[Senate Hearing 108-]
[From the U.S. Government Publishing Office]



 
  DEPARTMENTS OF LABOR, HEALTH AND HUMAN SERVICES, AND EDUCATION, AND 
          RELATED AGENCIES APPROPRIATIONS FOR FISCAL YEAR 2005

                              ----------                              


                        THURSDAY, MARCH 25, 2004

                                       U.S. Senate,
           Subcommittee of the Committee on Appropriations,
                                                    Washington, DC.
    The subcommittee met at 9:35 a.m., in room SD-192, Dirksen 
Senate Office Building, Hon. Arlen Specter (chairman) 
presiding.

    Present: Senators Specter, Cochran, Stevens, and Harkin.

                DEPARTMENT OF HEALTH AND HUMAN SERVICES

                        Office of the Secretary

STATEMENT OF HON. TOMMY G. THOMPSON, SECRETARY

               OPENING STATEMENT OF SENATOR ARLEN SPECTER

    Senator Specter. Good morning, ladies and gentlemen. The 
Appropriations Subcommittee for Labor, Health, Human Services, 
and Education will now proceed.
    Our witness today is the distinguished Secretary of Health 
and Human Services, Tommy Thompson. Secretary Thompson served 
as Governor of Wisconsin from 1987 to the year 2000, the 
longest tenure of a Governor in Wisconsin's State history, a 
national leader in welfare reform and expanding healthcare to 
low-income children and families, served as chairman of the 
National Governors Association, the Education Commission of the 
States, and Midwestern Governors Conference, bachelor of law 
degree from the University of Wisconsin in Madison.
    We focus today on the budget of the Department of Health 
and Human Services, which has been proposed by the 
administration at $62.9 billion, which is an increase of $974 
million over the fiscal year 2004 level, or 1.6 percent. And 
this is tough year on all accounts, as we know. This budget 
proposal has a great many question marks in it, one of which is 
the assumed savings of $767 million, all of which are within 
the jurisdiction of Finance Committee, but I'm sure Senator 
Thompson will drop a letter to the Finance Committee and tell 
them to proceed to save that money for us, right, Secretary?
    Secretary Thompson. That is correct, sir.
    Senator Specter. And the reduction and elimination of about 
a dozen programs, which have a lot of support in the Congress--
Article 1 of the Constitution still has that cumbersome 
provision about congressional authority to appropriate, and 
some of our colleagues take that very seriously on programs 
which have been developed over the years. And I take a look at 
11 programs which are being zeroed out, and then major cuts.
    The Center for Disease Control has a reduction of $116 
million, which is a little hard to understand in light of their 
increased responsibilities. Every time we turn around, there's 
a major problem on SARS or AIDS or bioterrorist threats. And 
their building program is in midstream. I visited the Center 
for Disease Control several years ago, and was shocked to see 
what was going on down there. Your predecessor, Mr. Secretary, 
appeared here every year, and never once mentioned the need for 
capital improvements at the CDC, and it was in dire need. It's 
gone a fair distance on a billion-and-a-half dollar budget, and 
I don't know how we can stop it now, but, at the same time, I 
don't know how we can not stop it now.
    The NIH funding is totally inadequate to allow NIH to go 
forward. I know how important that is in your personal agenda. 
And I also know you're not the President or the director of 
OMB, and you don't structure all of the budgets.
    But it looks like a tough year ahead for us, Mr. Secretary.
    Secretary Thompson. It is.
    Senator Specter. I was hoping to finish before the 
distinguished ranking member came, so he missed his opening 
statement.
    Just kidding. Just kidding, Senator Harkin.
    We have established a unique partnership, I think, that the 
world knows about, to the detriment of both of us, personally. 
But when we have changed gavels from time to time, it has been 
seamless, and we have worked very, very closely together. And 
I'm delighted to yield to my distinguished colleague today, who 
has effectively tied up the Senate with an overtime issue on 
which I agree with his position.
    Senator Harkin.

                OPENING STATEMENT OF SENATOR TOM HARKIN

    Senator Harkin. I wish it wouldn't tie up the Senate. I 
wish we would just vote, that would be the end of it.
    Thank you very much----
    Senator Specter. We--Senator Frist may let you do that. 
Then what are you going to do?
    Senator Harkin. We vote, and then we move on.
    Thank you very much, Mr. Chairman. And, again, I just echo 
the words that you've said. I've enjoyed our partnership, now 
going back 14 years, and the changing of the gavel back and 
forth has been seamless. And I have appreciated your 
willingness to work together and make this truly a bipartisan 
subcommittee, in every sense of the word. The issues we deal 
with, on health and education, medical research, biomedical 
research, are not really partisan issues at all, and I don't 
think either one of us have ever looked at them in that regard.
    Mr. Secretary, it's always a pleasure to have you appear 
before this subcommittee, and I look forward to working with 
you in this year's budget process. First, I want to commend you 
for your commitment to two important issues, issues that I know 
are a top priority for both of us.
    The first is the support for programs for persons with 
disabilities. I appreciate your continued support for the New 
Freedom Initiative and its goal of removing barriers to 
community living for people with disabilities. This is 
extremely important. Now let's work together to get the 
legislation enacted.
    Secretary Thompson. Please.
    Senator Harkin. I also want to thank you for including 
funding for the Real Choice System Change Grants in your fiscal 
year 2005 budget. I don't think those funds would be there 
without your personal intervention, and I appreciate that.
    Second, I congratulate you on your efforts to make wellness 
programs a priority. Obesity, lack of physical activity, 
smoking, and poor nutrition are a grave threat to our country; 
not just to individuals, but to all of us, as taxpayers. In 
this country, we spend a trillion dollars a year on healthcare, 
and the figures show that fully 75 percent of those are spent 
on chronic diseases, like heart disease, cancer, and diabetes. 
And what those diseases have in common is that often they're 
preventable.
    So, Mr. Secretary, I know you agree, because I've read your 
statements. In this country, we fail to make the necessary up-
front investments in prevention. I'm absolutely convinced that 
prevention is an idea whose time has come. And the good news 
is, this can be and should be a bipartisan initiative. Senator 
Specter and I are working together on some wellness initiatives 
that we plan to include in this year's bill. I look forward to 
working with you on these initiatives.
    For one thing, CDC has promised to send me some more 
pedometers. Ah-ha, you beat me to it. All right, Mr. Secretary, 
tell you what I'll do. Unscripted, I tell you what, I may issue 
a challenge, and I'll issue one to my partner here. We'll all 
put pedometers on, and we'll see who takes the most steps this 
year.
    Secretary Thompson. Ten-thousand steps a day, Senator.
    Senator Harkin. How many?
    Secretary Thompson. Ten-thousand steps a day.
    Senator Harkin. Are you doing that?
    Secretary Thompson. Uh-huh.
    Senator Harkin. I may take back my challenge.
    Good for you. Well, that is a great example, because that's 
what we've got to be doing here.
    We're doing some other things. I've been working with 
Senator Frist on getting some signs put by the elevators----
    Secretary Thompson. Uh-huh.
    Senator Harkin [continuing]. Which they've done at NIH. I 
don't know if you've done your Department the same. If we just 
go over there a little bit, there's a stairs. If you climb the 
stairs, it's healthier, and there's a certain calorie type of 
thing for how many stairs you climb, and stuff like that, to 
get people climbing stairs. Well, that's just off the record.
    But we're going to get the pedometers, and we're going to 
try to get this thing moving here on the Hill. But, again, I 
just wanted to commend you for those things. The Freedom Grants 
Initiative, the money that you've requested for the Systems 
Change Grants--please work with us to get that bill through, 
the New Freedom Initiative. It's most important. And on all the 
stuff you're doing on wellness and obesity and things like 
that--I may differ with you slightly--I have this in my 
questions--in terms of whether or not it should be mandatory or 
permissive for restaurants and things like that, on the menus 
and stuff, and we'll have a dialogue with you on the questions 
on that.
    The one last thing that--on a less positive note, I 
suppose--I'm concerned about recent reports that the chief 
actuary for the Medicare program was told not to tell Members 
of Congress that his office had concluded that the Medicare 
Prescription Drug Program--that would cost upwards of $10 
billion more than previously reported. Again, I'll be asking 
you this during the question-and-answer period.
    Again, Mr. Secretary, I look forward to your testimony.
    Secretary Thompson. Thank you very much.
    Senator Specter. Thank you very much, Senator Harkin.
    Senator Cochran.

               OPENING STATEMENT OF SENATOR THAD COCHRAN

    Senator Cochran. Mr. Chairman, thank you very much.
    Mr. Secretary, we appreciate very much your exemplary 
service as Secretary of the Department of Health and Human 
Services. We also note that you've made strong efforts to begin 
the implementation of the new Medicare Prescription Drug 
Initiative. I'm pleased to see, also, the aggressive effort in 
the budget to safeguard the country against bioterrorist 
threats--$5 million that's included in the budget to help 
prepare State and local governments to respond to these disease 
outbreaks is an important step forward.
    I also commend the efforts to identify threats before they 
reach our country, and to prevent the entry of microbes, 
diseases, adulterated drug products, and all other items that 
would threaten the safety of our citizens. The budget also 
provides funding to help improve the health of those who live 
in small towns and rural communities, such as in my State of 
Mississippi. Almost half of those served by small-town health 
centers are in rural areas. The increase of $219 million to 
provide for health centers and their sustainment was 
appreciated very much.
    It's my hope that special emphasis can also be placed on 
targeting research to areas of the country that suffer 
disproportionately from diseases like diabetes, cardiovascular 
disease, and obesity. Generally speaking, I think, under the 
pressures of trying to control spending and deal with the 
problems of the deficit, this is a budget that should encourage 
those of us who are interested in improving the health and 
safety of American citizens.
    Thank you very much.
    Secretary Thompson. Thank you, Senator.
    Senator Specter. Thank you, Senator Cochran.
    Just one note, to answer the question which may be on the 
minds of many, or at least some, about my Halloween mask. I 
came out of the restaurant in Philadelphia on Saturday night 
and tripped on a defect in the sidewalk, and landed squarely on 
my nose. And I'm pleased to report that my nose was not broken, 
but where my nose hit the sidewalk, the sidewalk was broken.
    Mr. Secretary, the floor is yours.
    Secretary Thompson. Mr. Chairman, Senator Harkin, Senator 
Cochran, thank you very much.
    I am very happy that the nose was not broken, and I'm glad 
that you are mending back in good shape. That could have been a 
very serious fall, and I'm very happy and appreciative that 
things are----
    Senator Specter. Mr. Secretary, my colleague in the 
Philadelphia city race, Tom Gola, a famous basketball star, 
lost his balance, slipped and hit his head, and he's been in 
very serious condition ever since, so there are repeated 
circumstances of people falling, and even fatalities, so I 
consider myself very fortunate.
    Having brought up the subject, I'm reminded there's a 
famous story, probably apocryphal, about Winston Churchill 
laying on a veranda one night, and a woman walked by and saw 
his condition and said, ``You're drunk.'' And he responded, 
``You're ugly.''
    She recounted again, ``You're drunk.'' And he said, 
``You're ugly.'' And then she said again, ``You're drunk.'' And 
he said, ``Yes, but I'll be sober in the morning.''
    Next week, I'll be back to my old appearance, however bad 
that may be.

