and that may be true, but 
we don't have any way to know.
    One of the best things that Congress ever did, we believe, 
was create the drug approval process that set up a process for 
drugs to be approved as safe and effective by the FDA and 
manufactured under very stringent manufacturing controls with 
very stringent marketing controls and regulation by the States 
of physicians and pharmacies. Patients in this country have 
total confidence they are getting a safe drug. People that buy 
these sorts of drugs cannot tell the difference.
    And I'll make one last point. In foreign countries--in some 
foreign countries half the drugs are counterfeit. These are two 
identical drugs. One is real and one is counterfeit. I can't 
tell the difference. Our scientists can't tell the difference. 
And so if you open up the world to these sorts of drugs, the 
bad guys are going to have a way to get in. Right now it is 
very hard to market that product in the United States, very 
hard to get into the system. But these Internet sites give 
patients and nefarious sellers of drugs access to that system.
    So with that, Mr. Chairman, I'll take your questions, and 
so will Mr. Taylor. Thank you.
    Mr. Burton. Thank you.
    [The prepared statement of Mr. Hubbard follows:]
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    Mr. Burton. I want to give you some figures that we found 
very interesting. In 1990, the pharmaceutical industry gave 
$2.3 million in campaign contributions. In 1992 it was $5 
million. In 1994 it was $5.2 million. In 1996 it was $9.3 
million. In 1998 it was $9 million. And then in 2000, because 
there were questions about a lot of things dealing with the 
pharmaceutical industry, it went from $9 million to almost $20 
million the last two election cycles. There are 600--over 600 
lobbyists up here lobbying the Congress, the administration 
about pharmaceuticals, and there are many of us in the Congress 
that believe they do have undue influence. And there is also 
kind of a revolving door policy where an awful lot of the 
people who work at the FDA and our health agencies leave these 
agencies and go to work directly with the pharmaceutical 
industries. I'll be glad to give you some cases in point if 
you'd like to have those, but I think you probably are aware of 
that.
    Now let me ask a few questions. Your testimony states that 
the FDA cannot assure U.S. citizens that prescription drugs 
they're buying over the Internet from foreign countries such as 
Canada--and that's what we're talking about today--are safe. On 
September 5, 2001, you testified before the Senate Committee on 
Commerce, Science, and Transportation that you've not looked at 
the chain of supply system in Canada. Have you looked at the 
chain, Canadian chain of supply system since you testified in 
2001?
    Mr. Hubbard. We've certainly had discussions with our 
Canadian colleagues. However, FDA has no authority to go to 
Canada and assess their system.
    Mr. Burton. So you haven't looked at it?
    Mr. Hubbard. Other than having the Canadian counterpart to 
the FDA explain their system to us, no, Mr. Chairman, we have 
not.
    Mr. Burton. You haven't. Can you make the assertion today 
that the Canadian chain of supply system is unsafe for 
Americans?
    Mr. Hubbard. I would not want to characterize another 
country's drug safety system, Mr. Chairman.
    Mr. Burton. Well, I know, but you've brought all these 
packages in here, mostly from Thailand and every place else, 
but you didn't say anything about Canada.
    Mr. Hubbard. Well, we'll be glad to characterize the safety 
of drugs, but not of another country's drug approval system.
    Mr. Burton. How many cases do you know of where Canadian 
pharmaceuticals came in this country, caused damage to people?
    Mr. Hubbard. We think that is unknowable. How would you 
know if hundreds of thousands of patients are taking a Canadian 
or any other foreign blood pressure medicine and their blood 
pressures are being reduced by 10 points instead of 40?
    Mr. Burton. How many people----
    Mr. Hubbard. You might not know that for 10 years.
    Mr. Burton. How many people were damaged last year by 
aspirin? Do you know?
    Mr. Hubbard. I don't know, Mr. Chairman.
    Mr. Burton. Well, that's sold in the United States.
    Mr. Hubbard. Aspirin certainly has----
    Mr. Burton. That's over the counter.
    Mr. Hubbard. Yes.
    Mr. Burton. You don't know that, either?
    Mr. Hubbard. I don't know that specific number.
    Mr. Burton. How about Tylenol?
    Mr. Hubbard. Again, all of the non-steroidal, anti-
inflammatory drugs have side effects.
    Mr. Burton. But you don't know how many here in the United 
States and you don't know how many from Canada were caused?
    Mr. Hubbard. I'm sure our physicians at FDA would know more 
about the domestic drug side effects.
    Mr. Burton. Mr. Hubbard, at this same Senate hearing a 
letter from the former FDA Commissioner, David Kessler, was 
read, and it stated, ``The Senate bill, the Meds Act, which was 
signed into law, allows only the importation of FDA-approved 
drugs manufactured in FDA-approved facilities and for which the 
chain of custody has been maintained addresses my fundamental 
concerns. I believe the importation of these products can be 
done without causing a greater health risk to the American 
consumer.''
    Mr. Hubbard. I do not believe we agree with that, Mr. 
Chairman.
    Mr. Burton. Well, he was the head of the FDA, wasn't he?
    Mr. Hubbard. He certainly was.
    Mr. Burton. Are you the head of the FDA?
    Mr. Hubbard. No, I am not, Mr. Chairman.
    Mr. Burton. Does the head of the FDA now take issue with 
this?
    Mr. Hubbard. I believe Dr. McClellan would say that it is 
important that consumers in this country get cheaper drugs, but 
safely, and that bringing in drugs from foreign countries would 
not be a way to do that.
    Mr. Burton. Mr. Kessler I think was talking about Canada in 
particular, wasn't he? And he said the chain of custody, 
because that's what they call it up there, ``for which the 
chain of custody has been maintained addresses my fundamental 
concerns.''
    It addressed his concerns because he said, in effect, that 
the Canadian system did a pretty good job, and he said, ``It 
addresses my fundamental concerns. I believe the importation of 
these products can be done without causing a greater health 
risk to the American consumer.''
    You don't agree with that?
    Mr. Hubbard. I believe he was referring to legislation that 
you referred to earlier, Mr. Chairman, that passed the Congress 
and was not effectuated either by the Clinton or the Bush 
administration.
    Mr. Burton. No. But the point is he was saying he had no 
concerns about that, didn't he?
    Mr. Hubbard. I think he was saying that legislation would 
alleviate concerns he had because it would set up a verified 
chain of custody of the drugs to confirm that they had gone to 
Canada from the United States and it would turn to the United 
States with a chain of custody maintained.
    Mr. Burton. Right. Well, I think that's pretty clear. He 
didn't have a great deal of concern. Do you believe that Canada 
regulates the quality of medications manufactured and sold 
there as rigorously as the FDA?
    Mr. Hubbard. Again, that's asking me to judge or 
characterize the Canadian----
    Mr. Burton. Well, let me ask you a question.
    Mr. Hubbard. All right.
    Mr. Burton. If you don't know, why don't you find out? 
You've got people here who are paying two and three and four 
times as much for drugs, and you sit back and say, ``You might 
be criminally guilty if you abet somebody buying these drugs.'' 
And these people, as Mr. Sanders said, many of them can't 
afford to buy their drugs and food. And I know some of these 
people, and you're sitting there in your ivory tower and you're 
saying, ``Well, I don't know about Canada. I don't know if 
their system is as good as ours.'' You had cursory conversation 
with them, but you really don't know. And yet you're making 
these decisions saying, ``Hey, if you buy drugs from Canada you 
may be guilty of breaking the law,'' thereby implying that 
these people might be prosecuted.
    Now, these senior citizens, many of them aren't as 
sophisticated as you and I. They know that you're probably not 
going to do that, but you scare the hell out of them.
    Now, you know, the last thing I'd like to say to you is 
that this is not going to be the end of it. Today in the AARP 
publication going to 35 million people they are talking about 
this issue. We're going to contact every single senior citizens 
group in this country and keep pounding on them. Now, I know 
that the pharmaceutical industry gives $20 million a year in 
political contributions up here on the Hill and to the 
administration and to others. They do that both under Democrat 
and Republican administrations. And I also believe the FDA is 
influenced by the pharmaceutical industry, and anybody that 
doesn't believe that has got their eyes shut.
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    Mr. Burton. And so the last thing I'd like to say is this 
ain't going to go away. I'm going to be chairman of this 
subcommittee hopefully for 6 years, and you're going to be here 
a lot, and we're not going to quit until you guys do something 
about this and Mr. Gutknecht is going to get exactly what he 
wants. He's going to get all the hearings he can handle.
    Who is next? Ms. Watson.