              SUMMARY STATEMENT OF HON. TOMMY G. THOMPSON

    Secretary Thompson. I want to thank you, Senator Specter, 
for inviting me, and Senator Harkin, for giving me this 
opportunity to discuss the President's fiscal year 2005 budget 
for the Department of Health and Human Services.
    In my first 3 years in the Department, I believe we have 
made tremendous progress in improving the health, the safety, 
and the independence of the American people. We continue to 
advance in providing healthcare to seniors and to low-income 
Americans, and in providing the welfare to children and 
strengthening families and protecting the homeland. We have re-
energized the fight against AIDS at home and abroad. We've 
increased access to quality healthcare, especially for 
minorities, the uninsured, and the under-insured.
    We're helping smokers--and I know this is a very big 
concern of yours, Senator Harkin--free themselves of a 
debilitating habit through a national hotline. We have set it 
up in the Department, Senator Harkin, without asking the 
Congress for any money. It'll be up and running by the end of 
this year. And I want you to know that I pushed this, and I 
feel as passionate as you do that we've got to reduce the 
tobacco. And hopefully someday we'll be regulating it.
    With your help, 3 months ago President Bush signed the most 
comprehensive Medicare improvements since it was created, 
nearly four decades ago. There has been some controversy, and I 
know there'll be questions about it, and I'm going to answer 
those questions completely to this particular Committee.
    To expand on our achievements, the President proposes $580 
billion for HHS for fiscal year 2005, an increase of $32 
billion, or 6 percent, over fiscal year 2004. Our discretionary 
budget authority is $67 billion, an increase of $819 million, 
or 1.2 percent, over fiscal year 2004, and an increase of 26 
percent since 2001. And I understand, Senator Specter, that 
there are some gaps, and I want to work with you to see how we 
might be able to ameliorate the situation.
    Of this total, subcommittee is responsible for $63 billion, 
an increase of $659 million, or 1.1 percent, over fiscal year 
2004, or $974 million under current law. In order to strengthen 
our bioterrorism preparedness and public-health system, we have 
requested $4.1 billion, up from $300 million in 2001. And I 
would respectfully--humbly respect--and invite all of you 
Senators down to take a look at what we have done in the 
Department. And I think you'll find it very impressive and 
informative, what we have built, to be able to track diseases 
and bioterrorism activities all over the world. I've had a lot 
of people come down, and everybody that walks out of it feels 
very much relieved that we are very much there. And I would 
hope that you'd come down and see it.
    This investment will improve our preparedness for 
bioterrorism attack on any kind of bioterrorism attack or for 
any public-health emergency. We already have seen our 
investment pay off, in CDC's leadership in fighting the SARS 
outbreak last year in a coordinated a public-health response to 
the West Nile virus, and even helped to deal with a 
particularly hard flu season this past year.
    As you all know, I'm a very big proponent of information 
technology. That's why we will be providing a computer 
language, called SNOMED, to any proprietor that wants to, at no 
charge, starting, hopefully, by the 1st of May. We're leading 
the way in developing standards for electronic medical records. 
And last month, I announced an FDA rule to prevent medication 
errors by requiring bar codes on medicine and blood products.
    Community health centers, as you have mentioned, Senator 
Cochran, are absolutely a key element for increasing access to 
and availability of healthcare for helping the uninsured. We're 
proposing to provide $1.8 billion for health centers to provide 
healthcare services to 15 million Americans. I want to thank 
you, Senator Specter and Senator Harkin, for your leadership on 
this. We wouldn't be here today if it wouldn't have been for 
your great leadership.
    Through our New Freedom Initiative, Senator Harkin, we're 
working to help the elderly, the disabled, by promoting home 
and community-based centers. In my desire to reduce obesity and 
diabetes, we, along with the help of Congress last September, 
my Department announced 12 steps to HealthierUS grants totally 
more than $13 million to some more community initiatives to 
promote better health and prevent disease. This included 23 
communities, including one tribal organization, 15 small cities 
and rural communities, and seven large cities. These 
communities are doing some very exciting work in chronic 
disease prevention and health promotion. For example, in 
Washington State, health professionals are targeting Latino 
adults who have diabetes, asthma, or obesity, or have a high 
risk of getting those conditions.
    In Michigan, through the Intertribal Council of Michigan, 
public-health officials have created a resurgence of interest 
in passing on traditional wisdom in cultural practices, 
including consumption of highly nutritious traditional foods. 
We're delighted by these activities, and the Department will 
expand the program this year with the addition of $44 billion, 
and has requested $125 million for these programs in 2005.
    Later today, I'm going to unveil the Medicare improved 
drug-discount cards. I will also announce that a Pennsylvania 
company will be among our Medicare-approved drug-discount card 
sponsors. This company serves 265,000 Pennsylvania seniors, 
and, all together, Pennsylvania seniors will receive $486 
million this year and next.

                           PREPARED STATEMENT

    We look forward, ladies and gentlemen, to working with this 
committee, the medical community, and all Americans as we build 
upon our past accomplishments, implement the new Medicare law, 
and carry out the initiatives that President Bush is proposing 
to build a healthier, safer, and stronger America. And I want 
to thank you for your bipartisan support on health issues.
    Thank you, once again, for giving me this opportunity to 
appear in front of you.
    [The statement follows:]

              Prepared Statement of Hon. Tommy G. Thompson

    Good morning, Chairman Specter and members of the Subcommittee. I 
am pleased to present to you the President's fiscal year 2005 budget 
for the Department of Health and Human Services (HHS). I am confident 
you will find our budget to be a positive solution to improving the 
health, safety, and well-being of our Nation's citizens. Before I 
discuss the fiscal year 2005 budget, I would like to thank the 
Subcommittee for its hard work and dedication to the programs within 
HHS. I am extremely proud of the manner in which we have worked 
together effectively, in a bipartisan effort, since I was appointed 
Secretary. This cooperation should be lauded and the tremendous results 
for the American people can be seen in our many accomplishments.
    This year's budget proposal builds upon past accomplishments in 
meeting several of the health and social well-being goals established 
at the beginning of the current Administration. I deeply appreciate the 
level of support I have received from the Subcommittee during the past 
on so many issues that have touched American's lives. For example, with 
your help, the Department has funded 614 new and expanded health 
centers. This has effectively increased access to health care for an 
additional 3 million people, of which 64 percent are minorities, 
increasing the overall number of patients served in health centers by 
almost 30 percent. In the past three years, your support for protecting 
our nation from bioterrorism has made the country better prepared and 
better protected.
    Your unwavering commitment in doubling the budget for the National 
Institutes of Health has supported work by more than 217,000 research 
personnel affiliated with 2,000 universities, hospitals, and other 
research facilities across our great nation. This support has led to a 
constant flow of new scientific discoveries. We have also established 
the Access to Recovery State Vouchers program, providing 50,000 
individuals with needed substance abuse treatment and recovery 
services. HHS initiated a new Mentoring Children of Prisoners program 
to provide one-to-one mentoring for approximately 30,000 children with 
an incarcerated parent and created education and training vouchers for 
foster care youth, securing funding to provide vouchers of up to $5,000 
to 17,400 eligible youth since 2001. Last year, we worked together with 
Congress to pass the Medicare Prescription Drug, Improvement, and 
Modernization Act of 2003 (MMA), adding prescription drug coverage for 
seniors and modernizing the Medicare program. While I thank you for 
your support in these and the many other accomplishments to improve the 
health, safety, and well-being of our citizens, there is still much to 
be done.
    For fiscal year 2005, the President proposes an HHS budget of $580 
billion in outlays to enable the Department to continue working with 
our State and local government partners, as well as with the private 
and volunteer sectors, to ensure the health, safety, and well-being of 
our nation. This proposal is a $32 billion increase in outlays over the 
comparable fiscal year 2004 budget, or an increase of about 6 percent. 
The mandatory programs in the HHS budget total $513 billion in outlays. 
Of this $513 billion, Medicare and Medicaid combine to equal about $474 
billion, an increase of approximately $29 billion or 6.5 percent over 
fiscal year 2004. The discretionary programs in the HHS budget totals 
$67 billion in budget authority. Of this total, this Subcommittee is 
responsible for approximately $63 billion in budget authority, an 
increase of approximately $659 million, or 1.1 percent over fiscal year 
2004 for proposed law, and an increase of approximately $974 million, 
or 1.6 percent over fiscal year 2004 for current law.
    For fiscal years 2004 and 2005, the MMA appropriated $1.0 billion 
in start-up funds so that the Centers for Medicare and Medicaid 
Services (CMS) would have funds available upon enactment to implement 
the enormous increase in new administrative responsibilities under the 
legislation. With rare exceptions, however, these administrative costs 
have typically been categorized in the budget as discretionary. Thus, 
this year the President's budget classifies the $1 billion for CMS 
implementation of the MMA as discretionary.
    In addition, the budget identifies approximately $500 million in 
mandatory program savings for this Subcommittee's consideration. These 
are four legislative proposals that I believe will lead to increased 
cost effectiveness and reduced waste in the Medicare and Medicaid 
programs. First, allowing beneficiaries to purchase durable medical 
equipment after 13 months instead of 15 months is a lower burden for 
our beneficiaries and a savings for Medicare, and it will improve 
access to these products while reducing rental payments. Second, 
requiring the Centers for Medicare and Medicaid Services (CMS) to use 
the Administration for Children and Family's (ACF) wage database will 
allow CMS to identify more quickly whether a beneficiary has employer-
sponsored insurance and to determine whether Medicare should be the 
secondary payer, as opposed to the primary payer, to that other health 
coverage.
    Third, we are proposing to eliminate a windfall to the States by 
reducing Federal reimbursement for Medicaid administrative costs by 
about $300 million. Most states' TANF Block Grants were based on 
expenditures that included the costs of determining Medicaid 
eligibility, but they have also received Federal match for these 
expenditures through Medicaid since TANF's implementation. Our proposal 
seeks to eliminate this double payment for fiscal year 2005. Finally, 
we are proposing to change the enhanced matching rates for 
administrative activities toward systems' improvements, consistent with 
other enhanced rates.

             EXPANDING ACCESS TO HEALTH CARE FOR AMERICANS

    One of the most important issues on which we can continue to work 
together, is expanding access to quality health care for all Americans. 
In 2002, the President launched an initiative to expand access to 
health care by creating 1,200 new or expanded health care sites and 
serving an additional 6 million people by 2006. Since the initiatives 
inception, with the strong bi-partisan support of this Subcommittee, 
the Health Centers program has significantly impacted more than 600 
communities, serving over 13 million patients, 3 million more than in 
2001, 40 percent of who have no health insurance coverage, and many 
others for whom coverage is inadequate. In addition, States use Health 
Insurance Flexibility and Accountability (HIFA) demonstrations to 
expand health care coverage. As of January 2004, HIFA demonstrations 
expanded coverage to 175,000 people and another 646,000 were made 
eligible.
    While we have made significant strides in this endeavor, there is 
still much work to be done. In fiscal year 2005, the President's budget 
request will continue to expand resources for Health Centers to a level 
of $1.8 billion, an increase of $219 million over fiscal year 2004. 
This increase will result in increased services for an additional 1.6 
million people in approximately 330 new and expanded sites. This level 
will provide access to comprehensive preventative and primary care 
services, at over 3,800 health sites nationwide, for a total of almost 
15 million uninsured and underserved individuals, nearly 7 million from 
rural areas.

                           ACCESS TO RECOVERY

    Mr. Chairman, the fiscal year 2005 budget represents the fourth 
year of the President's strong commitment in leading our nation's 
battle against addiction. With your support, we have made significant 
progress. Current use of illicit drugs among students has declined by 
11 percent between 2001 and 2003. However, there continues to be an 
unmet need for drug treatment services. The fiscal year 2005 budget 
will provide 100,000 individuals with drug and alcohol treatment 
benefits by doubling funding to $200 million for the Access to Recovery 
State Voucher Program. This program will allow individuals seeking 
clinical treatment and recovery support services choices among 
qualified community provider organizations, including those that are 
faith-based. The program's emphasis is on objective results and is 
measured by outcomes, including decreased or no substance use, no 
involvement with the criminal justice system, attainment of employment 
or enrollment in school, family and living conditions, and social 
support.