    Ms. Watson. I think that the Chair is correct because he 
feels the emotion of this issue. I would hope that the FDA 
would take a look at the pharmaceuticals that are being ordered 
through the Internet from Canada. I was told that there have 
been no negative effects. But I do know in other countries that 
the ingredients are different when they make up a compound, and 
I would like some research on how those ingredients would 
impact. You held up a package of a particular product that was 
made for the mail system, not the e-mail system, and I'm sure 
there are other kinds of pharmaceuticals that are in the hands 
of Americans today. They simply don't have the knowledge.
    So I would hope that FDA, through one of its auxiliary 
branches, could do a little research on those particular 
pharmaceuticals and also on the Canadian products.
    Am I correct to say that I have not heard of any negative 
effects of the products that come in from Canada, but there 
could be----
    Mr. Hubbard. That's generally correct, Ms. Watson, but, 
again, the system is a passive one. It's not set up to record 
these sorts of things. These drugs are in violation of the law, 
and should not be coming in at all, and so the system is not 
set up to record potential adverse events from drugs that 
shouldn't be here at all.
    Ms. Watson. Well, let me suggest to the Chair that maybe we 
would want to promulgate some legislation that would give the 
authority to the FDA and any other branch under maybe HHS to 
look into this matter, and I think it is a matter of directing 
and funding, but I think we might want to look into that.
    Mr. Burton. Would the gentlelady yield?
    Ms. Watson. Yes.
    Mr. Burton. Do you have this authority already?
    Mr. Hubbard. I think we would have the authority to test 
drugs coming in from Canada, yes.
    Mr. Burton. Yes. Well then why aren't we doing it if you 
have a concern?
    Mr. Hubbard. Other Members have asked us that. It would be 
a very expensive proposition and there are concerns about what 
you would be looking for. There are also concerns about that it 
would be only a snapshot of that batch of drugs that you test 
at any given time. So there are a number of logistical 
questions about that, but we would be glad to respond to that 
in more detail in writing, Ms. Watson.
    Ms. Watson. Let us do this as a committee, and I will work 
with the Chair on this--send a formal letter from the 
subcommittee to the FDA asking them to use their authority to 
take a look and do an evaluation of the drugs. It is an illegal 
procedure now and we would just like you to evaluate what is 
going on, you know, what you think the traffic is like, and the 
volume, and how many people are in violation. But I would like 
to know what the impact and effect these pharmaceuticals have 
on those who are ordering them. I think under that authority, 
if it requires additional funding you need to work through the 
system for that, but since you have that authority I'd like for 
you to take the responsibility. Maybe we can draft a letter to 
ask them to do that.
    Mr. Burton. I would be happy to do that with you, Ms. 
Watson.
    Mr. Gutknecht.
    Mr. Gutknecht. Thank you, Mr. Chairman.
    I want to come back to a couple of things that you said, 
Mr. Hubbard. First of all, you said that your scientists could 
not tell whether that drug was, in fact, the real drug or a 
counterfeit, but isn't it really true that you could do the 
same thing with a drug that I would purchase down the block at 
the local pharmacy? Could your scientists tell by just 
examining the bottle whether, in fact, it was real or 
counterfeit?
    Mr. Hubbard. No. The difference though is that the system 
is so closed in----
    Mr. Gutknecht. And that's a drug----
    Mr. Hubbard [continuing]. This country that you wouldn't 
ever even be looking for counterfeits in this country 
generally. They're very, very rare in the United States, very 
rare.
    Mr. Gutknecht. Oh, it's very rare in the United States?
    Mr. Hubbard. Whereas counterfeits in foreign countries are 
very common.
    Mr. Gutknecht. Because we don't test we know that it is 
very rare here in the United States? Well, Mr. Hubbard, I think 
you really should look at the facts. Counterfeiting is 
happening in the United States right now. And do you know why? 
It's because the prices are so high.
    I want to come back to something that you said about a year 
ago in testimony before a hearing here on the Hill on September 
5, 2001. You said, ``The Canadian system is one that I have 
some knowledge of, and I would have some degree of confidence 
to say, as opposed to the Third World.'' In other words, the 
Canadian system is a pretty good system. We don't have 
Canadians dropping like cordwood from buying prescription drugs 
at their pharmacies, do we? I mean, is there evidence?
    Mr. Hubbard. That's right. I said that if I were in Canada 
and ill and saw a Canadian physician and was given a drug from 
a Canadian pharmacy, I would have a relatively high degree of 
confidence that I was getting a safe and effective drug.
    Mr. Gutknecht. Let me ask another question about the FDA. 
You are responsible for fruits and vegetables coming into the 
United States, are you not?
    Mr. Hubbard. Yes.
    Mr. Gutknecht. What do you say----
    Mr. Hubbard. Perhaps Mr. Taylor should answer this next 
question.
    Mr. Gutknecht. Well, what does the FDA say to the roughly 
1,012 people who have gotten sick in the recent years as a 
result of eating imported raspberries? Do we have a 
responsibility to those people?
    Mr. Taylor. Absolutely. And----
    Mr. Gutknecht. What about the 270 people who have gotten 
sick from eating imported strawberries?
    Mr. Taylor. Absolutely.
    Mr. Gutknecht. What about the 25,000 people who have gotten 
sick as a result of eating imported cantaloupes?
    Mr. Taylor. Absolutely.
    Mr. Gutknecht. Now, what do we know anything about where 
those cantaloupes come from?
    Mr. Taylor. Actually----
    Mr. Gutknecht. I mean, could some of them actually be 
coming from foreign countries in the Pacific?
    Mr. Taylor. Actually, we do know a great deal about the 
cantaloupe situation, and, to answer your question more 
generally, in the last 2 years there has been an increase in 
our funding to deal with imported foods as part of the counter-
terrorism efforts, so we have increased our coverage not only 
at the border, we've also increased a number of foreign 
inspection----
    Mr. Gutknecht. So you stop and check every shipment that 
comes into the United States now?
    Mr. Taylor. No, we do not.
    Mr. Gutknecht. How many do you stop?
    Mr. Taylor. I think the figures are that only 1.7 percent 
of the food that----
    Mr. Gutknecht. That's 1.7 percent. Now, it seems to me--and 
I'm just--I have been watching this now for 4 years. You have 
set a bar in terms of imported drugs that is as high as it 
possibly can, even though even your scientists can't even prove 
drugs at the local pharmacy, whether or not they are, in fact, 
a real drug or a counterfeit, by your own admission. But you 
have a bar for imported drugs that is as high as the ceiling, 
and yet for imported foods it is almost zero. And we know the 
evidence. The empirical evidence is overwhelming. You are much 
more likely to get sick from an imported strawberry than you 
are an imported, legal, FDA-approved drug.
    Now let me bring one more point. My time is almost up. Even 
in your own handout--Mr. Chairman, you need to see this. This 
is important for Members to understand. Even in your own 
handout you show something that the FDA does not require in the 
United States of America, and that is counterfeit-proof--I'm 
sorry, counterfeit-proof blister pack packaging. Most countries 
in Europe now require that kind of packaging, and the company 
that makes that packaging is the same company that provides the 
materials to our U.S. printing office that prints the $1 bills 
and the $5 bills and the $20 bills. The question I would have 
for the FDA: wy don't you require that kind of counterfeit-
proof packaging here in the United States?
    Mr. Taylor. Quite actually, we are looking into developing 
technologies that will help both industry and the FDA improve 
our ability to detect counterfeits. As you noted, the U.S. 
printing office has done a great deal of work on this, but 
there are also academic centers and others in industry who are 
trying to look at state-of-the-art ways that can improve our 
ability to detect counterfeits.
    Mr. Gutknecht. But you would have to acknowledge that it is 
much more difficult to put a counterfeit drug in a counterfeit-
proof package, which you actually show on one of the Web sites 
that you introduced as evidence that this may not be, in fact, 
the same drug, right?
    Mr. Taylor. I will admit that it is more evidence, but I 
will also say that, quite frankly, some of the counterfeiting 
these days is so high tech that, even though it makes it 
harder, it does not necessarily preclude the possibility that 
it will occur.
    Mr. Gutknecht. But we are testing some of the drugs here in 
the United States and finding out that some of them may be 
counterfeit; isn't that correct?
    Mr. Taylor. Absolutely. I mean, the suggestion--we should 
not suggest that there have not been instances in the domestic 
market where there have not been situations where we've 
discovered that products have been counterfeited. And that's 
absolutely right.
    Mr. Gutknecht. I would yield.
    Mr. Burton. I just want to point out that we have a witness 
here today, and I don't know if you are going to stay for the 
witness. I hope you will. Ms. Elizabeth Wennar, she came up 
with an organization called ``Internet Mail Order 
Pharmaceutical Accreditation Commission, IMPAC.'' They are 
developing a rigorous system of quality standards for American, 
Canadian, and Mexican mail order pharmacies, and they use this 
method of packaging so that you can't get in there and change 
it. You can't--if it is a prescribed drug and it is put in this 
container and it is sealed, it comes in. It can't be 
counterfeit. It has got to be the product that they purchased.
    Now, what I don't understand, if she does this as an 
individual citizen, why in the heck hasn't the FDA looked into 
it with Canada, because if they did that they could work with 
these pharmacists up there, they could work with the Canadian 
Pharmaceutical Department, the government department, and they 
could make sure that there was some kind of a system where you 
would seal these things so that they came in without a great 
deal of risk. And the only reason that I could think of that 
you're not doing that is because the profit is so much greater 
here in the United States for the pharmaceutical companies. And 
I hate to think that. That's why I would hope--and I'm sure 
that my colleagues would hope--that you would look at these 
kinds of alternatives so that people can buy things safely on 
the Internet, especially from Canada.
    Mr. Sanders, I think you are next. And thank you for 
yielding to me.
    Mr. Sanders. Thank you, Mr. Chairman.
    Mr. Hubbard, you are under oath now, so I would like you to 
answer this question for me. For the past 15 or 16 years, the 
FDA has used its enforcement discretion to allow Americans to 
get 90 days of a prescription drug in Canada--and I know that 
because I went across the border with people from Vermont and 
other Members of Congress have done the same. Now--Mr. Burton 
alluded to this--it appears that the FDA is clamping down on 
this practice. Glaxo is withholding some of its medicine to 
Canada. And I find it somewhat coincidental that all of this is 
happening at the same time, as Mr. Burton indicated, huge sums 
of money are coming from the pharmaceutical industry into the 
U.S. Congress and, in fact, the White House.
    Now, you are under oath. Could you please tell this 
committee who within FDA or the Department of Health and Human 
Services or elsewhere in the administration has advocated for 
or directed a retreat from the FDA's longstanding enforcement 
policy on this issue? Who gave you this idea suddenly after 16 
years where, to the best of our knowledge, there has not been 
one problem, suddenly, coincidentally, when the drug companies 
are beginning to lose money the FDA is off and running. Who 
have you been talking to?
    Mr. Hubbard. I'll just simply say that in September I'll 
have 32 years in the Government as a civil servant working for 
both Republicans and Democrats, and at no time have I attempted 
to make any decision or recommendation based on any sort of 
political influence. The policy that you are referring to is 
what is called the ``personal importation policy.'' It was 
created in the late 1980's to let patients with serious or 
life-threatening diseases such as cancer or AIDS patients go to 
a foreign country to access an unapproved drug, an experimental 
drug, and it allowed that patient to bring 90 days' supply in 
under supervision of a physician if there was no alternative 
treatment in the United States.
    That policy has no relationship to people purchasing 
these----
    Mr. Sanders. But, in fact, because I did it, many of my 
colleagues have done it, and hundreds of thousands of Americans 
have done it, the reality is that for many, many years now 
Americans have been driving over the border or increasingly 
using the Internet without a problem. So my question is: if you 
have a program that is saving Americans huge sums of money, 
saving lives, why suddenly, all of the sudden--Mr. Gutknecht 
mentioned problems with fruits and vegetables. There are 
millions of people in this country probably getting sick 
because they can't afford prescription drugs. How did it occur 
to the FDA that one of their major priorities is to produce 
literature like this frightening the American people, 
investigating folks who are trying to keep themselves--where 
did this idea come from?
    Mr. Hubbard. Mr. Taylor will answer this.
    Mr. Taylor. I notice that you were waving the pamphlet 
there. I haven't been here at FDA the whole period of time that 
the personal importation policy has been in place, but I have 
not seen even in the last few years a change in the policy, 
itself. We obviously have not focused on the individuals who 
are purchasing the product. The focus for us has been on the 
products themselves.
    What we are trying to do, recognizing that people, indeed, 
are going to go across the border to purchase these products 
and, quite frankly, are going to purchase the products over the 
Internet, as we have discussed today, what we've tried to do 
and what we've tried to emphasize is the fact that we, the FDA, 
who quite frankly are given the mandate of trying to assure 
that people are receiving products that are safe and effective, 
cannot necessarily do so for these products. And what we are 
trying to do is educate people and help people make informed 
decisions, because we have seen an increase in the 
mischaracterization of certain products. For example, we've 
seen an increase in Web sites that have characterized products 
as FDA approved and----
    Mr. Sanders. Mr. Taylor, I have a limited amount of time. I 
apologize.
    Mr. Taylor. OK. Fair enough.
    Mr. Sanders. This is not the best format to do these 
things. But let me ask you this.
    Mr. Taylor. Sure.
    Mr. Sanders. This is my concern. You want to educate 
Americans. You know what I think you should be educating 
Americans about? You should be putting out pamphlets that say, 
``For the last 16 years people have been going across the 
Canadian border saving substantial sums of money, probably many 
instances staying alive rather than dying, improving their 
physical condition rather than seeing a deterioration, and 
there hasn't been one problem.'' How about putting out some 
leaflets on that?
    The issue is you bring up these charts about Thailand. We 
are not talking about Thailand. We are talking about Canada. 
And the evidence again--and please contradict me if I am 
wrong--you have not indicated to us one instance of an American 
purchasing a prescription drug from Canada who has been hurt. 
And the answer is that Canadian pharmacies, as the chairman has 
indicated, are regulated to quite the level that our pharmacies 
are regulated; that, in fact, all drugs sold through registered 
pharmacies that come into the United States are exactly the 
same products as are sold to Canadians, and that, in fact, 
because the pharmaceutical industry continues to charge 
Americans so much money, out of desperation people are now 
going across the border.
    Frankly, I think that pieces of literature like this are 
outrageous. I would agree with the chairman that I see it is 
really a strange coincidence that, with all of the money coming 
in from the industry, with Glaxo beginning to put pressure on 
the Canadians, that suddenly the FDA is paying attention to a 
non-problem rather than paying attention to a more serious 
problem.
    Mr. Hubbard, Mr. Taylor, have you done any research into 
how many people in this country die or see a deterioration in 
their physical condition because they cannot afford the 
medicine that doctors prescribe? Do you have any studies on 
that?
    Mr. Hubbard. That's not the type of study that----
    Mr. Sanders. Really? You're supposed to protect the safety 
and health of the American people. Millions of people can't 
afford their medicine. They're suffering. Maybe instead of 
scaring the American people about not going to Canada you might 
want to do a study like that.
    Thank you, Mr. Chairman.
    Mr. Burton. Thank you, Mr. Sanders.
    Mr. Cummings.
    Mr. Cummings. Thank you very much, Mr. Chairman.
    I just want to say to the gentlemen I want to associate 
myself with the words of Mr. Sanders. It is so sad, incredibly 
sad that I have people in my District that I see--I hate to 
even go into a senior housing facility because over and over 
again I see people as late as about a month ago--well, 
actually, let's go back a year where a gentleman said, 
``Congressman, you know, don't worry about passing some type of 
prescription drug legislation for me.'' He said, ``I have been 
cutting up pills now for the last 3 or 4 years and I'll be 
dead. Do it for my fellow tenants here in this housing 
project.''
    Going back to Mr. Sanders' comments, I have constituents 
that go to Canada, too. They take busloads up there, trying not 
to just get rid of pain, in many instances trying just to stay 
alive, stay alive. And I would appreciate it very much, and I 
wish that they could--I started to say I wish they were here 
today, but I'll be honest with you--I think if they were here 
today they probably would be jumping over that table and be 
very upset, probably lifting up canes because they get that 
upset because they know their lives are on the line and they 
know that they are choosing between eating and buying 
prescription drugs.
    The chairman is absolutely right. So often I think that we 
find ourselves divorced from the very people who we are 
supposed to be trying to help and trying to protect, and I 
would appreciate it if you would put just as much effort into 
trying to lift people up so that they can stay alive, stay 
alive, as you do in putting these little pamphlets together, 
because I think that sadly the American people are getting sick 
and tired of not being able to afford the drugs that they need.