            DISEASE DETECTION AND BIOTERRORISM PREPAREDNESS

    In the past three years, your support for our bioterrorism efforts 
has been unwavering, and together we have made tremendous strides in 
protecting our nation from various threats. While we have made great 
strides, it is imperative that we remain steadfast in our commitment to 
protect our nation and the well-being of all its citizens. The fiscal 
year 2005 request for HHS bioterrorism activities is $4.1 billion, an 
increase of $155 million above fiscal year 2004, and $3.8 billion above 
the fiscal year 2001 level.
    This work will be coordinated with the Global Disease Detection 
Initiative at CDC. The Global Disease Detection Initiative (+$27.5 
million) will help the United States learn more rapidly about new 
disease threats that emerge in other Nations. CDC will recognize 
infectious disease outbreaks abroad faster, and help those nations 
identify and stop those diseases before they arrive in the United 
States. In order to accomplish this task, CDC will expand its presence 
internationally and collaborate with multinational organizations, such 
as the World Health Organization (WHO) to improve overall global 
disease detection, control, and surveillance. CDC will also invest an 
additional $10 million to expand quarantine efforts at ports-of-entry 
for international travelers.
    Funds will be directed to carry out a new interagency bio-
surveillance initiative to prepare against a potential bio-terrorist 
attack. The Centers for Disease Control and Prevention (CDC), in 
coordination with the Food and Drug Administration (FDA), the 
Department of Homeland Security, and the Department of Agriculture, 
will be working to improve the response to bioterrorism through early 
detection with the BioSense Surveillance Initiative. Through this 
program, we will improve human health surveillance, strengthen the 
laboratory response network, and increase the numbers of boarder health 
and quarantine stations, which will allow us to identify and isolate 
potential disease outbreaks more rapidly.
    We also continue our work in building the Strategic National 
Stockpile of drugs, vaccines and medical supplies that can be shipped 
anywhere in the country on short notice, with a request for $400 
million in fiscal year 2005. The fiscal year 2005 budget returns the 
financing of the stockpile to HHS. DHS will continue to have the 
authority to order deployment of the stockpile in an emergency, along 
with HHS. The fiscal year 2005 budget includes a three-year financing 
plan to expand our antibiotic stockpile to be able to provide post-
exposure anthrax treatment from 13 million to 60 million people. In 
fiscal year 2005, we have included a contingency provision that will 
allow us to transfer up to $70 million to the Stockpile from funds 
available for State and local preparedness, should the added funds be 
needed.
    Our nation's ability to detect and counter bioterrorism ultimately 
depends on the state of biomedical science, and the National Institutes 
of Health (NIH) will continue to ensure full coordination of research 
activities with other Federal agencies in this battle. The fiscal year 
2005 budget includes $1.74 billion for NIH biodefense research efforts, 
an increase of $120 million, or +7.4 percent. Included within this 
biodefense total is $150 million to support the construction of 
Biosafety laboratories for NIH to help develop medical protection from 
bioterrorism, and to back up State and Federal public health 
laboratories. Prior to fiscal year 2002, only a few laboratories in the 
United States were capable of conducting research on potential bio-
terrorism agents. The $150 million investment in fiscal year 2005 will 
fund an additional 20 Biosafety Level 3 laboratories across the 
country.
    The ability to mitigate the health effects of radiation exposure in 
the potential event of the use of a limited nuclear or radiological 
device in a terrorist attack presents a critical challenge for which 
little progress has been made in the last forty years. For fiscal year 
2005, $47 million is requested in the budget for the Public Health and 
Social Services Emergency Fund, to be coordinated and managed by NIH. 
This new initiative will support targeted research activities needed to 
develop medical countermeasures to more rapidly and effectively treat 
nuclear or radiological injuries.
    Throughout my time as Secretary, many steps have been taken to 
allow for improved access to vaccines for those in need and better 
methods to combat the spread of influenza viruses. The average Medicare 
reimbursement rate to physicians for the administration of the flu 
vaccine increased from $3.98 per dose in CY 2002, to $7.72 in CY 2003, 
an increase of +94 percent. The payment increased again in 2004 to 
$8.25 per dose. In fiscal year 2004 and 2005, $40 million per year will 
be used for creating a stockpile of children's influenza vaccine to 
ensure this past year's shortages do not reoccur. While these previous 
measures have improved access to vaccines, we must also look toward 
future improvements. It is imperative that the United States develops 
the domestic capacity to produce rapidly the vaccine our nation would 
need in a pandemic. For that reason, the fiscal year 2005 budget seeks 
to double to $100 million our investment to ensure a year round 
production capacity for influenza vaccines to improve our preparedness 
for an influenza pandemic, as well as develop production technologies 
that could be scaled-up rapidly to provide surge capacity during a 
pandemic.

                           CHILDHOOD VACCINES

    The Budget includes two legislative proposals in Vaccines for 
Children that I believe should be strongly supported by the members of 
this Subcommittee. This legislation would enable any child who is 
entitled to receive VFC vaccines to receive them at State and local 
public health clinics. There are hundreds of thousands of children who 
are entitled to VFC vaccines, but can receive them only at Community 
Health Centers and other Federally Qualified Health Centers. The 
proposal ensures VFC coverage of childhood vaccines for VFC eligible 
children when they show up for services at a public health clinic. 
Given the rising cost of childhood vaccines, ensuring access to VFC 
vaccines for eligible children is especially important. Legislation is 
also needed to restore tetanus and diphtheria vaccines to the VFC 
program. The VFC authorization caps prices at such a low level that no 
manufacturer will bid on a VFC contract. As a result, the vaccines that 
are provided to VFC children through the public health system have to 
be financed with scarce discretionary resources. Enactment of the 
legislation the budget proposes would, at the same time, expand by $55 
million the vaccines that are available to children while reducing by 
$110 million the demand for vaccines financed with discretionary 
appropriations.
    CDC will continue to build a six-month, vendor-managed stockpile of 
all routinely recommended childhood vaccines. Between fiscal year 2004 
and fiscal year 2006, CDC will invest an additional $583 million to 
meet target quantities needed for a six-month stockpile. Vaccines from 
the stockpile can be distributed in the event of a disease outbreak and 
will mitigate the effect of any potential manufacturing supply 
disruption.

                   COMPLETION OF THE DOUBLING OF NIH

    I commend you, Mr. Chairman, and this Subcommittee, for your 
commitment in doubling the budget for the National Institutes of 
Health, consistent with the President's request. Building on the 
momentum generated by the fulfillment of the President's commitment to 
complete the five-year doubling of the NIH budget, the fiscal year 2005 
request provides $28.8 billion for NIH. This is an increase of $764 
million, or +2.7 percent, over the fiscal year 2004 level. In fiscal 
year 2005, over $24 billion of the funds requested for NIH will flow 
out to the extramural community, which supports work by more than 
217,000 research personnel affiliated with 2,000 university, hospital, 
and other research facilities across our great nation. These funds will 
support a record total of nearly 40,000 research project grants in 
fiscal year 2005, including an estimated 10,393 new and competing 
awards.
    NIH remains the world's largest and most distinguished organization 
dedicated to maintaining and improving health through the use of 
medical science. Major advances in scientific knowledge, including the 
sequencing of the human genome, are opening dramatic new opportunities 
for biomedical research and providing the foundation for un-imagined 
results in preventing, treating, and curing disease and disability. 
Investment in biomedical research by NIH has driven these advances in 
health care and the quality of life for all Americans, and the fiscal 
year 2005 budget request seeks to capitalize on the resulting 
opportunities to improve the health of the nation.
    In an effort to target gaps and opportunities that no single NIH 
institute could solve alone, the fiscal year 2005 budget allocates $237 
million for the Roadmap for Medical Research initiative, an increase of 
$109 million (or +85 percent) over fiscal year 2004. This initiative 
consists of three core themes of establishing new pathways to 
discovery, inventing the research teams of the future, and re-
engineering the clinical research enterprise.

                 COMMUNITY AND FAITH-BASED INITIATIVES

    In support of the President's Community and Faith-Based Initiative, 
the fiscal year 2005 budget maintains a commitment toward programs that 
link community and faith-based organizations with State, local 
governments, and Federal partners programs. The initiative creates 
results by empowering those at the community level, who can best 
identify the social and health related problems. Those at the community 
level can then act to produce positive results and be agents of change 
in the lives of the most needy.
    The President's budget requests a total of $100 million for the 
Compassion Capital Fund, doubling the fiscal year 2004 level. Initiated 
in fiscal year 2002, the Compassion Capital Fund awards grants to 
organizations which provide technical assistance to help faith-based 
and community organizations access funding sources, operate and manage 
their programs, develop and train staff, expand the reach of programs 
into the community, and replicate promising programs.
    As our nation's prison population continues to rise, another 
important program that reaches our most vulnerable children is the 
Mentoring Children of Prisoners program. Studies indicate that children 
with incarcerated parents have a seven times greater chance of becoming 
incarcerated themselves and are more likely to succumb to substance 
abuse, gangs, early childbearing, and delinquency. This budget request 
includes $50 million, maintaining the fiscal year 2004 level, to 
provide grants to enable public and private organizations to establish 
or expand projects that provide mentoring for children of incarcerated 
parents and those recently released from prison. This activity will 
give 30,000 adolescent children of prisoners a beacon of hope in their 
world of despair.
    The President's budget includes $10 million for Maternity Groups 
Homes as part of the Transitional Living program. This will provide 
pregnant and parenting youth who cannot live safely with their own 
families access to adult-supervised community-based group homes, and a 
range of coordinated services including childcare, job training, and 
counseling.

                           HEAD START PROGRAM

    One of the most fundamental truths in our society today is the 
necessity for a solid educational background to allow all children the 
opportunity to succeed. The initial educational experience is the 
bedrock of our children's healthy growth and development. Mr. Chairman, 
with the generous support of this Subcommittee, we have made a 
significant difference in this beginning stage of our children's growth 
and development. This commitment towards meeting the needs of our most 
vulnerable citizens is unwavering and remains stronger than ever with 
the 2005 President's budget request of $6.9 billion for Head Start. 
This is an increase of $169 million over the fiscal year 2004 level. In 
fiscal year 2005, 919,000 children will receive Head Start services 
including 62,000 children in the Early Head Start program.
    In fiscal year 2005, we will continue to emphasize the goals of the 
President's Good Start, Grow Smart Initiative to strengthen Head Start 
by partnering with States, by providing information on child 
development and early learning to teachers, caregivers, parents, and 
grandparents, and close the gap between research and practice in early 
education. The fiscal year 2005 request includes $45 million to support 
the President's initiative to improve Head Start by funding nine State 
pilot projects coordinating State preschool programs, Federal child 
care grants, and Head Start into a comprehensive system of early 
childhood programs for low income children. The budget also includes 
$124 million to maintain competitive salaries for Head Start teachers 
and to support program enhancements in early literacy and cognitive 
development.

                         PREVENTION INITIATIVES

    More than 1.7 million Americans die of chronic diseases--such as 
heart disease, cancer, and diabetes--each year, accounting for 79 
percent of all U.S. deaths. Although chronic diseases are among the 
most common and costly health problems, they are also among the most 
preventable. The budget includes $915 million for CDC's Chronic Disease 
Prevention and Health Promotion program, an increase of $62 million 
over fiscal year 2004.
    Within this request is $125 million, an increase of $81 million, 
for the Steps To A Healthier U.S. Initiative. This increase will fund 
the State and community grant program initiated this past September to 
reduce the prevalence of diabetes, obesity, and asthma-related 
complications, targeting those at high risk. Last year these funds 
reached 23 communities, including seven large cities, one Tribal 
consortium, and 15 smaller cities and rural areas, and more areas will 
benefit during the upcoming year. Also a total of $10 million will be 
used to expand the Diabetes Detection Initiative, which targets at-risk 
populations. The aim of this initiative is to reach these populations 
where they live, work, and play through a customized, tailored approach 
with the aim of identifying undiagnosed diabetes.
    The fiscal year 2005 budget request for the CDC National Breast and 
Cervical Cancer Early Detection Program (NBCCEDP) is $220 million, an 
increase of $10 million over fiscal year 2004. This program has helped 
to increase mammography use by women aged 50 and older by 18 percent 
since the program's inception in 1991. Efforts are targeted toward low-
income women with little or no health insurance and have helped to 
reduce disparities in screening for women from racial and ethnic 
minorities. With the requested increase, an additional 32,000 
diagnostic and screening services will be provided to women who are 
hard-to-reach and have never been screened for these cancers.

                        MENTAL HEALTH TREATMENT

    In meeting the President's goal of transforming the mental health 
system and increasing access to mental health services for some of our 
most vulnerable citizens, the fiscal year 2005 budget includes $913 
million in discretionary funding for mental health services, an 
increase of $51 million over fiscal year 2004, or +6 percent. As an 
important step in reshaping this delivery system, the budget proposes 
$44 million for State Incentive Grants for Transformation. These new 
grants will support the development of comprehensive State mental 
health plans to reduce system fragmentation and increase services 
available to people living with mental illness.
    Recent studies have found that 20 percent of individuals 
experiencing chronic homelessness also have a serious mental illness. 
This request proposes $10 million for the Samaritan Initiative, an 
Administration-wide initiative to reduce chronic homelessness, jointly 
administered with the Departments of Housing and Urban Development and 
Veterans Affairs. Through this initiative, States and localities will 
develop processes to better enable access to the full range of services 
that chronically homeless people need, including housing, outreach, and 
support services such as mental health services, substance abuse 
treatment, and primary health care.

                           FIGHTING HIV /AIDS

    HIV is one of the most serious and destructive challenges facing 
humanity in our world today. No country, whether large or small, rich 
or poor, can escape the devastation it brings. All have citizens whose 
lives have been destroyed by this horrible disease, and our commitment 
to ending this pandemic is both strong and unwavering. No nation in 
history has ever committed the time, energy, and fiscal resources that 
the United States has invested in this effort. The fiscal year 2005 
total HHS budget will continue this emphasis with the request for HIV/
AIDS funding of $15 billion, or +31 percent over fiscal year 2001 for 
both domestic and global HIV/AIDS prevention, care, treatment, and 
research activities.
    Specifically, the fiscal year 2005 budget includes $784 million for 
States to purchase medications for persons living with HIV/AIDS. At 
this level, monthly AIDS Drug Assistance Programs will increase from 
93,800 clients in fiscal year 2004 to 100,000 clients in fiscal year 
2005. Also included is $53 million for the HIV/AIDS in Minority 
Communities activities to support innovative approaches to HIV/AIDS 
prevention and treatment in minority communities.

                MARRIAGE AND HEALTHY FAMILY DEVELOPMENT

    The President announced an expanded initiative to build on research 
that there are life-long benefits of growing up in married-parent 
families. This initiative, comprised of new and existing programs, has 
four elements: (1) supporting marriage and families; (2) providing 
tools to parents; (3) teaching values to children; and (4) encouraging 
community and faith-based organizations to support families.
    Within this initiative is $273 million to help parents and 
communities provide teens with the tools to make responsible choices 
and abstain from early sexual activity. The budget includes $50 million 
to support a new program that will assist non-custodial fathers in 
becoming more involved in their children's lives, and $107 million to 
nearly double funding for State child abuse programs to reduce the 
incidence of child abuse and neglect and increase services to those who 
are victims.

                   HEALTH CARE INFORMATION TECHNOLOGY

    Improvements in the safety, effectiveness, and efficiency of health 
care, as well as in public health preparedness, can best be achieved by 
the accelerated use of health information technology (IT). Therefore, 
the fiscal year 2005 budget requests $50 million in new funding for a 
Health Care IT initiative. This amount, by funding demonstrations and 
investing in private sector and public program partnerships, will 
accelerate the development and utilization of modern IT in both health 
care and public health. These investments will assist development by 
the private sector of needed standards, examine ways the use of IT can 
be encouraged, coordinate actions across all agencies, and ensure that 
this investment will further the national health information 
infrastructure.
    These resources will be made available to local, regional, tribal 
and State data exchange networks and organizations, to provide the 
infrastructure necessary for exchange of a patient's health information 
within that area, and with other such organizations nationally. In 
addition, technical assistance and resources to these networks and 
information infrastructures will be available. These investments will 
complement and build upon the Agency for Healthcare Research and 
Quality's (AHRQ) demonstration grants and other activities to evaluate 
the effects of IT on the safety and quality of health care--a critical 
component of assuring that IT's positive benefits are adopted broadly.

                  MODERNIZATION AND REFORM INITIATIVES

    With the enactment of Medicare Prescription Drug, Improvement, and 
Modernization Act of 2003, the Department faces many challenges in the 
coming fiscal year. A top priority for CMS, and all Operating Divisions 
within HHS, will be the timely implementation of the sweeping changes 
in the law. As the most significant reform of Medicare since its 
inception in 1965, the law expands health choices for beneficiaries and 
adds a prescription drug benefit. MMA will strengthen and improve 
Medicare, while providing beneficiaries with new benefits and the 
option of retaining their traditional coverage.
    Along with Medicare reform, the President remains fully committed 
to strengthening and empowering America's families through legislation 
supporting welfare reform, modernization of Medicaid and SCHIP, 
increased child support enforcement, and reform of the child welfare 
system.

                        MANAGEMENT IMPROVEMENTS

    Finally, I would like to update the subcommittee on the 
Department's efforts to use our resources and the taxpayer's dollars in 
the most efficient manner. To this end, HHS remains committed to 
setting measurable performance goals for all HHS programs and holding 
managers accountable for achieving results. I am pleased to report that 
HHS is making steady progress. We have made significant strides in 
streamlining and making performance reporting more relevant to both 
decision makers and customers. As a result, the Department is better 
able to use performance results to manage and to improve programs. By 
raising our standards of success, we will continue to improve 
efficiency and increase our ability to improve the health of every 
American citizen.

       IMPROVING THE HEALTH, SAFETY, AND WELL-BEING OF OUR NATION

    Chairman Specter and members of the Subcommittee, I would like to 
thank you once again for your passion and support in working with us in 
this fight to improve the health, safety, and well-being of all 
Americans. The budget I bring before you contains proposals from many 
different areas. These programs, from enhancing the building blocks for 
our youngest and most vulnerable with Head Start, to expanding Health 
Centers to increase the access to quality health care for minorities, 
to protecting our nation from the threat of bio-terrorism, all meet 
vital needs within our communities. All of these proposals, which vary 
greatly in substance, are put forth with one simple overarching goal of 
ensuring the health, safety, and well-being of all Americans. I know 
that this goal is one that we share together, and I look forward to 
your continued support as we move toward turning our passionate 
commitment into positive results for the American people.

    Senator Specter. Thank you very much, Mr. Secretary.
    We will now proceed with our customary 5-minute rounds.

                  PRESCRIPTION DRUG BENEFIT ESTIMATES

    Mr. Secretary, the morning news reports are filled with the 
testimony of Mr. Richard Foster before a House committee 
yesterday, where he, in his capacity as the Medicare programs 
chief actuary, told House Members that he gave an analysis last 
June to the White House and the President's Budget Office which 
was not shared with the Congress, predicting that prescription 
drug benefits being drafted on Capitol Hill would cost about 
$150 billion more than President Bush said he wanted to spend. 
And he further reported that unnamed administration officials, 
or perhaps they are named, threatened to fire him.
    I have two questions for you on that. Do you have any 
personal knowledge that the cost estimate of $150 billion was 
concealed? And, second, do you have any personal knowledge 
about the alleged threats?
    Secretary Thompson. Senator, let me quickly respond, as 
accurately as I possibly can. Number one, I read in the paper, 
after the alleged threat by the Administrator of CMS--I had my 
chief of staff immediately----
    Senator Specter. The first you knew about it was reading 
about it in the newspaper?
    Secretary Thompson. No, no. This was way back in June when 
this took place. I read about it in the newspaper, I heard 
about it, and I had my chief of staff call----
    Senator Specter. And my question is: The first time it came 
to your attention was when you heard news reports?
    Secretary Thompson. That is correct. Last June.
    Senator Specter. Okay.
    Secretary Thompson. And then I had my chief of staff 
contact Mr. Foster and tell him, directly from me, that his job 
was not in jeopardy.
    Now, the actuary's assumptions, based upon that, was only 
for the first section of Senate bill 1, and that was $550 
billion. I did not know of that figure. I did know of the 
assumptions that Rick Foster had projected that we would be 
having more people participate in Medicare, by 94 percent 
versus CBO's number of 87 percent that was publicized. The 
Congress knew about that. The administration knew about that. 
And that was the big difference.
    The second difference on the cost estimates was based upon 
how much is going to be used by low-income seniors. We assumed 
that it's going to be a lot more than CBO. CBO scores it at 87 
percent. We score it at 94 percent. That is a difference of 
about a $100 billion of the $134 billion difference between CBO 
and our actuary. That's based upon assumptions. Those figures 
were known--not the exact figures. The fact is, is that we knew 
that they were going to be more, and we made that to be known 
to the Congress.
    Senator Specter. Well, focus specifically on what Mr. 
Foster----
    Secretary Thompson. Okay.
    Senator Specter [continuing]. Has said. And that is that he 
had a figure of $154 billion more than the President's figure, 
and he did not tell Congress about that $150 billion more.
    Secretary Thompson. Senator, that was based upon an earlier 
bill. That was Senate bill 1 that was introduced--that was the 
chairman's score from the Finance Committee. That was not the 
bill that was debated on the floor of the Senate or the House 
of Representatives. Those figures didn't come out until 
December of this past year, after the bill passed.
    Senator Specter. So are you saying that his allegation is 
factually incorrect, that he did not have information about 
$150 billion excess beyond what the President wanted to spend, 
and that he did not conceal that from the Congress?
    Secretary Thompson. I'm saying that the $150 billion 
difference is based upon an earlier version of the bill, and 
the final version is $134 billion, and that didn't come out 
until December 13. And the $150 billion was based upon only the 
first section of the bill. And there was no--to the best of our 
knowledge, and we have looked through all the records--there 
has not been any written record where any Member of Congress 
has asked for the earlier assumptions or the earlier figures. 
And that's why I've asked the inspector general of my 
Department to get all the facts so that we can report it to 
Congress. I have asked the inspector--have asked the Inspector 
General to make a detailed report to me and to Congress.
    Senator Specter. My red light just went on, and I want to 
observe the time limits, so I'll turn now to Senator Harkin.
    Senator Harkin. Mr. Secretary, I think the record will show 
here that you might have made a little bit of a misstatement, 
because I made a note on this. You said you read about this 
last June in the news reports. You did not read about it last 
June.
    Secretary Thompson. Yes, I did.
    Senator Harkin. There was a news report last June----
    Secretary Thompson. Yes, there was.
    Senator Harkin [continuing]. In the newspapers----
    Secretary Thompson. Absolutely.
    Senator Harkin [continuing]. Saying that there was this 
higher estimate?
    Secretary Thompson. No. No, there was a--the newspaper 
article that was last June was--is that--it came out, it was 
reported by AP, that Mr. Foster had been threatened that he was 
going to lose his job if he didn't send up--and what was 
requested was the score on the benefits of the particular bill, 
on premium support.
    Senator Harkin. Premium support, that's----
    Secretary Thompson. Premium support. And that was what was 
requested. That was what Tom Scully had told Rick Foster not to 
send up. That's what was said.
    Senator Harkin. Okay.
    Secretary Thompson. Then Tom Scully says, ``Somebody made 
the allegation that you're going to get fired if you send it 
up.'' When I heard that, I asked my chief of staff to call--
which he did--call Mr. Foster and say, ``Your job is not in 
jeopardy at all.'' Mr. Foster has testified to that.
    Senator Harkin. Okay, then, I still wonder why we were not 
given those numbers.
    Secretary Thompson. We've looked at it, Senator Harkin, and 
we do not believe there has ever been a written request from 
any Member of Congress--neither the Senate or the House had 
ever requested for those figures. Those figures were 
preliminary figures on Senator Grassley's bill, and it was only 
on the benefit portion, on the drug portion, not the total 
bill. And that figure was $551 billion. And the last figure 
that deals with the bill that was passed was $534 billion.
    Senator Harkin. Uh-huh.
    Secretary Thompson. That's $17 billion difference, and 
that's--and Rick Foster testified yesterday that the final 
figures did not come out until the latter part of December, 
after the bill passed.
    Senator Harkin. That's right. But on June 3, Foster made 
his higher estimate. That's one. That was $150 billion.
    Secretary Thompson. That is--but that was on a different 
bill. That was on----
    Senator Harkin. That was on S. 1.
    Secretary Thompson [continuing]. S. 1. But that was--that 
was the chairman's mark, and that was only on the drug benefit. 
It wasn't on the other seven provisions of the bill, the other 
seven chapters.
    Senator Harkin. Okay. So then the bill passed in November, 
but the bill that passed--it was somewhat different than S. 1, 
obviously.
    Secretary Thompson. Completely different.
    Senator Harkin. Well, I don't know that it was completely 
different; it was somewhat different. But are you saying that 
it made no difference whether or not we knew there was $150 
billion more, or what the estimates were by the time the bill 
passed?
    I guess it just seems to me that, you know, who knew what, 
when, and how they knew it, and all that kind of stuff. It just 
seems to me that we have a fundamental question here. Do you 
think it should be the policy of the administration, any 
administration, that the actuaries officers at CMS provide 
technical assistance to Members of Congress, as I understand 
the practice was before this year? Now, I could be mistaken on 
that. But I understand the practice was that the actuaries 
office at CMS provided information to the relevant committees.
    Secretary Thompson. We have looked at that, and that was 
not the practice, and that's why there was some report language 
put in, in the Balanced Budget Act, because members of the 
Republicans were not able to get it from the actuary under the 
previous administration.
    But to answer your question, Senator Harkin, I think that 
that information should be made available, and I have testified 
to that previously.
    Senator Harkin. I agree with you, because obviously it was 
collected at taxpayers' expense. I mean----
    Secretary Thompson. Yes, sir.
    Senator Harkin [continuing]. This is not some private 
entity doing this, and that--those figures ought to be 
available for policymakers. I don't know what the end result is 
going to be, but I hope it is that we have access to these kind 
of figures in the future, I hope.
    Secretary Thompson. I think you should. I think you will. 
The CBO numbers are the ones that are--and those are the ones--
the CBO still says it's $395 billion, not the $534 billion. And 
there's a logical explanation that I could go into if you would 
want me to, Senator Harkin.
    Senator Harkin. My time is up. I hope we get a second 
round, because I did want to ask you about the Wellness 
Program.
    Senator Specter. There will be a second round, Senator.
    Senator Harkin. Thank you, Mr. Chairman.
    Senator Specter. Senator Cochran.