    It is so very, very painful. It is probably the most 
painful thing I do as a Congressman is to hear the stories, and 
so I beg you that if you can't find a way to do the kind of 
things that Mr. Sanders said, you ought to get out of the job 
and let somebody else do it. Let somebody else do it who will 
have the compassion for people and will help them stay alive. I 
think it is almost criminal. It is almost criminal when we come 
to a point where our seniors are being denied the kind of 
information that they need, because, I mean, this is what it's 
all about. I've told my constituents, you know, until we can 
get some kind of prescription drug bill for them, to do 
whatever you have to do. Take the bus. Go up there. As a matter 
of fact, I've told them I'd help them pay to get up there. And 
so then when I find out that--and, by the way, a lot of the 
drugs that they're talking about, you know, they look at the 
labels and they see that these drugs are the identical drugs, 
of course, and packaged same places here in the United States, 
and so they get very confused, I think as Mr. Gutknecht said. 
They get confused. They don't understand it. They don't get it.
    And so I would just ask that you all look into that. Have 
you all looked into doing any of the things that Mr. Sanders 
just suggested?
    Mr. Hubbard. Mr. Cummings, we have spent countless hours 
trying to examine processes or procedures that can allow these 
drugs in safely, and we have simply given our honest appraisal 
that the ideas that we have come up with and that others have 
come up with can ameliorate the situation but cannot assure the 
safety. It will weaken the safety net that has been created, 
and if Congress wishes to do that because of price controls, 
that is an issue for the Congress. FDA has not found a magic 
answer to identify the safe drugs over here and the skeptical 
drugs over here.
    Mr. Cummings. Well, it would be--I think you need to keep 
trying.
    Mr. Burton. Mr. Cummings, would you yield on that point?
    Mr. Cummings. Yes, I'll yield.
    Mr. Burton. I'll give you some more time if you need it. 
Last week it was suggested that domestic Internet pharmacy 
sites get a seal of approval to validate that they are 
legitimate. Now you say you haven't thought of anything to get 
the job done. Why not do the same thing with Canadian 
pharmacies in concert with the Canadian Government? In other 
words, go to these various pharmacies up there and the ones 
here and validate whether or not--check them out, make sure 
they are legitimate. You've got a lot of people working for 
you. They could do that. Once they check out the Canadian as 
well as the American pharmacies, then there should be no 
problem. But to say you can't find an answer just begs the 
issue. I mean, the people here want to be getting these drugs 
at a fair price, and it is your responsibility to make sure 
that they get them at a fair price as well as make sure they're 
pure. And that can be done through the packaging. I talked 
about that just a minute ago, where they're sealed so that they 
come back and you know that they haven't been broken, or 
through making sure that the Internet sites are legitimate by 
working with the Canadian Government to have them license them. 
``Is this a legitimate one? Is it one we can work with?'' 
You're talking about doing it here; why not there, as well? 
There's not as many of them up there as there are here.
    The reason you don't want to do it, it appears, is because 
the pharmaceutical companies aren't going to make as much money 
and because they give so much money here on the Hill.
    Mr. Cummings, I'll yield back if you have any additional--
--
    Mr. Cummings. I wanted to ask him to answer that. Can we do 
that? Can you do what the chairman just asked?
    Mr. Hubbard. Well, we certainly at the hearing last week 
did say that we thought the verify Internet pharmacy site was a 
good idea and gave consumers a way of identifying legitimate 
sites from illegitimate. The question of doing that for foreign 
sites raises some other issues we'd be happy to look at.
    Mr. Taylor, would you like to add to that?
    Mr. Taylor. Well, the National Association of Boards of 
Pharmacy, who sponsored the VIPPS program here in the United 
States, I believe have a Canadian version, but they do not 
provide a seal of approval for Canadian sites that sell their 
products in the United States because it violates State law, so 
they have a program that is a domestic Canada program and a 
domestic United States program, but they don't have a program 
that allows consumers in the United States to look at the seal 
and know that these products are FDA approved and manufactured 
in accordance with----
    Mr. Burton. If the gentleman would yield?
    Mr. Cummings. Yes.
    Mr. Burton. If you can do it here and there's limitations 
by State law or something, here is an agency for the whole 
country. I mean, why in the world can't you send an emissary up 
to Canada to talk to their agencies and work out an agreement? 
We passed NAFTA. We passed NAFTA so we could trade everything 
with Mexico and Canada, and you're telling me that you can't go 
to Canada, have somebody from your agency say, ``OK, we want to 
make sure in a way to accredit these pharmacies, to make sure 
that they're doing the job right, just like we're going to do 
it in the United States.'' That way the drugs can come in and 
they'll be safe because you will know that pharmacy is on the 
level.
    I mean, to say that you can't do it or imply it by what you 
just said really bothers all of us.
    I'm sorry, Mr. Cummings. Go ahead.
    Mr. Cummings. Mr. Chairman, I think that what disturbs me 
so much--first of all, I'm very pleased that this is a 
bipartisan effort. As you can see, we are on both sides of the 
aisle, we're very concerned about this. I remember years ago 
there used to be something in the boxing world called ``rope-a-
dope,'' and the boxer just laid against the ropes and took the 
punches like you are. You probably feel like you are taking 
punches today. And then when the fight was over they just 
walked out of the ring, and maybe they won or maybe they felt 
that they lost. But let me tell you something: I hope you are 
not rope-a-doping today because I've got too many constituents 
that are dying. And you cannot convince me for 1 second that 
you cannot do the kinds of things that the chairman is talking 
about.
    In some kind of way I told my staff so often there are so 
many people that their main power is the power to say no. 
Everything is no, no. We can't do it. They find every excuse 
not to do it. I'm begging you--I'm not asking you, I'm begging 
you, because I'm begging for people who want to simply live--to 
find a way to do it.
    And, Mr. Chairman, I would hope that we would try to maybe 
give these wonderful gentlemen some kind of time table to come 
back to us with regard to, if there are issues with this, 
showing us what the issues are and how we might be able to 
resolve those issues as a Congress. That's why we are here.
    With that, Mr. Chairman, I yield back.
    Mr. Burton. Thank you, Mr. Cummings. We will honor your 
request.
    Mr. Gutknecht, did you have any other questions?
    Mr. Gutknecht. Well, Mr. Chairman, I want to again thank 
you for this hearing, and I want to thank them for coming and 
testifying.
    The problem here it seems to me is much more about 
attitude. The FDA has taken the attitude that imported drugs 
are, by themselves, illegal, and in fact this is a relatively 
solvable problem. Technologically, the technology exists. It is 
off the shelf, it is inexpensive, and it is called 
``counterfeit-proof blister packs.'' They're available for most 
European countries. The FDA could require them in the United 
States. And it seems to me that if they really wanted to help 
us solve this problem, we could have this problem solved in 45 
days.
    It seems to me I agree with Mr. Cummings. I mean, it really 
is shameful that the FDA has taken the attitude that senior 
citizens who are simply trying to save a few bucks--and in many 
cases a lot of bucks--and, more importantly, to save and 
preserve their lives, are treated as common criminals by their 
own government. That is shameful. And it seems to me that the 
FDA has a responsibility, Secretary Thompson has a 
responsibility to do what it can to allow seniors, to allow 
American consumers to do this in a safe way.
    As they said earlier in their testimony, they don't test 
American drugs. They assume that the drugs that you buy at the 
local drug stores are actually those drugs and they are not 
counterfeits. But the fact is it's happening more and more 
where the local pharmacists are dealing in counterfeit drugs. 
They don't test them. They assume that they're safe and 
effective.
    We should at least assume that American consumers and most 
pharmacists, particularly in Canada and in the G-7 countries, 
are not trying to kill their own patients. There is no evidence 
that they are dying like cordwood. And, you know, it really is 
shameful that the FDA is not working with us and with consumers 
and with the producers to come up with a very simple, 
technologically effective way to guarantee to the maximum 
extent possible that these are, in fact, safe and effective 
drugs for American consumers.
    Mr. Burton. Any other comments? Mr. Sanders.
    Mr. Sanders. Let me just very briefly indicate my agreement 
with all of the comments made by my colleagues and just make 
this point: given the fact that we live in a global economy, 
given the fact that the lettuce and the tomatoes that we ate 
for lunch today came from God knows where, what kind of farm in 
Mexico, the grapes that I get from Chile--I don't know where 
they come from, I don't know what they have been sprayed on--
and yet all of those products are imported into this country. 
Mr. Gutknecht gave some of those statistics.
    If the Federal Government and the FDA can say it is OK for 
us to consume those problems, how in God's name are you not 
able to regulate a few dozen pharmacies in an advanced country 
like Canada which already has a regulatory system as strong as 
ours? That begs any rational explanation. You can do it. Of 
course you could do it. And if the chairman told you to come 
back in a month with a mechanism to do it, you could do it if 
you wanted to do it. And our frustration is we know you can do 
it if you wanted to do it, but for some reason--and some of us 
have our suspicion that it has to do with the awesome amount of 
money that comes into Government from the pharmaceutical 
industry--you choose not to do that.
    So I would hope that you will come back to this committee 
and tell us how you can perform the relatively easy task of 
regulating and make sure that the products that come from an 
advanced country like Canada, which already has a strong 
regulatory system, are safe for the American consumers. We 
believe they are safe. We believe you could do that.
    Mr. Burton. And let me end up by saying--because I know you 
are tired. You have been here a long time--that you could do 
this one country at a time and you could start with Canada, and 
if you did that and it showed that it was going to be 
effective, then you could look at other countries one at a 
time. It's not something that has to be done all at once, but I 
think we want to make sure that Americans get the best price.
    I'm very concerned that we are going to pass a prescription 
drug benefit, and if you guys don't do something like this over 
there that the Government is going to be incurring these huge 
differentials in the price between here in the United States 
and around the world.
    And the last thing I would like to say are there are 600--I 
want to say this to my colleagues--there are at least 600 
lobbyists here in Washington that are paid by the 
pharmaceutical companies, and the $20 million that comes in 
every 2 years to Members of Congress and the White House, 
whoever is in the White House at the time, that $20 million and 
those 600 lobbyists aren't going to go away and we're going to 
have a fight on our hands. And the 600 lobbyists you can bet 
are being paid a heck of a lot more than $20 million. So this 
is something that we're going to have to fight at a grassroots 
level, and that's why we contacted the AARP, and they've 
already written an article, and we've got to contact every 
senior citizens group, and in your own Districts--and if you're 
talking to our colleagues, if you could talk to them about 
contacting their people, their senior citizens groups, and have 
there be a barrage of correspondence coming into Congress 
saying, ``Hey, let's get this job done,'' then I think the heat 
will get so great that we'll be able to get it done, even in 
spite of all that money.
    With that, Mr. Hubbard and Mr. Taylor, thank you for being 
here.
    Mr. Hubbard. Thank you for having us, Mr. Chairman.
    Mr. Taylor. Thank you.
    Mr. Burton. We'd like to call now Elizabeth Wennar. She is 
an M.P.H., D.H.A., president and CEO of United Health Alliance, 
principle, HealthInova; Mr. Andy Troszok, vice president of 
standards, Canadian International Pharmacists Association; Mr. 
Robert M. Hayes--is anybody staying here from the FDA?
    Are you with the FDA? I would like for you to stay and hear 
their testimony and maybe convey that back to Mr. Thompson.
    Good, good. We appreciate that very much.
    Mr. Robert Hayes is with the Medicare Rights Center; and 
Mr. J.P. Garnier, chief executive officer of GlaxoSmithKline. I 
know he's not going to be here, but we'll have some questions 
that we'll send him.
    Would you please rise so I can have you sworn in?
    [Witnesses sworn.]
    Mr. Burton. Be seated. We'll start with you, Dr. Wennar.

 STATEMENTS OF ELIZABETH A. WENNAR, PRESIDENT AND CEO, UNITED 
  HEALTH ALLIANCE, PRINCIPLE, HEALTHINOVA; ANDY TROSZOK, VICE 
     PRESIDENT, STANDARDS, CANADIAN INTERNATIONAL PHARMACY 
    ASSOCIATION; AND ROBERT M. HAYES, MEDICARE RIGHTS CENTER

    Ms. Wennar. First I would like to thank you, Mr. Chairman, 
for calling this very important hearing. I have submitted 
written testimony, but what I'm going to do is just attempt to 
synopsize what I have provided to you, with your permission.
    You know, I'd like to talk to you a little bit about where 
I come from so that the panel can understand why we started 
this.
    As you mentioned, I have a couple of different things that 
I'm involved with. You mentioned my name earlier in terms of 
some of the labeling that we have been working on, and I'll 
mention that a little bit later.
    We first got involved as a provider network in a rural 
community because we were very concerned about compliance, and 
if you understand quality we really--that is a pure definition 
in a provider's mind. Compliance is really the ability for the 
patient to be able to take their medications as prescribed so 
that you can get the outcome, the intended outcome.
    Now, technology in the form of a pill is here to stay. It 
is a major component of health care. So as a provider, you're 
looking at this and you make an assumption. Sometimes it is a 
false assumption, but you make the assumption that if you 
prescribe it for your patient that they are going to take it as 
prescribed.
    Now, when you find out that they cannot access it and its 
affordability, you have an ethical dilemma, you know. You 
prescribe something, it exists, and they can't afford to take 
it.
    So from our perspective about 3 years ago we got very 
actively involved, and we do have to thank--we have much 
gratitude and appreciation to Congressman Sanders for starting 
the initiative up in Vermont. We just basically piggy-backed 
onto what he started and decided that if it could be done, we 
had so many individuals we were trying to serve that could not 
get on a bus, could not--you know, they just couldn't leave 
their home. They needed to have access.
    We decided that it needed to be brought in through the mail 
and that we were going to be willing to attempt it. Our first 
case was with an individual who had breast cancer and needed 
tomaxaphin, and so we tried to come up with something very 
simple that would facilitate the process, and in doing so we 
suddenly became bombarded because we were initially concerned 
with just our local community. Since that time, we now are 
serving individuals in every State in the United States. We did 
a survey and counted that there were over 1.2 million 
individuals using this mechanism to access safe, affordable 
prescription drugs.
    Now, having said that, what I'd like to do is just sort of 
summarize what I'd like to talk to you about today, and I would 
be more than happy to answer any questions.
    The issues are very large from the perspective of if you 
look at it globally, we all know that, as has been previously 
mentioned here, employers are having a hard time trying to 
manage this problem, States are having a hard time trying to 
manage this problem, and certainly the Federal Government is 
having a hard time trying to manage this problem. We have a 
major crisis on our hands.
    So for those of us that are out there trying to deal with 
it every day, I think that we are constantly trying to be 
creative and innovative, and I would say to you that if the FDA 
can't figure out how to do this in terms of some of the things 
you have mentioned, we have offered before in previous 
testimony that we would be more than happy in the private 
sector to take on some of the burden of doing this. This should 
not be your burden alone to do, and we are willing to step up 
to the plate, and I challenge physicians, I challenge 
pharmacists. It is part of their responsibility to do this, and 
that's the reason our physicians have gotten involved. They 
must be engaged in these conversations. You cannot solve this 
problem alone. They must be there helping you. So I tell you we 
will wholeheartedly help you solve this problem.
    Having said that, I'd like to talk to you about some of the 
problems that exist right now in terms of the mechanism we have 
been using very effectively for over 3 years now to facilitate 
the process. I think I have heard some discussions about the 
legality of personal reimportation. And let me be real clear: 
personal reimportation is the area that we have been focused 
on, trying to help one individual at a time. Having said that, 
we do know that there are employer groups now that are very 
concerned and considering this.
    I have a gentleman here with me today who is the president 
and CEO of Aubuchon Hardware. He is a self-funded employer and 
he has been considering this effort. We did an analysis. He is 
currently using a PBM in the United States. With accessing 
medications from Canada, he could save another 25 percent over 
what he is saving here. He feels he has an obligation to his 
employees under self-funded to help them maintain their 
benefits. We agree. But he has now sort of been held at--it's a 
stalemate now because of the recent FDA letters that have been 
issued in terms of things, so he is now on a holding pattern in 
terms of doing this.
    I think our major concern now is the recent activity with 
the pharmaceutical industry cutting supply, and I would like to 
get back to the compliance issue that I spoke to you about. If 
you know you have individuals that are complying with a 
treatment plan and having good outcomes, now do you call it 
good quality to cut that supply to those individuals that have 
been complying? I think not. By the very definition of quality, 
they are complying and we have good outcomes, so to cut the 
supply after 3 years of knowledge of this taking place borders 
on--I have to tell you, it is just intolerable, from my 
perspective, to think that would occur with an entity that 
professes to be part of a provider network. Major technology 
they provide to save people's lives, and now they are going to 
take it away from them. I think it is unethical. I don't want 
to talk about legal. I want to talk about ethics, and it is a 
major ethical dilemma for us.
    Now, we have worked very hard to try and think about how we 
could help solve some of the problems that have been discussed 
around safety and quality. And if you put the right people in a 
room and sit and talk about it, you can come up with some very 
creative things. You mentioned IMPAC. IMPAC is Internet and 
Mail Order Pharmacy Accreditation Commission that has been 
licensed to a professional association made up of pharmacists 
and physicians from Canada, the United States, and Mexico that 
has just recently been put together. In fact, they've just 
recently had their first board meeting. Those individuals are 
looking broader than just reimportation. That's not their major 
mission. Their major mission is to look at things in pharmo-
economics and pharmo-therapeutics that they might be able to do 
that will help us all across the country, the whole North 
American continent, to cross-collaborate not only with two sets 
of professionals that have never been in one single 
association, but across three countries that we could really 
use our resources much better.