                           DRUG REIMPORTATION

    Senator Cochran. Mr. Secretary, we've had some debates and 
votes on amendments here in the Senate relating to importation 
of pharmaceutical products from other countries. Are there 
sufficient funds in this budget request to deal with the 
problem of counterfeit or unsafe pharmaceutical products that 
may enter the United States from other countries?
    Secretary Thompson. I don't think so, Senator. I think it's 
a growing problem, and I think that we are doing the best job 
possible. As you know, I requested this Congress, early on when 
I came on, to get enough inspectors to deal with some things 
with food. We have increased it. But, overall, I still think 
that there is a good chance of having counterfeit drugs. And we 
see that every time we stop. We had, as you know, some 
inspections at the border not too long ago, one in July and one 
in September and October of this year, and about 87 percent of 
the drugs that came in were either mislabeled, mis-packaged--
some were counterfeit, some were not certified by FDA, or 
approved by FDA. So a lot of drugs that come into America are 
not regulated by the FDA.
    Senator Cochran. Are you making an effort to bring this to 
the attention of our friends around the world, and try to get 
help there in those countries?
    Secretary Thompson. We are. We have a very strong, 
aggressive outreach program to other countries, especially to 
Canada. But Canada has pretty much indicated that it's not 
their problem, and it's our problem, and that we should address 
it ourselves. We have started hearings. Last Friday was the 
first hearing. I set up a commission, headed up by Surgeon 
General Carmona, to take a look at reimportation, importation, 
as well as ways in which we can develop it.
    We've also set up a task force on counterfeit drugs, and we 
announced that a couple of weeks ago. We're working with the 
Federal Trade Commission and the Department of Justice in 
regards to that.
    We're quite aggressive, but your question was, are there 
enough resources? I don't think there are, because FDA is very 
strapped with all of its demands. And this is a huge problem, 
and if, in fact, we are going to have reimportation, we're 
going to have more resources in order to make sure that this 
reimportation of drugs are safe.

                                VACCINES

    Senator Cochran. In connection with the availability of 
vaccines to deal with threats to the public health----
    Secretary Thompson. Yes.
    Senator Cochran [continuing]. There seems to be a gap 
between what we should have and what we do have in the way of 
an inventory of vaccines, being able to locate them, and then 
mobilize our resources to deliver them where they may be needed 
in case of an outbreak of a disease or illness. Is there any 
effort in the budget to deal with that problem by providing 
funding to the Centers for Disease Control or other agencies 
that could help move us in the direction to deal with that more 
effectively?
    Secretary Thompson. Absolutely, there is, and you've 
already done a great deal, and I wish you could just come down 
and see how we track this. We have got the country split up 
into 12--in 10 regions, but we have 12 strategic locations 
where we have 600 tons of medical supplies, antibiotics, 
vaccines that we can strategically deploy to any city in 
America within 7 hours. It takes nine semi-truck loads or a KC-
135 in order to do so. And we track that.
    We also have got, at the present time, enough smallpox 
vaccine, 400 million doses, to vaccinate every man, woman, and 
child in America. We have enough doxycycline and Cipro, as far 
as anthrax is concerned, to treat 14 million people in America 
for 60 days. We have money in here to go to 20 million, which 
is a huge increase of supplies that we're going to have to put 
in the supplies depots, but we're going to do that.
    We are asking for a BioShield, which is still tied up in 
Congress, and this is going to allow us to reach out to the 
pharmaceutical and biological companies to develop new vaccines 
for tularemia, for the plague, and for hemorrhagic 
superviruses, and so on.
    We're doing a lot, but we can always do more. I'm very 
satisfied with where we are, but I know that we can improve, 
and that's what we intend to do.
    Senator Cochran. Thank you very much for your efforts in 
this area. It's so important to homeland security and the 
health and safety of our American citizens.
    Secretary Thompson. I would hope you'd come down and see 
us, Senator.
    Senator Cochran. I'll do that. I need to go to the Center 
for Disease Control, too. I've never gone down there to take a 
tour around. I've seen photographs of some of the buildings 
that need upgrading----
    Secretary Thompson. Senator Specter's been down there. I'd 
like you to come down there. It's worth your time to do it. 
We're only a block away. If you come down, I can get you 
through in a half an hour, 45 minutes, and I can show you 
exactly how we track diseases and storms and whatever we've got 
to face. It's really an educational type of thing, and it's 
really--I invite you. I'd love to have you come down and host 
you and get a chance to see it.
    Senator Cochran. I accept your invitation, with pleasure.
    Secretary Thompson. Thank you.

                                ORASURE

    Senator Specter. Mr. Secretary, a Pennsylvania company, 
Orasure Technologies, Incorporated, in Bethlehem, has developed 
a 20-minute HIV test, and I know you're familiar with it.
    Secretary Thompson. I'm very excited about it, Senator.
    Senator Specter. On March 10, Orasure met with HHS 
officials regarding additional purchases through the Substance 
Abuse and Mental Health Administration, and was led to believe 
that SAMHSA had committed to a $13 million purchase order; 
however, SAMHSA has now told staff that no such commitment has 
been made, and any potential purchase will be less than $5 
million. You and I have exchanged correspondence on it. I would 
be interested to know whether there was any commitment for a 
$13 million purchase, and what you anticipate by way of a 
purchase in light of the remarkable technology at hand and the 
tremendous need for determining, in Africa and other places, 
whether the people have HIV/AIDS?
    Secretary Thompson. I can't answer you specifically as to 
what was committed by SAMHSA, or if there was a 
misunderstanding, but I will get an answer to you very quickly. 
I'm sorry about that, that I don't have it at the top of my 
head, Senator Specter.
    [The information follows:]
                                Orasure
    We are committed to using new technology to identify undiagnosed 
HIV-positive individuals, help them reduce risk of transmission, and 
refer them to care. In fiscal year 2003 CDC bulk-purchased $2 million 
of rapid tests (250,000 kits), and has placed an additional $2 million 
order for fiscal year 2004. We have also encouraged our international 
partners to consider the OraQuick tests in their efforts to identify 
individuals with HIV/AIDS. The Global Assistance Program countries 
frequently use OraQuick as a tie breaker when two less expensive tests 
give different results.
    SAMHSA submitted a request to the HIV/AIDS in Minority Communities 
Fund to purchase HIV rapid test kits for its HIV/AIDS grantees. At this 
time, no final decision has been made about the level of funding 
available for this request. The HIV/AIDS in Minority Communities Fund 
supports innovative approaches to HIV/AIDS prevention and treatment in 
communities of color. Each year HHS agencies/offices submit proposals 
for activities to reduce the disproportionate impact of HIV/AIDS on 
racial and ethnic minorities. In fiscal year 2003, a total of eight 
agencies/offices received dollars from this fund. It is our hope to 
reach final decisions on these dollars very shortly.

            GLOBAL FUNDS FOR AIDS, MALARIA, AND TUBERCULOSIS

    Secretary Thompson. In regards to Africa, as you know, I'm 
chairman of the Global Fund for fighting AIDS, malaria, and 
tuberculosis. I advised--we just came back from Geneva this 
past--we had our seventh board meeting, and I advised the board 
of this new, innovative idea that Orasure has come up with. The 
problem we have in the Global Fund is that it will use Orasure 
to be the arbitrator. They don't use it for the basics. I mean, 
they have a cheaper product. And if there's some question as to 
the accuracy, then they bring in Orasure to determine for sure. 
When they came out with this new quick test, I'm hoping to be 
able to push through the Global Fund to be able to be a bigger 
user of Orasure's product, because I'm very sold on it, and I'm 
very--I think the company is doing a tremendous job, and I 
think it could help save us money in the future.
    Senator Specter. Well, thank you for that answer and for 
your assurances that you will take a look to see what 
commitments----
    Secretary Thompson. I will.
    Senator Specter [continuing]. Have been made by SAMHSA or 
others in your Department.

                          CDC AND NIH BUDGETS

    A two-part question, Mr. Secretary. Your budget document 
states there is a growing concern that the next public-health 
emergency could overwhelm current capacities to respond, and 
would likely overwhelm CDC's current capabilities. How can we 
realistically cut the CDC budget by $116 million on their 
overall budget, and almost 180 million on their buildings and 
facilities, in the light of their mission and the tremendous 
threats?
    The second question I have for you relates to the budget of 
the National Institutes of Health, where we are facing a 
situation with the administration request to lead to a drastic 
curtailment of NIH awards.
    If you would respond to those two questions, I would 
appreciate it.
    Secretary Thompson. Thank you. And let me quickly respond 
so I can get to both of them.
    In regards to CDC, let me say that I let you down, Senator. 
I did not sell as effective as I thought I should have been 
able to, to get a little more money into buildings. That is the 
big difference in the reduction at CDC. As you all know, and 
you've been the leader in this, we're trying to get $250 
million a year down there, and we came in with a budget of $82 
million, of which $40-some million is going to Fort Collins. 
That is the big difference. A reduction in the VERB program was 
the other. I gave Director Gerberding, Assistant Secretary 
Julie Gerberding, an allotment of what she could do. She came 
in with the best budget she could. I think it's quite good.
    In regards to overwhelming the resources, the biggest thing 
I'm concerned about right now is a pandemic flu, and we have 
put some additional money in there, $50 million in the CDC, 
I've got $50 million into my accounts, in order to try and make 
sure that we are prepared to try and move companies from the 
egg culture to the cell culture, especially with avian flu that 
may come or may not come. I am very concerned about that. And 
avian flu could have the potential for destroying some of the 
egg stock because it affects chickens, and so we're trying to 
do something.
    In regards to NIH, we still, under our budget, are going to 
be able to give out more grants. Where we saved the dollars was 
reducing what was called the cost of increase to the cost of 
inflation over the 4-year grants, and we reduced that 
approximately from about 3.3 percent down to about 1.3 percent. 
But next year, even if our budget--if Congress doesn't put more 
money into it, there will be more grants out there than there 
has been before. And since I've been Secretary, thanks to you, 
the Congress leadership in giving us the dollars, we have gone 
up by 30 percent in grant applications, in grant requests, in 
grant approvals, and 42 percent increase in the amount of 
dollars that those grants have been able to receive.
    Senator Specter. My red light went on in the middle of your 
answer, Mr. Secretary. And we will be submitting more detailed 
questions on NIH----
    Secretary Thompson. Thank you.
    Senator Specter [continuing]. For the record.
    Secretary Thompson. I would be more than happy to answer 
them, sir.
    Senator Specter. We've been joined by the distinguished 
chairman of the full committee.
    Senator Stevens.