    IMPAC is an accreditation process that is much like the 
Joint Commission on Accreditation of Health Care Organizations. 
I'm sure many of you are familiar with it. All of our hospitals 
are required to be accredited before they are reimbursed for 
care. Physicians are held to a set of standards, as well. 
Prescription drugs are really the only one component, and 
particularly in the form of mail order--and now when you talk 
about Internet pharmacies I'd like a clarification here, 
please. Internet is mail order, first and foremost. We have 
mail order in this country, and I would challenge people to 
please tell me in mail order do you believe that when something 
comes from across the country to you in a package, do you have 
every assurance that is completely safe? I have yet to see them 
meeting a set of standards and meeting these accreditation 
standards that we require every other component in health care 
to do. I think it is time. The time is now.
    Now, having said that, we believe that Canadian pharmacies 
are willing to step up to the plate to meet these accreditation 
standards. Once they meet those standards they would then be 
issued these non-counterfeitable seals, which I'm going to ask 
you, if you happen to have a $20 bill in your pocket, to pull 
it out and look at it, because it is the same technology that 
is utilized by our U.S. Mint. It is not counterfeitable, and 
I'm going to show you how. It is optical technology, and I do 
also have an expert here with me that can answer technical 
questions. But if you pull it out--thank you, Mr. Gutknecht--if 
you look at the right-hand corner of the $20 there you will 
notice that it is a different color. If you hold it flat under 
the light and rotate it, you will see that it optically 
changes. I could--if you just rotate it toward you, and you 
will see it change in color. That cannot be broken, that 
optical code. The FBI has not been able to break that code. And 
I would ask you one question: if it is good enough for our 
currency, is it good enough to be used here? I would profess 
that it is.
    We have come up with a prototype label. In front of me I 
actually have something that's much broader that I would 
suggest you think about, and that is that anything that leaves 
an FDA manufacturing approved site, every manufacturer should 
have this labeling on their bottle. That's a good beginning in 
terms of stopping counterfeiting right there and endorsing 
safety.
    But I'm going to say it again: if it is good enough for the 
U.S. Mint, it should be good enough for our prescription drugs.
    With that, I would tell you that, again--I'll finalize my 
comments by saying three things. One, the interpretation of 
whether this is legal or not is where we're having a problem. 
The manufacturers' recent efforts in Canada to shut supply is 
our second issue. And third is the FDA's recent letters that 
they have been sending out in terms of threatening those of us 
that attempt to help our patients. Those are barriers to 
success in Canada.
    And the last thing I will say is that Canada is not a Third 
World country. We do site visits to all the pharmacies that we 
utilize, and I don't understand, if we can do it in the private 
sector, why is it that they can't do it at the FDA? Of course, 
leave it to the private sector then. We will engage them in the 
conversation. We'll make sure they have a list of every 
registered pharmacy in Canada or any place else in the world.
    Thank you.
    Mr. Burton. Thank you.
    [The prepared statement of Ms. Wennar follows:]
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    Mr. Burton. I think that you have probably heard us and our 
suspicions of why, so take that for what it is worth. There's 
an awful lot of pressure being exerted up here.
    Mr. Troszok. Is that right?
    Mr. Troszok. Close enough.
    Mr. Burton. I want to make sure I get this right.
    Mr. Troszok. We from Canada have strange names from 
different planets.
    Mr. Burton. OK. You guys play a lot of hockey up there too, 
don't you?
    Mr. Troszok. Mr. Chairman, committee members, thank you for 
having the opportunity to discuss safety issues from Canada. I 
am a Canadian licensed pharmacist, and when I graduated I 
pledged an oath to take the health, safety, and well-being of 
my patients as a priority. I have the privilege of working in 
community pharmacy for 8 years, and also in academia, and I 
have had the ability to work with patients, and every time I 
did I took that to the strongest possible level.
    I think patient safety and overall patient health should be 
the priority of any pharmacist working in any kind of realm, be 
it hospital, retail, or innovative delivery of service such as 
distance-based delivery or mail order.
    Canadian pharmacy is recognized internationally as a leader 
in innovation, focus, and patient health and safety. Pharmacy 
is a highly regulated profession in Canada, and pharmacists 
must adhere to guidelines administered by the Federal and 
provincial regulatory organizations.
    Health Canada has a branch called the Health Protection 
Branch that is responsible for approving and regulating 
medications in Canada. The Health Protection Branch has a 
similar role to the FDA in the United States. That's what kind 
of surprised me when Mr. Hubbard was talking about not 
understanding the Canadian approval systems, because, to my 
knowledge, the FDA and Health Protection Branch work hand in 
hand and know equally what one does.
    Medications are approved and sold----
    Mr. Burton. Would you repeat that one more time? I want to 
make sure that we got that.
    Mr. Troszok. To my understanding, the Health Protection 
Branch, which is the equivalent branch in our government to the 
FDA, to my knowledge works hand in hand in communicating 
between the border on issues of drug regulations. And I'm not 
an expert in this area. I would ask that you maybe subpoena 
someone from the Canadian Government that is, because I know 
that these two organizations do talk together.
    The process of approving drugs in Canada is similar to that 
of the United States. In part, this process is facilitated by a 
high degree of collaboration between the Health Protection 
Branch and FDA, as well by the fact that a vast majority of 
prescription pharmaceuticals are manufactured in the United 
States and are bio-equivalent or identical in both countries.
    Now, the distribution of medications from drug 
manufacturers to pharmacies is also very highly controlled. 
Pharmacies can only purchase medications directly from a drug 
manufacturer or through a wholesaler that is licensed by Health 
Canada to sell pharmaceuticals. Only pharmacies licensed by the 
provincial regulatory authorities can purchase prescription 
medications that are to be dispensed to the public. There are 
approximately 12 wholesalers in Canada, and their ability to 
control and regulate them is quite easy.
    In Canada provincial pharmacy regulatory organizations 
called colleges or associations regulate the practice of 
pharmacy. A pharmacy must obtain a license from the provincial 
pharmacy regulatory organization to be able to dispense 
prescription medications to the public. Each province and 
territory has a legislative pharmacy act in addition to 
standards of practice and a code of ethics that pharmacies and 
pharmacists must abide by.
    I am vice president of an organization called the 
``Canadian International Pharmacy Association.'' I handle 
standards. We were created in November 2002, and our main focus 
was to represent Canadian pharmacies practicing international 
pharmacy, but also to put forth standards and regulation into 
this industry. So we are willing to work closely with the FDA, 
with U.S. regulators to make this a safe and viable practice.
    We currently have what is known as a CIPA certification 
process. As was mentioned by the FDA, we tried to become VIPPS 
certified, but we were denied a VIPPS certification because we 
could not get a license to practice pharmacy in each of the 
States. But our members were willing to take that process but 
were denied.
    So what we did was we mirrored our CIPA certification 
behind the VIPPS certification. Now Dr. Wennar has mentioned 
that there is another certification program. I guess what I'd 
like to tell this committee is that regulated, licensed, 
professional pharmacies are willing to work with any U.S. 
organization that will enhance the safety and the well-being of 
U.S. patients.
    Thank you.
    [The prepared statement of Mr. Troszok follows:]
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    Mr. Burton. Are all of your comments in your written 
statement?
    Mr. Troszok. Yes. I have submitted a----
    Mr. Burton. I want to send that to the FDA because I think 
that is important. Send that to the head of the FDA and to Mr. 
Thompson.
    Mr. Hayes.
    Mr. Hayes. Thank you, Mr. Chairman, committee members.
    The Medicare Rights Center is the largest independent 
source of Medicare information and assistance in the United 
States. Day in and day out what we do is work with people with 
Medicare to assist them access needed health care. Tens of 
thousands of callers use our health lines annually and, no 
surprise to you members of this committee, the greatest and 
gravest unmet need of older and disabled Americans is the 
unavailability of affordable prescription medicine.
    From the trenches from which we work in, Mr. Chairman, the 
unaffordability of prescription medicine is a national 
emergency you folks at least seem to recognize.
    Today the importation of comparatively affordable medicine 
from Canada is literally saving the lives of people we work 
with. Of course, I think we all here know that easing access to 
lower-priced prescription drugs imported from Canada is not the 
comprehensive, ultimately the intelligent response this 
national emergency requires, but keeping this lifeline open is 
essential to the health security of hundreds of thousands of 
American citizens.