                          HEALTHCARE DELIVERY

    Senator Stevens. Thank you, Mr. Chairman. I do have three 
other areas to stop by--I stopped by here, Mr. Chairman, 
because I don't think any person in history has brought more 
hope to the Alaska native people in the area of healthcare 
delivery than Secretary Thompson, and I'm----
    Secretary Thompson. Thank you.
    Senator Stevens [continuing]. Here to thank you very much 
and, what's more, to invite you back again. Your annual visits 
really bring great hope to our people.

                       ALASKA DENTAL ASSOCIATION

    You may be interested to know that yesterday, for the first 
time, the American Dental Association, the Alaska Dental 
Association, approached me with the idea of trying to interface 
some dental care into the village health clinics. That has been 
a total gap, in terms of the care----
    Secretary Thompson. Huge gap.
    Senator Stevens [continuing]. Of Alaska natives. It's 
really great news. They came forward on their own, and I look 
forward to working with you and with your people on trying to 
partnership with them. They're willing to take on part of the 
cost. It's a very interesting thing.

                      POSITRON EMISSION TOMOGRAPHY

    I also am grateful to you for what you've done to help us 
try to move CMS forward to bring about the favorable coverage 
decision for PET, positron emission tomography. I do believe, 
Mr. Chairman, that there's no system that holds more hope for 
dealing with the baby-boom generation than PET, in terms of 
trying to get a handle on Alzheimer's and those diseases 
related to dementia. And, clearly, if we follow through in that 
generation with the amount of Alzheimer's we've had in my 
generation, the cost is going to be overwhelming. We must find 
some way to deal with it, and at least PET will give us a 
chance for our medical researchers going ahead to try and find 
a cure to slow it down and to provide the opportunity, through 
the prescription drugs already on the scene, to deal with 
severe symptoms and to give those seniors with Alzheimer's a 
chance to have a fairly decent life as they can--into that 
terminal period. I can't thank you enough for that.
    I do have a couple of questions that I would like to submit 
for the record, if I may, Mr. Chairman. And I thank you for 
your courtesy.

                                OBESITY

    My last comment would be, keep up the battle against 
obesity.
    Secretary Thompson. Thank you.
    Senator Stevens. You know, we're just back on a journey 
through the Middle East, Mr. Secretary--Jordan, Iraq, Kuwait, 
Pakistan, Afghanistan, and even into France. We're the only 
nation that really has this terrible, terrible addiction to 
obesity, that I saw on that whole trip. Not our military men 
and women, thank God. They get the discipline when they're 
fairly young, and I hope it carries through for them. But for 
our community at large, I think obesity is becoming a number-
one challenge to our survival. So I would hope we would all 
join with him and help him as much as possible.
    Thank you for your courtesy.
    Secretary Thompson. Thank you very much, Senator Stevens, 
and let me just thank you for your leadership. And, yes, I will 
be back in Alaska. I told you I'd go back to Alaska every year 
as long as I'm Secretary, and we've made some progress; not as 
much as you or I would like, but we're making some, and we'll 
be back there, and we've still got to work on the water and 
sewer for Alaska natives, because that is still--it's a huge 
problem, and I know you're the leader in that that, and I 
applaud you.

                           prepared statement

    Senator Stevens. Well, when your nearest neighbor is 500 
miles away in every direction, and you have a hundred people, 
hope is a great thing.
    Secretary Thompson. Yes, sir.
    Senator Stevens. And you've brought hope to those people, 
and I want to help you continue that.
    Secretary Thompson. Thank you very much.
    Senator Stevens. Mr. Chairman.
    [The statement follows:]
               Prepared Statement of Senator Ted Stevens
    Thank you Mr. Chairman. Secretary Thompson, it's a pleasure to see 
you here today. Once again I want to express my appreciation for your 
leadership on a host of issues that are of vital importance to all 
Americans. I especially want to thank you for all that you have done 
for Alaska. We are looking forward to having you visit us again this 
summer.
    I am also very grateful to you for helping get C.M.S. moving 
forward to a favorable coverage decision for PET scans to help diagnose 
Alzheimer's disease in Medicare patients at an earlier time than any 
other diagnostic test. That coverage will give many seniors who 
discover they have Alzheimer's a chance to slow the progress of the 
disease with medication before its incapacitating symptoms appear.
    Mr. Secretary, I believe we will be facing a crisis of huge 
proportions when Alzheimer's begins to strike the baby boom generation. 
I hope our investment in medical research at NIH will produce a cure 
before that time. But, in the meantime, early diagnosis of Alzheimer's 
disease, through pet, coupled with currently available prescription 
drugs begun at a stage before the most severe symptoms appear, will 
help many seniors continue to lead productive and reasonably healthy 
lives.
    I'm also pleased that you were finally successful in including 
funding in your fiscal year 2005 budget for the Denali Commission. 
While it is less than our fiscal year 2004 number, I know that you have 
worked hard to have those funds included in your budget because you 
have seen first hand many of the infrastructure projects the commission 
has funded in remote parts of Alaska.
    I am concerned that several programs that fund rural health 
activities, like the Rural Outreach grants and Rural Hospital 
Flexibility grants have been eliminated. Both of these programs, while 
relatively small ones, have benefited remote communities in Alaska and 
other rural States that need special help to provide needed health 
services. I know this is a very tight budget, but I urge you to work 
with the subcommittee to restore funding for these programs.
    Another matter of concern to me is our Nation's growing epidemic of 
obesity. Mr. Secretary, you are to be applauded for your personal 
leadership in this area, beginning with your putting the Department on 
a diet and encouraging physical activity. I hope you will continue to 
push forward, because yours is a message we must heed. A recent report 
from the CDC tells us that obesity will soon overtake smoking as the 
Nation's leading cause of preventable death. I will be pleased to work 
together with you in your efforts to make us a healthier Nation.
    Mr. Secretary, again I thank you for your tireless efforts to 
improve the health and well being of Alaskans and other Americans.

    Senator Specter. Thank you, Senator Stevens.
    Senator Harkin.
    Senator Harkin. Thank you, Mr. Chairman.

                  MONEY FOLLOWS THE PERSON INITIATIVE

    Mr. Secretary, as I said in my opening statement, I know 
you've long supported the right of people with disabilities to 
choose to live in their neighborhoods and communities, rather 
than nursing homes and institutions. Along with Senators 
Specter and Smith, we introduced a bill last summer to get the 
Money Follows the Person Initiative, as it's called, enacted 
last summer. As I said earlier, you included funds for this 
initiative in your fiscal year 2005 budget, for which we're 
very appreciative. I understand the Finance Committee is going 
to hold hearings on this issue on April 7. Again, these are all 
good first steps, but we really need your support to get this 
bill moving through Congress and signed into law.
    I haven't really heard of any real opposition to it. It's 
just, sort of, we've got to get it moving. You know, we hear a 
lot of talk about the New Freedom Initiative and everything, 
and we're all very supportive, but nothing seems to happen. I 
guess I'm just asking if you could really help with the 
administration and getting this thing moving through Congress 
this year. That's all I'm asking.
    Secretary Thompson. Absolutely. I am as passionate about 
it, hopefully, as you are, Senator. And I want to see it done, 
because I'm not going to be here next year, and I want to make 
sure that we get it through before I leave, and then I'm--I 
have talked to Senator Grassley on it, and he's going to hold a 
hearing on it. I'm hoping he'll get the bill introduced quickly 
so we can start getting co-authors on it and start getting 
bipartisan support. I don't think there's that much--any 
opposition to it. I think we've just got to get the time to get 
it through the committee and on the floor and through both 
houses. And I know the President's going to sign it. So let's 
work together on a bipartisan basis and make sure it gets 
completed this year.
    Senator Harkin. Well, I appreciate that, and I just--
whatever we can do to help, but you can also be very 
influential in----
    Secretary Thompson. Thank you.
    Senator Harkin [continuing]. Move it through. And I know 
you're passionate about it. And I agree with you, we've got to 
get it through this year.

                             FOOD LABELING

    The second part of my question is, I had--I said I'm--
again, I'm really appreciative of all that you're doing 
personally, and, through you, your Department, on this issue of 
obesity and wellness, and personal wellness as, sort of, a 
thing that we've got to be focusing on. I am somewhat puzzled, 
however, by the fact that many of the recommendations 
pertaining to the food industry and the labeling of foods, 
especially restaurant foods, are voluntary rather than 
mandatory.
    As the FDA report notes, food consumed away from the home 
has increased from 33 percent of consumers' food budgets in 
1970 to 47 percent in 2002. Over the same period, total 
calories consumed from food purchased outside the home 
increased from 18 percent to 32 percent. I guess my question is 
this: Why, then, despite FDA's own assertion that the food 
labeling required under the original National Labeling 
Education Act has been helpful to the consumers, and despite 
the fact that your focus groups show that consumers would like 
more labeling in restaurants, why do does the report recommend, 
quote, ``urge'' the restaurant industry to launch a nationwide, 
quote, ``voluntary'' and point-of-sale information campaign for 
customers, rather than some sort of mandatory labeling 
requirement? I guess that's the essence of my question. Why 
voluntary? Why not have some mandatory labeling requirement for 
that information?
    Secretary Thompson. It's a different way to approach the 
problem. I'm not saying one approach is that much better over 
the other one. Every month I sit down with a different group of 
people. I've met with the Restaurant Association now three 
times. I have asked them to put more information on their 
menus. Most of them are complying. It was a tough sell in the 
first meeting. Every meeting since then has been getting 
better, Senator. And the last one was a very friendly meeting 
in which they were volunteering many more menu items that are 
going to be heart-healthy and low carbs and better, and they're 
going to be more informative.
    Number two, I have met with the health insurance companies 
many times. I met the health insurance, health companies, 
medical companies, and so on. I do this on a monthly basis. I 
bring in a different group to talk about prevention. And we 
continue to do that. We're holding a summit, I believe, next 
week, in Baltimore, on prevention, and we're having, I believe, 
1,200 people that have signed up already to do it. So I'm using 
the bully pulpit because I believe, like you do, of $1.5 
trillion, 75 percent is for chronic illnesses--$155 billion for 
tobacco-related diseases, 442,000 people die; $135 billion for 
diabetes, 200 million Americans die; $117 billion on obesity. 
And I think we can do a lot better job. And I just think right 
now we can do it by pushing rather than hammering them.
    Senator Harkin. Well, Mr. Secretary, I was here when we 
pushed through the labeling for packaged goods in grocery 
stores. We had the same arguments then from the grocery people. 
The grocery manufacturers--oh, my gosh--``We changed the 
contents of boxes. We can't be doing this. And it's just going 
to be awful. It's just going to cost so much money.'' We went 
ahead and did it, and, you know, not even a blip. And yet 
people rely on that today. They go to grocery stores--it's 
taken some years, but now you look, I think the figures are 
over 60-some percent in surveys--people go to grocery stores, 
look at those labels to find out what they're buying.
    Now, Ruby Tuesday, I don't know anybody--I don't know Ruby 
Tuesday--who owns it or who runs it, but I have a feeling they 
had a lot to do with these people now being more willing to put 
things on their menus, because Ruby Tuesday voluntarily said 
they're going to put it all in.
    Let me just show--where's my chart? They were saying how 
onerous it was going to be. Here's a typical menu. And all they 
did is, they put the calories, the saturated fat, and sodium 
for each item. It's not a big deal.
    Secretary Thompson. It is not.
    Senator Harkin. It's not a big deal.
    Secretary Thompson. And it's very enlightening. And that's 
what we've got. We're changing the labeling out at FDA. We set 
up a committee. We're going to have some new labels with more 
information as to calories, portion size. And that's coming to 
FDA.
    Senator Harkin. But, again--and I know my time is up--I'm 
all for volunteerism, but FDA is also in the business of 
regulation and mandating, and we've been through this before, 
because it is such a health crisis. I, again, urge you to get 
the FDA involved in setting down a mandatory--there's 
legislation here, as you know, to do that, pending in the 
Senate and the House, to get the FDA to set down regulations on 
information of fat, calories, sodium on menus in restaurants. 
Rather than urging them--and you can urge and urge and urge. 
Some will do it, but not all of them will.
    Secretary Thompson. I think you're going to see a lot of 
that kind of information on the labels when we come out later 
on this summer, Senator.
    Senator Harkin. Well, I hope so.
    Secretary Thompson. I think you'll be very happy with it.
    Senator Harkin. But, again, I guess my rhetorical response 
might be, well, should we undo the regulations on the labeling 
regarding packaged good, and just make that voluntary?
    Secretary Thompson. No.
    Senator Harkin. Of course not. Of course not. So I think 
this is, sort of, the next step in that, and I still believe 
that--I hope voluntarily everybody does it, but then you're 
going to have--maybe one will voluntarily put this information, 
someone will put this information.
    Secretary Thompson. No, we're going to have uniform 
standards, and I'm going to be rolling those out this summer.
    Senator Harkin. But they'll be voluntary.
    Secretary Thompson. Most of them will be at this point.
    Senator Harkin. So I won't have to abide by it. I'll put 
whatever I want to on it. Rather than putting the total 
calories and what that double-cheese, double-whatever-it-is, 
and these fries, I might put it on for a 6-ounce portion.
    Secretary Thompson. I think we're going to be much more 
successful than you think, Senator.
    Senator Harkin. Well----
    Secretary Thompson. I hope, anyway.
    Senator Harkin. Well, we can hope. We can hope. But it 
seems to me they've got to be pretty stringent and 
straightforward. But if it's voluntarily, you'll get a mismatch 
of all kinds of different information on stuff, and they will 
try to confuse people, because we've seen that happen in the 
past without the kind of things we have on the packaged goods. 
And we have a problem there, too, a little bit, as you know, 
because they use different sizes. And the FDA is getting ready 
to address that, and I applaud that.
    Secretary Thompson. Yes, we are.
    Senator Harkin. Thank you, Mr. Chairman, for letting me go 
over my time.
    Senator Specter. Thank you, Senator Harkin.