    We at the Medicare Rights Center are staffed. We rely 
heavily on volunteers, are routinely in the heartbreaking 
position of being unable to assist callers help find the 
affordable medicine they do need. We do everything we can to 
advise consumers. We research State prescription programs, we 
look at veterans benefits, supplemental insurance programs, 
discount cards, free samples, private company programs, family 
foundations, mail order houses, Internet pharmacies--yes, even 
those that are not in the United States, and maybe we're lucky 
the FDA has taken off. We go to the kindness of strangers 
frequently to try to get medicine to people who need it, but 
too often we fail.
    I think the committee really finds itself today 
legislatively in the same situation our volunteer counselors 
work in. We, like you considering this legislation to bring 
cheaper drugs from Canada, are doing what we can do with what 
we have, knowing what we have to work with is terribly 
inadequate.
    Mr. Chairman, three quick points. One, Congress should 
amend the Prescription Drug Marketing Act to authorize 
individuals to import from Canada, whether by mail, by 
Internet, by visit, prescription drugs for personal use. Seems 
pretty clear it's vitally in the Nation's interest to take the 
discretion away from the FDA on how they enforce existing law.
    Two, more significantly, Congress again needs to take the 
lead in authorizing clearly authority to reimport prescription 
drugs from Canada.
    Three, I've got to say that those of us who try to keep 
somewhat away from politics and are working with folks in the 
trenches are so gratified to see a committee work as this 
committee is doing. I think folks on both sides of the aisle 
here--maybe three aisles, almost--should be hugging each other, 
because it is such an unusual sight from the trenches to see 
this kind of tripartisan commitment to the public good. But 
there should be applause for the introduction of H.R. 847.
    From our daily work assisting people find affordable drugs, 
we know that many Americans will go without medicine if their 
Canadian pharmacy is cutoff and they cannot find alternatives. 
Our experience, contrary to what I expected our friends from 
Glaxo to say, but what they do say on their Web site, our 
experience is that older Americans will not find an affordable 
alternative if the Canadian pharmacy route is cutoff from them.
    Again, our experience, contrary to what GlaxoSmithKline 
speculates on, is that our callers, consumers have not faced 
dangers in purchasing drugs from Canada. The danger, as you 
folks have made quite clear, the danger they face is going 
without the medicines that doctors have prescribed.
    So, to wrap up, four things we know: One, there is direct 
evidence that citizens of this Nation, real people, someone's 
parents, grandparents, and wives are going without the 
medication they need. We are not speculating on that evidence.
    Two, more Americans will be able to afford more medicines 
that the doctors have prescribed if they are allowed to 
purchase the drugs reimported from Canada.
    Three, there is absolutely no evidence of any person 
suffering negative effects or complications because their 
medicine was reimported from Canada.
    And, fourth, ask any physician in America who treats an 
elderly population--the damage to our citizens who go without 
needed medication is palpable, painful, frequently deadly.
    So, Mr. Chairman and committee members from all parties 
here, we thank you for your efforts to mitigate the damage 
being done to our people.
    [The prepared statement of Mr. Hayes follows:]
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    Mr. Burton. Let me just ask a couple of questions, and I 
won't take my full 5 minutes, which is unusual.
    Mr. Hayes, you deal with the realities of life when you 
deal with these people. Are there people dying as a result of 
the problems that they can't afford prescription drugs?
    Mr. Hayes. No question, Mr. Chairman.
    Mr. Burton. You wouldn't have any idea from your experience 
what the number might be?
    Mr. Hayes. No idea. Obviously, we can only help so many 
people with our small crew of horribly paid staff and 
volunteers, many of them elderly, themselves, many of them who 
become volunteers in these trenches because they have 
experienced the same hardship. I think Congressman Sanders' 
idea to get the GAO to do some examination of this is vitally 
important and would be very useful.
    Mr. Burton. Well, I think many of us will join him in 
asking for that study. How big an area do you deal with?
    Mr. Hayes. Nationwide.
    Mr. Burton. Nationwide. And so you have volunteers all 
across the country who feel as you do?
    Mr. Hayes. We have callers from around the country.
    Mr. Burton. Callers.
    Mr. Hayes. We have call answerers based mostly in New York. 
But this is a problem that is mitigated to some extent in some 
States where there is a State prescription drug program that 
helps some people.
    Mr. Burton. I know, but in many States they don't have 
that.
    Mr. Hayes. Many they don't.
    Mr. Burton. And so as a result, people are suffering.
    Mr. Hayes. Yes. And, of course, you'll hear from Glaxo and 
from any other drug company about all the alternatives there 
are. Believe me, we use them. We have no ideology against any 
pharmaceutical company, but it is similar to running from soup 
kitchen to soup kitchen to get a meal--it is so hard to access, 
and more often than not we can't help people find anything.
    Mr. Burton. Dr. Wennar, I just want you to answer one 
question. It is possible to use this kind of technology to make 
sure that the drugs being imported from Canada or any place as 
long as you've got a cooperating pharmacy, to make sure that 
they are absolutely safe?
    Ms. Wennar. Absolutely. And, I mean, on top of that you put 
an additional layer by requiring that they meet a set of 
standards, themselves.
    Mr. Burton. Yes.
    Ms. Wennar. Which includes a site visit, and then there is 
a list of standards with multiple elements under it that I 
would be more than happy to provide you with that whole 
listing.
    Mr. Burton. What I would like from you, all of you, to give 
us a list of things that you think could be done to make sure 
the importation of pharmaceuticals are safe. You give us a list 
of those, and we'll give it to the FDA, and we'll ask them to 
check that out because they say they can't find an answer, and 
we believe that maybe you do have some answers. If they look at 
your answers and say that they're not workable, we're going to 
ask them why. We'll do our very best to work with you, and we'd 
like to continue to have this kind of dialog.
    Ms. Watson, do you have any questions?
    Ms. Watson. Not really a question, but the models that have 
been mentioned here I would hope that we could maybe--well, I 
guess this piece of legislation does that. I would like to ask 
the authors of H.R. 847--and I haven't really looked at every 
line, but do you authorize the access and the labeling and the 
licensing through this legislation?
    Mr. Sanders. There are two separate issues. H.R. 847 deals 
specifically--is a response to what Glaxo did and what we say 
is that drug companies, not just Glaxo, cannot discriminate 
against Americans and limit supplies to Canada, and if they do 
that they are going to be fined heavily. But, to answer your 
question, in other reimportation language, bills that we have 
introduced, the issues that you have raised are dealt with.
    Among many other things, we have built--I'll give it back 
to you, but we have built in a very strong regulatory mechanism 
to make sure that all product that comes into this country is 
FDA approved and is safe.
    Ms. Watson. Is that in addition to this bill?
    Mr. Sanders. Yes.
    Ms. Watson. It's in other bills?
    Mr. Sanders. Yes.
    Ms. Watson. I would like the panel to respond if the bills 
that have already been introduced meet your needs of making 
these drugs accessible across the border.
    Ms. Wennar. Well, I think there is a litany of bills that 
are out there that are trying to serve multiple purposes. I 
mean, obviously in the ideal world we'd like to see one 
comprehensive bill that could serve multiple purposes. The 
reality--I'm going to get back, and maybe I'm going to sound 
like the FDA here, but safety is a major concern of ours and 
quality is a concern. Let's not confuse counterfeiting, 
although it is a component of this. Counterfeiting, as Mr. 
Gutknecht eloquently pointed out, exists in every country in 
the world, including the United States. We are not attempting 
to solve all of the potential counterfeiting problems. What we 
are trying to do is assure the highest level of safety that we 
can and quality as it relates to something that is being 
brought back in. And again we're just talking about Canada, but 
the same technology can be applied, and certainly this 
technology we're talking about right here in terms of the seals 
that would go around the bottle or on a labeling is saying that 
once it left the manufacturing site in this condition--and this 
optical technology is so inexpensive in terms of how you assess 
it by simply rotating it, and it is very easy to do. It doesn't 
require huge resources. This is a first stage effort of saying 
that you have done something at that manufacturing level when 
it leaves there. That's the first step.
    The second thing is that we're talking about the pharmacies 
actually meeting a set of accreditation standards just like 
hospitals in the United States are required to do now. I will 
point it out again--every component of health care with the 
exception of this one is required to meet some set of 
accreditation standards.
    Ms. Watson. Would you yield for a minute?
    Ms. Wennar. Yes.
    Ms. Watson. Are the bills that are out there doing what 
you're asking? Then let's have a bill introduced that does 
this.
    Ms. Wennar. I have not seen specific language that would 
require any mail order pharmacy to meet a set of standards.
    Mr. Sanders. If the gentlelady will yield, last year we 
introduced a bill which for, in a sense, political and 
practical considerations limited the reimportation from Canada, 
which has built in it very, very strong regulatory and safety 
safeguards. This year that bill has already been introduced in 
the Senate and will be introduced in the House.
    Ms. Watson. Mr. Chair, if I may on this issue?
    Mr. Burton. Sure. Yes.
    Ms. Watson. When that bill comes over here to the House of 
Representatives, why not amend it to put in the provisions that 
you are describing if they are not already enumerated? We can 
do that. We can prepare them and have them ready to amend into 
the bill. Then it could go into conference and we'll come out 
with----
    Ms. Wennar. And what this does do is very simply it makes 
the FDA--I should say Customs' job much easier, because now if 
they--I believe one of the envelopes that's floating around, in 
addition to it being secure this way, on the cover of that 
shipping and handling package there is a non-counterfeitable 
seal that would be applied that's simply rotated by the Customs 
officer, and if the seal doesn't change optically in terms of 
the color it should be not allowed into the United States. Very 
simple.
    Mr. Gutknecht. If the gentlelady would yield, I am working 
on that portion of the bill because I think that is a critical 
point, but if I could just make this point, Mr. Chairman, just 
real briefly, the problem we have confronted for the last 4 
years is that we have come up with a number of ideas, but what 
we are dealing with here is a agency who clearly does not want 
to do this. And no matter what we may put in statute, if they 
don't want to do it--in fact, it is on the books today that 
they have to allow personal importation, and yet they are 
finding every excuse possible not to enforce the law that's on 
the book--in fact, in my opinion to misinterpret the law that 
is on the books. So whatever we put in law will be very 
difficult to get the FDA to implement if they're not willing to 
at least listen to what we and the vast majority of Americans 
are saying.
    Ms. Watson. Would you yield?
    Mr. Gutknecht. It's your time. I'm sorry.
    Ms. Watson. Why is it that, along with the amendments that 
you've already been working on, that we could not put in a 
provision directing the FDA to do this, and if it is not done 
by a certain date there are consequences, whatever that might 
be?
    Mr. Gutknecht. I think that is an excellent idea. As a 
matter of fact, we may have to put at the end of this bill this 
year, assuming we can get it to a floor vote on the House and 
in the Senate, we may have to put a line at the very end that 
says ``and we really mean it.'' [Laughter.]
    Ms. Watson. We'll work with you on that.
    Mr. Burton. I suppose you could put a criminal penalty on 
there. If they don't comply with the law, then the bureaucrats 
are liable.
    Mr. Troszok. May I just make a comment regarding the 
Canadian political system as reacting to the current laws? In 
February our organization took Glaxo to the Competition Bureau, 
the Federal Competition Bureau, because Glaxo has--just to be 
on the record, Glaxo has imposed the ban to Canadian pharmacies 
that sell prescription medications to U.S. patients, so that 
ban is on as of January 21st.
    We took Glaxo to the Competition Bureau. The Competition 
Bureau came back and said, ``You have a case in every single 
circumstance with the exception of the legality.'' And the 
Competition Bureau dropped the case because they talked to the 
FDA and were told that this is an illegal act. So I think it 
also has to be----
    Mr. Burton. The FDA told them it was an illegal act?
    Mr. Troszok. Yes, they did.
    Mr. Burton. The law doesn't say that.
    Judge, did you have any questions?
    Mr. Duncan. Well, thank you, Mr. Chairman. I had some other 
meetings and so I don't have many questions, but I will say 
that we had a hearing that got into some of these things before 
the Government Reform Committee just a few days ago. Mr. 
Hubbard testified and they had an official from the Federal 
Trade Commission who testified, and he said in response to a 
question that I asked that they had not received any 
complaints, not one, at the Federal Trade Commission from 
people who had gotten prescription drugs over the Internet. You 
know, sometimes you can get a little more with a carrot than 
with a stick, and I actually introduced a bill that I knew 
wouldn't really go any place but I thought would start the 
conversation at least maybe, to try to come up with some type 
of tax break for a pharmaceutical company that would certify 
that they were selling their drugs at the same price in this 
country as in any other country.
    I think, though, that the chairman a while ago got into the 
area where probably something really could be done on this, and 
that is we put some provision in the law when we set up the 
prescription drug plan that no company can participate unless 
they will certify that they are selling those drugs to the 
government or the prescription drug plan at the lowest price 
that they're selling it any place else, something to that 
effect.
    But I appreciate your testimony today. I've read over as 
much as I could here in just a few minutes, and I'm sorry I 
didn't get to hear it all in person.
    Thank you, Mr. Chairman.
    Mr. Burton. That's a great idea, and we'll see if we can't 
get an amendment to that effect on the floor with a bunch of us 
speaking on it.
    Mr. Sanders.
    Mr. Sanders. I'll be brief because we have some votes. I 
just want to thank our panelists. Without exception, the 
testimony was excellent.
    Mr. Chairman, Mr. Hayes told us that in the real world 
people are suffering and dying because they can't afford 
prescription drugs. Dr. Troszok--we thank you very much for 
coming south--has told us about the high standards of the 
Canadian pharmaceutical industry and their willingness and 
desire to cooperate with the U.S. Government in making sure all 
of the safety standards that we require are met. And Dr. 
Wennar, who comes from Bennington, VT--you forgot to mention 
that, Beth--has done just an outstanding job starting off small 
scale in Bennington and spreading all over this country, and 
because of Dr. Wennar's work God knows how many Americans now 
are receiving medicine that they require at reasonable prices. 
We thank you all very much, and her innovative ideas in terms 
of safety are great.
    The conclusion that I reach, Mr. Chairman--I think you've 
said it and Mr. Gutknecht has said it. We've all said it. This 
is a problem that can be easily solved if there is the will to 
solve it, and we have got to continue to work together, 
because, as Mr. Hayes has indicated, the stakes are enormous. 
People are dying today and they are suffering because this 
institution, our Congress, has not acted. And I pledge to work 
with all. Let's all work together in a nonpartisan way, and if 
we do we will succeed.
    Mr. Burton. Very good.
    Mr. Gutknecht.
    Mr. Gutknecht. Mr. Chairman, we do have a vote, and I do 
want to thank the witnesses. This was excellent testimony. I 
wish we had time, especially for Dr. Wennar. She has testified 
before. We have met several times. The program that they have 
going on is really the model that I would like to see 
implemented around the country and I think could be expanded 
upon.
    This is one of the most frustrating issues that I have ever 
been involved with, and I always tell people I feel sometimes 
like the little boy who came in and asked his mother a question 
and his mother was busy and she said, ``Go ask your Dad.'' And 
the little boy said, ``Well, I didn't want to know that much 
about it.'' The more you learn about what is happening and the 
pernicious nature of the way pharmaceutical drugs are priced 
around the world, it is really shameful. And it seems to me 
that, working together with people in the private sector, that 
there has to be a better way to come up with a formula so that 
at least we can have average prices. You know, there is no 
excuse for the world's largest market paying the world's 
highest prices.
    And if I could just say also, we subsidize this industry in 
three separate ways. Mr. Sanders mentioned through the tax code 
we are incredibly generous in terms of allowing them to write 
off their expenses. Second, we subsidize them in the amount 
that we spend on basic research. This year this Federal 
Government will spend over $21 billion taxpayer dollars on 
basic research, much of which will go to benefit the 
pharmaceutical industry. And then, finally, we pay as American 
consumers virtually all of the cost for the other research 
that's done, and that is being used by consumers all around the 
rest of the world.
    I want to thank our excellent panels. I want to thank you 
for having this hearing. This is a very important first step. 
It is a bipartisan issue. It is an issue whose time has come, 
and ultimately I am confident that some time during this 
Congress we are going to move this ball forward and allow 
Americans to have access to world-class drugs at world-market 
prices.
    Mr. Burton. Well, let me just make a suggestion. Individual 
bills may or may not succeed, but we are going to have the 
prescription drug bill on the floor for discussion and debate. 
We need to go to the Rules Committee, ask for an open rule so 
we can amend that, and then try to put something in there that 
will deal with this problem so people can get the lowest prices 
on these drugs. So that's going to be the opening that we can 
get to if we really work at it.
    With that, thank you for being here. We'd like to have all 
your suggestions so we can write to the FDA.
    We stand adjourned.
    [Whereupon, at 4:05 p.m., the subcommittee was adjourned, 
to reconvene at the call of the Chair.]
    [Additional information submitted for the hearing record 
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