                           HEALTH PROFESSIONS

    Mr. Secretary, there are three questions that I would like 
to state now, and ask you to respond to for the record.
    With respect to health professionals, Mr. Secretary, I 
would like you to answer, for the record, how we can 
realistically cut the $300 million reduction on those programs 
in light of the urgent shortage of health professionals, 
especially in rural areas. Your budget justifies that by an 
additional $25 million to the National Health Service Corps, 
which, frankly, I don't see the relationship. But if you would 
respond for the record, we would appreciate it.

                          ABSTINENCE EDUCATION

    Number two, on the abstinence initiative, this is a program 
that I think is very meritorious, abstinence education, and we 
would like a response on the evaluation that your Department is 
having as to how well these programs are working.

                           STEM CELL RESEARCH

    And, third, as to stem cells, this continues to be a highly 
controversial subject. Those who oppose embryonic stem-cell 
research seek to tar those who favor it with the accusation 
that human cloning is supported, which, of course, is factually 
untrue. It's totally different, nuclear transplantation. But we 
would like you to respond as to your evaluation as to the 
availability of the 63 lines the President referred to on his 
famous declaration, back on August 9, 2001 in his 9 o'clock 
speech--the line was expanded to 70--and what has happened 
there, and how many of those are really usable, untainted with 
mouse feeder, and what is happening elsewhere. We hear periodic 
reports, but you are the central figure in the Federal 
Government. Give us the specifics on what's going on in South 
Korea or other places, or what Harvard is doing with reported 
$100 million program, another report about things going on in 
Minnesota. And I see these periodically in the press, but we 
really ought to collate all of this in one central repository 
so we know what is happening on this very important subject, 
which is the cutting edge of real opportunity to make inroads 
against the most dreaded maladies of the era. I know your 
personal thinking on the subject, and I know that--the 
complexities of the issue, but, at the minimum, as of this 
time, we ought to have the facts before us as to what is 
happening there to make a judgement.
    Well, thank you very much for coming in, Mr. Secretary.
    Secretary Thompson. Thank you, Senator.
    Senator Specter. I'd like to meet with you privately for a 
moment or two after the hearing.

                     ADDITIONAL COMMITTEE QUESTIONS

    There will be some additional questions which will be 
submitted for your response in the record.
    [The following questions were not asked at the hearing, but 
were submitted to the Department for response subsequent to the 
hearing:]
              Questions Submitted by Senator Arlen Specter

                           HEALTH PROFESSIONS

    Question. With respect to health professionals, Mr. Secretary, I 
would like you to answer, for the record, how we can realistically cut 
the $300 million reduction on those programs in light of the urgent 
shortage of health professionals, especially in rural areas?
    Answer. Over the past two decades, we have invested over $6 billion 
on general health professions training grants. However, as we shape 
future spending, we will concentrate on directly supporting efforts 
that improve health professions shortages, focus on emerging workforce 
demands, and meet the needs of the underserved.
    The President's budget makes a substantial investment in expanding 
access to health care to underserved communities through the Health 
Centers program and the National Health Services Corps. In fiscal year 
2005, the Health Centers program is on-track to meet the President's 
five-year goal to increase access to health care in 1,200 communities 
with new and significantly expanded health center sites and increase 
the number of people served by over 6 million. Further, the President's 
budget supports approximately 2,750 loan repayments and scholarships 
for health care professionals in the neediest communities through the 
National Health Services Corps program.
    The new rural health care investments created by the Medicare 
Prescription Drug, Improvement and Modernization Act (MMA) will mean 
greater access to hospitals, health professionals and other medical 
services for rural seniors. It is estimated that the major rural 
provisions of the MMA will increase Medicare spending in rural America 
by $20 billion over 10 years. In addition to substantially increasing 
Medicare reimbursement for rural hospitals, a focal point for health 
care in rural communities, the MMA will also increase reimbursement for 
physicians, and other health care providers, in rural areas. For 
example, the Act establishes a new 5 percent incentive payment for 
physicians practicing in physician scarcity areas which include many 
rural communities.

                               ABSTINENCE

    Question. On the abstinence initiative, this is a program that I 
think is very meritorious, abstinence education, and we would like a 
response on the evaluation that your Department is having as to how 
well these programs are working.
    Answer. The Department is currently funding two independent, 
rigorous, longitudinal evaluations of abstinence education programs. 
The first is an on-going evaluation of a select number of State Section 
510 abstinence education programs. It is being conducted by Mathematica 
Policy Research (MPR). The second evaluation effort is currently in 
design phase. It will examine the effectiveness of community-based 
abstinence education programs and other approaches to teen pregnancy 
and STD prevention. Both of these evaluation efforts are overseen by 
the Office of the Assistant Secretary for Planning and Evaluation 
(ASPE).
    An implementation report from the ongoing MPR evaluation was issued 
in April 2002. It documented a wide range of abstinence education 
programs that have been well received. They are innovative in their 
approach to promoting abstinence as the healthiest choice for youth. 
These programs incorporate activities that have been shown to be 
effective: an emphasis on goal setting; developing decision-making 
skills; getting parents, schools, and communities involved in 
supporting the healthy development of youth.
    The programs are diverse, creative, and offer youth much more than 
a single message of abstinence. Youth responded positively to program 
staff who showed a strong and unambiguous commitment to the program 
message, and programs that used an intensive set of youth development 
services to enhance and support the abstinence message were very well 
received. The report showed that addressing peer pressure is difficult, 
and many programs have struggled to address these issues and engage 
parents in this process. This report also offered a description of the 
ways in which programs have partnered with local schools to provide 
abstinence education, highlighting some of the challenges to creating 
and sustaining these partnerships.
    The MPR evaluation has an end date of September 30, 2006. The 
original time frame in the statute under which the evaluation project 
is operating was through September 2001. However, the contractor and 
others have recognized the need for a longer-term follow-up period in 
which to examine the program effects on youth. As a result, the 
contract period has been extended through September 2006.
    ASPE is also in the process of designing an evaluation of 
community-based abstinence education activities and other approaches to 
teen pregnancy and STD prevention. ASPE contracted Abt Associates to 
develop evaluation designs for a longitudinal, rigorous impact study, 
which will help best answer some of the original policy questions that 
were the impetus for this study. The study will follow adolescents 
through high school, and will measure the impact of these programs on 
behavioral outcomes, including the reduction and prevention of out-of-
wedlock pregnancies and sexually transmitted diseases (both viral and 
bacterial). Other key outcome variables of interest include age at 
first sexual activity and intercourse, frequency of sexual activity and 
intercourse, and number of individuals who postpone sexual activity or 
intercourse through adolescence.

                           STEM CELL RESEARCH

    Question.What is the status of the human embryonic stem cell (hESC) 
derivations listed on the NIH Stem Cell Registry? How many are in 
private hands? How many have been grown on mouse feeder layers? How 
many are viable?
    Answer. All of the derivations listed on the NIH Human Embryonic 
Stem Cell Registry are privately owned by 15 different companies or 
academic institutions. The providers indicated by an asterisk (*) below 
are recipients of the NIH Infrastructure award to develop, characterize 
and distribute cell lines.
    BresaGen, Inc., Athens, Georgia*
    --4 derivations
    --3 lines available
    --The cells in derivation BG04/hESBGN-04 failed to expand into 
            undifferentiated cell cultures.
    Cell & Gene Therapy Research Institute (Pochon CHA University), 
Seoul Korea
    --2 derivations
    --0 lines available
    Cellartis (formerly Cell Therapeutics Scandinavia), Goteborg, 
Sweden*
    --3 derivations
    --2 lines available
    --Cell line SA03/Salgrenska 3 was withdrawn by donor.
    CyThera, Inc., San Diego, California*
    --9 derivations
    --0 lines available
    --The cells failed to expand into undifferentiated cell cultures.
    ES Cell International, Melbourne, Australia*
    --6 derivations
    --6 lines available
    Geron Corporation, Menlo Park, California
    --7 derivations, all duplicates of Wisconsin Alumni Research Fdn. 
            derivations
    Goteborg University, Goteborg, Sweden
    --16 derivations, reported to have not been exposed to mouse feeder 
            layers
    --0 lines available
    Karolinska Institute, Stockholm, Sweden*
    --6 derivations
    --0 lines available
    --The cells failed to expand into undifferentiated cell cultures.
    Maria Biotech Co. Ltd.--Maria Infertility Hospital Medical 
Institute, Seoul, Korea
    --3 derivations
    --0 lines available
    MizMedi Hospital--Seoul National University, Seoul, Korea*
    --1 derivation
    --1 line available
    National Centre for Biological Science/Tata Institute of 
Fundamental Research, Bangalore, India
    --3 derivations
    --0 lines available
    Reliance Life Sciences, Mumbai, India
    --7 derivations
    --0 lines available
    Technion-Israel Institute of Technology, Haifa, Israel*
    --4 derivations
    --2 lines available
    University of California, San Francisco, California*
    --2 derivations
    --2 lines available
    Wisconsin Alumni Research Foundation, Madison, Wisconsin*
    --5 derivations
    --5 lines available
    Of the 78 entries on the Registry, 71 are from independent embryos 
and 7 are duplicates located at both WiCell (Wisconsin Alumni Research 
Fdn.) and Geron. The Geron cell lines are not being widely distributed 
to the research community.
    Of the 71 independent derivations:
  --16 have failed to expand into self renewing, pluripotent cell lines 
        (9 at CyThera, 1 at BresaGen, 6 at Karolinska), and 1 line was 
        withdrawn by the donor at Cellartis (formerly Cell Therapeutics 
        Scandinavia, CTS). NIH provided Infrastructure support in 
        failed attempts to expand these 16 derivations into 
        distribution-quality cell lines.
  --Of the remaining 54 independent derivations, 21 are available for 
        shipment, after expansion and characterization using NIH 
        Infrastructure grant awards. The 21 that are currently 
        available are:
                BresaGen, Inc.--BG01, BG02, BG03
                Cellartis--SA01, SA02
                ES Cell International--ES01, ES02, ES03, ES04, ES05, 
                ES06 4
                MizMedi Hospital--MI01
    4Technion-Israel--TE03, TE06
                UCSF--UC01, UC06
                WiCell--WA01, WA07, WA09, WA13, WA14
  --Of the remaining 33 independent derivations, 2 more are at 
        institutions with NIH Infrastructure awards. If these 2 were 
        developed into distribution quality cell lines ready for 
        shipment, there would be 23 independent cell lines available to 
        the research community. The 2 cell lines under development are:
                Technion-Israel--TE04, TE07
  --The remaining 31 independent derivations are all at institutions 
        located outside of the United States that have not applied for 
        NIH Infrastructure awards to develop their cell lines. Any 
        plans to develop these derivations into cell lines that are 
        available to the research community are unclear at this time. 
        The 31 derivations at institutions that do not have 
        Infrastructure awards are:
                Pochon CHA (Korea)--2 derivations
                Goteborg Univ. (Sweden)--16 derivations
                Maria Biotech (Korea)--3 derivations
                National Centre for Biological Sciences (India)--3 
                derivations
                Reliance Life Sciences (India)--7 derivations
    As far as we know, all derivations have been exposed to mouse 
feeder cells, with the exception of the 16 derivations at Goteborg 
University (Sweden).
    Information on the detailed characteristics of each of the 
derivations is available on the NIH Human Embryonic Stem Cell Registry, 
http://escr.nih.gov.
    Question. What is Happening at Harvard University?
    Answer. On March 25, 2004, Harvard University announced the 
derivation of 17 hESC lines in an article published in the New England 
Journal of Medicine. Funding for the derivations and distribution of 
these lines is being provided by the Howard Hughes Medical Institute, 
Juvenile Diabetes Research Foundation and Harvard University.
    On April 23, Harvard University announced the establishment of the 
Harvard Stem Cell Institute. According to Harvard, the Institute will 
encourage adult and embryonic stem cell research using both animal and 
human stem cells. The Institute has two co-directors: Harvard Medical 
School Professor David Scadden, who also directs Massachusetts General 
Hospital's Center for Regenerative Medicine and Technology, and Douglas 
Melton, the Thomas Dudley Cabot Professor of the Natural Sciences and a 
Howard Hughes Medical Institute investigator.
    Research at the Institute will be focused on five areas of disease 
for which stem cell therapy seems most promising. The diseases all 
result from some sort of organ or tissue failure and include: diabetes, 
neurodegenerative diseases, blood diseases, immune diseases, 
cardiovascular disease, and musculoskeletal diseases.
    Although research on the 17 new human embryonic stem cell (hESC) 
derivations are not eligible for Federal funding, NIH is currently 
supporting several scientists at Harvard University whose hESC research 
use lines eligible for Federal funding. Dr. Doug Melton is working to 
identify the genes involved in hESC self-renewal and differentiation. 
Dr. George Daley is studying hematopoietic development from hESCs. Dr. 
Howard Green is working to develop the culture conditions to coax hESCs 
to become the keratinocytes that make up human skin's epidermis. Dr. 
Jeffrey Harper is analyzing the signals that control hESC division.
    Question. What is Happening in South Korea? What is Happening in 
Other Countries?
    Answer. On February 12, 2004, South Korean researchers published 
the first scientifically credible report of the creation of a cloned 
human embryo in the laboratory by means of somatic cell nuclear 
transfer (SCNT) (Science 303: 1669-1674.) These scientists, supported 
by the South Korean government, then used these cloned embryos to 
establish a human embryonic stem cell line. They combined the DNA of a 
woman's ovary cell with her donated egg, from which the nucleus had 
been removed, and then stimulated the newly combined cell to divide. 
The resulting very early embryo was then allowed to develop to the 
blastocyst stage (five to nine days), at which point it was 
disaggregated and the highly potent stem cells of the inner cell mass 
were removed. These stem cells were then treated to produce a stem cell 
line to be used for various kinds of biomedical research. Subsequent to 
the publication of the SCNT study, the South Korean government voted to 
ban the creation of cloned human embryos, but might allow cloning for 
biomedical research on a case-by-case for medical treatment subject to 
approval by a National Bioethics Advisory Commission. Scientists will 
be permitted to use spare frozen embryos, left over from infertility 
treatments and kept in laboratories for at least five years, for 
limited stem cell research into treatments for hard-to-cure diseases. 
The regulations banning human cloning are expected to come into effect 
after President Roh Moo-hyun signs the bill. The regulations on stem 
cell research will go into effect in 2005.

Other International Stem Cell Efforts

            International Society for Stem Cell Research (ISSCR)
    The International Society for Stem Cell Research is an independent, 
nonprofit organization established to promote and foster the exchange 
and dissemination of information and ideas relating to stem cells, to 
encourage the general field of research involving stem cells and to 
promote professional and public education in all areas of stem cell 
research and application. Opinions on the legitimacy of experiments 
using human embryos vary among members of the European Union (EU) 
according to the different ethical, philosophical and religious 
principles in which they are grounded. EU member states have taken very 
different positions on the regulation of human embryonic stem cell 
research and cloning for biomedical research. More information about 
the regulations and policies of EU members can be found on the website 
of the ISSCR at the following link: http://www.isscr.org/scientists/
legislative.htm.

            The International Stem Cell Forum (ISCF)
    The ISCF was founded in January 2003 to encourage international 
collaboration and funding support for stem cell research, with the 
overall aim of promoting global good practice and accelerating progress 
in this vitally important area of biomedical science. The Forum's long-
term aim is to help stem cell scientists achieve a range of 
revolutionary medical advances that will benefit people throughout the 
world. The ISCF is led by the United Kingdom's Medical Research Council 
and consists of 14 leading supporters of stem cell research from around 
the world. Member organizations are based in the United States, 
Finland, Australia, Canada, Germany, France, Israel, Netherlands, 
Japan, Singapore, Sweden, Switzerland, and the United Kingdom. Within 
ISCF, the United States is represented by the NIH. The Juvenile 
Diabetes Research Foundation International (JDRF) is also a member of 
the ISCF. One short term goal of the ISCF is to compare different stem 
cell lines from the member organizations. As part of this goal, NIH's 
federally approved stem cell lines will be compared to those of other 
member organizations. Information about the stem cell research efforts 
of the member organizations can be found on the website: http://
mrc.live.tmg.co.uk/.

                      PREPARED STATEMENT RECEIVED

    Senator Specter. We have received the prepared statement of 
Senator Mary L. Landrieu. The statement will be placed in the 
hearing record.
    [The statement follows:]

             Prepared Statement of Senator Mary L. Landrieu

    With the release of the 2005 budget, President Bush emphasized his 
commitment to reducing the deficit, most of which has been created by 
his fiscally irresponsible policies, within five years. The overall 
budget proposed by the President cuts domestic discretionary spending 
outside of homeland security by $49 billion by 2009, a 12 percent cut 
in spending. A large portion of the domestic discretionary spending 
that the Administration proposes to cut from 2005-2009 is administered 
by the Department of Health and Human Services and provides services 
such as child care, child welfare, and health care to our poorest 
children, families, and seniors.
    Because it is an election year, the Administration has attempted to 
hide their lack of support for domestic spending by playing a shell 
game. When questioned about their commitment to important social 
issues, the Administration touts its minor increases in some programs 
in the 2005 budget as evidence of their ``compassionate conservatism.'' 
Yet, if you look closely enough you will see that after this year, 
these ``increases'' continue to shrink until they sink below current 
funding levels by 2009.
    Although I am supportive of almost any policy aimed at bringing the 
economy back into an era of surpluses, as we enjoyed during the Clinton 
years, I believe the President's method for trying to achieve a 
reduction in deficits through cuts in spending on our most vulnerable 
populations is at best, flawed. Because domestic discretionary spending 
outside of homeland security only accounts for one-sixth of the overall 
budget, the President's proposed cuts would not significantly reduce 
the deficit. What they will do, however, is increase financial burdens 
on states at a time when they are experiencing the worst fiscal crises 
since WW II. estimates show that states will face deficits of $40 
billion or more in 2005. It is predicated that my own state of 
Louisiana will face a deficit of $500 million this year. Under the 
decreased federal funding in the President's new budget, Louisiana and 
other states will be forced to impose deeper cuts on programs such as 
government subsidized health insurance and child care subsidies for the 
poor.
    In his budget, President Bush does not limit his cuts to 
discretionary spending but also proposes cuts in entitlement spending 
for many of these programs. It is unbelievable to me that in a time of 
a recession, this President proposes to cut support for TANF, child 
care, child welfare, and other social services by over $2.8 billion.
    While his TANF re-authorization calls for increases in the number 
of hours that fathers and mothers must work, the budget flat funds 
child care assistance to these families. Over the last year 100,000 
children have lost assistance and predictions indicate that at least an 
additional 200,000 children will lose assistance by 2009 under the 
current budget proposal. The TANF entitlements funds are also flat-
funded, though 8.2 million people are unemployed and more families are 
at risk of reliance on the welfare system. And although President 
Bush's policies have contributed greatly to the dire situation many of 
these families face, he continues to turn his back on them by refusing 
to provide adequate funding to the government programs that will allow 
them to survive these difficult times.
     The Administration's proposal for health care reflects an equal 
lack of compassion towards these low-income families. Our country's 
problem of the uninsured has reached a crisis level, with almost 44 
million individuals who are not insured. Predictions show this problem 
is getting even worse. Yet, the Administration is proposing further 
cuts in aid to low-income individuals through Medicaid, calling for a 
reduction in funding for Medicaid by nearly $1 billion in 2005 and by 
nearly $16 billion over the next ten years. And the President is 
attempting to unload this crisis onto states by pushing for turning 
Medicaid into a block grant. The result would be a cap on the amount of 
money the federal government would spend on this program and a shift of 
costs to the states, preventing them from being able to respond to the 
dynamic health care needs of their residents.
    President Bush is proposing a similar funding structure for foster 
care payments to states. Under this proposal, states would be given the 
option to receive block grants in place of entitlement funding that is 
typically provided for services to foster children. These block grants 
would freeze funding to states at a specific level for five years, 
meaning that the funds would no longer be based on need or the number 
of eligible children. This cost neutral proposal does not increase 
funding to a foster care system that is already under-funded. In fact, 
many programs that have been block-granted in the past have ended up 
with less funding over time. Although I do support a federal funding 
structure for child welfare services that allows states the flexibility 
to be innovative in meeting the challenges of families involved in this 
system, the President's proposal of block granting will ultimately 
result in states having less resources to provide necessary services.
    Understanding that these families face complex and varying 
challenges, I support the President's budget proposal that would 
increase funding for Promoting Safe and Stable Families to $505 
million. This program offers flexible funding to states for a range of 
community-based family support and adoption services. This money can be 
used for prevention and family preservation services that help to keep 
children with their biological families and out of the child welfare 
system. Although I am happy to see that the Administration has 
recognized the importance of this program by proposing increased 
funding, I hope that it will modify proposals for other child welfare 
programs to provide adequate funding to assist families.
    Investments in programs that focus on prevention, such as those 
provided through the Promoting Safe and Stable Families funding, are 
cost-saving. By investing in these primary services, our government 
avoids investment in solving problems that could have been prevented. 
Unfortunately, the President's budget proposal for substance abuse 
services under the Substance Abuse and Mental Health Administration 
does not reflect this idea, with over 2\1/2\ times the amount of 
funding proposed for prevention services dedicated to treatment 
services. I support the increases that President Bush is proposing for 
these treatment services, for this funding will aid in the healing of 
individuals and families who suffer from substance abuse issues. 
However, I further support increases in funding for prevention 
services, so that we can help families avoid the problems associated 
with substance abuse.
    As lawmakers and appropriators, we have the responsibility to act 
on the idea that we can always do more to help the people we represent. 
We cannot be complacent with this budget. Much more can be done for 
some of our most vulnerable populations that are served through the 
Department of Health and Human Services than what is outlined in the 
President's budget. Using my seat on the Appropriations committee, I am 
committed to seeing valuable programs proposed to receive cuts by the 
Administration receive the funding that is necessary to meet the needs 
of those they are intended to serve.

                          SUBCOMMITTEE RECESS

    Senator Specter. Thank you all very much. The subcommittee 
will stand in recess to reconvene at 9:30 a.m., Thursday, April 
1, in room SH-216. At that time we will hear testimony from the 
Honorable Elias Zerhouni, Director, National Institutes of 
Health.
    [Whereupon, at 10:35 a.m., Thursday, March 25, the 
subcommittee was recessed, to reconvene at 9:30 a.m., Thursday, 
April 1.]
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