[Congressional Record Volume 140, Number 70 (Wednesday, June 8, 1994)]
[Senate]
[Page S]
From the Congressional Record Online through the Government Printing Office [www.gpo.gov]


[Congressional Record: June 8, 1994]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]

 
          STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS

      By Mr. RIEGLE (for himself, Mr. Jeffords, Mr. Hatch, Mr. Stevens, 
        and Mr. Cochran):
  S. 2165. A bill to amend the Internal Revenue Code of 1986 to allow a 
deduction for qualified adoption expenses, and for other purposes; to 
the Committee on Finance.


                   fairness for adopting families act

 Mr. RIEGLE. Mr. President, today I am introducing legislation 
that will assist families who are adopting a child. This bill will 
allow families to deduct their expenses up to a maximum of $5,000 for 
domestic adoptions and $7,000 in the case of an international adoption.
  This legislation is similar to bills that have been introduced in 
both the House and the Senate in recent years. In the 103d Congress, 
Representative Andy Jacobs has introduced in the House a bill to 
provide the same assistance. In past sessions Senator Hatch has 
introduced this legislation and is cosponsoring this legislation along 
with Senator Jeffords.
  This measure is important because of the expenses that are incurred 
when a family is matched up with a child in need of a home. Despite the 
waiting lists for adoptions, there are great numbers of children who 
wait every year for a good home. In some instances, these children may 
fit in a category of special needs and as a result qualify for 
financial help. But oftentimes, a child may not fit into any category 
as a result of rules or definitions. This tax deduction can help in 
these instances. In other instances, this tax change will provide for 
relief from associated health care costs that would have been covered 
if the family welcomed a child into their home as a result of a natural 
childbirth.
  This bill is written to include provisions that will encourage 
employers to help with these expenses by not defining such financial 
assistance as income. At the same time, prohibitions are written into 
the Act to prevent any attempts at both receiving unreported income and 
also writing it off. This tax deduction will be available to all 
families whether or not they use the long or short tax form. Finally 
this tax break would be phased out beginning at an income level of 
$60,000 and completely phased out at $70,000.
  Mr. President, adoption plays an important role in giving some 
children an opportunity to benefit from a family setting. It also 
allows many couples to experience the joy of raising and having a 
family. I hope my colleagues will join with me in supporting this 
important legislation and that, in turn, will help families reach their 
dreams. Mr. President, I ask unanimous consent that the text of the 
bill be printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 2165

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress Assembled,

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Fairness for Adopting 
     Families Act''.

     SEC. 2. DEDUCTION FOR ADOPTION EXPENSES.

       (a) Deduction for Adoption Expenses.--
       (1) In General.--Part VII of Subchapter B of chapter 1 of 
     the Internal Revenue Code of 1986 (relating to addition 
     itemized deductions for individuals) is amended by 
     redesignating section 220 as section 221 and by inserting 
     after section 219 the following new section:

     ``SEC. 220. ADOPTION EXPENSES.

       ``(a) Allowance of Deduction.--In the case of an 
     individual, there shall be allowed as a deduction for the 
     taxable year the amount of the qualified adoption expenses 
     paid or incurred by the taxpayer during such taxable year.
       ``(b) Limitations.--
       ``(1) Dollar limitation.--The aggregate amount allowable as 
     a deduction under subsection (a) for all taxable years with 
     respect to the legal adoption of any single child by the 
     taxpayer shall not exceed $5,000 ($7,000, in the case of an 
     international adoption).
       ``(2) Income limitation.--The amount allowable as a 
     deduction under subsection (a) for any taxable year shall be 
     reduced (but not below zero) by an amount which bears the 
     same ratio to the amount so allowable (determined without 
     regard to this paragraph but with regard to paragraph (1)) 
     as--
       ``(A) the amount (if any) by which the taxpayer's taxable 
     income (determined without regard to this section and section 
     137) exceeds $60,000, bears to
       ``(B) $10,000.
       ``(3) Denial of Double benefit.--
       ``(A) In general.--No deduction shall be allowed under 
     subsection (a) for any expense for which a deduction or 
     credit is allowable under any other provision of this 
     chapter.
       ``(B) Grants.--No deduction shall be allowed under 
     subsection (a) for any expenses paid from any funds received 
     under any Federal, State, or local program.
       ``(C) Employer program.--No deduction shall be allowed 
     under subsection (a) for any expenses paid by an employer 
     which are excludable from gross income under section 137(a).
       ``(c) Qualified Adoption Expenses.--For purposes of this 
     section--
       ``(1) In general.--The term `qualified adoption expenses;' 
     means reasonable and necessary adoption fees (including 
     agency fees), court costs, attorney fees, and other expenses 
     which--
       ``(A) are directly related to the legal adoption of a child 
     by the taxpayer but only if such adoption has been arranged--
       ``(i) by a State or local agency with responsibility under 
     State or local law for child placement through adoption,
       ``(ii) by a non-profit, voluntary adoption agency which is 
     authorized by State or local law to place children for 
     adoption, or
       ``(iii) through a private placement, and
       ``(B) are not incurred in violation of State or Federal 
     law.
       ``(2) Adoption expenses not to include certain amounts.--
     The term `qualified adoption expenses' shall not include any 
     expenses in connection with--
       ``(A) the adoption by an individual of a child who is the 
     child of such individual's spouse, or
       ``(B) travel outside the United States, unless such travel 
     is required--
       ``(i) as a condition of a legal adoption by the country of 
     the child's origin,
       ``(ii) to assess the health and status of the child to be 
     adopted, or
       ``(iii) to escort the child to be adopted to the United 
     States.
       ``(3) Child.--The term `child' means an individual who at 
     the time of adoption under this section has not attained the 
     age of 18.''.
       (2) Clerical amendment.--The table of sections for such 
     part VII is amended by striking the item relating to section 
     220 and inserting the following:

``Sec. 220. Adoption expenses.
``Sec. 221. Cross reference.''.

       (b) Deduction Allowed in Computing Adjusted Gross Income.--
     Subsection (a) of section 62 of such Code is amended by 
     adding after paragraph (15) the following new paragraph:
       ``(16) Adoption expenses.--The deduction allowed by section 
     220.''.
       (c) Adoption Assistance Programs.--
       (1) In general.--Part III of subchapter B of chapter 1 of 
     such Code (relating to items specifically excluded from gross 
     income) is amended by redesignating section 137 as section 
     138 and by inserting after section 136 the following new 
     section:

     ``SEC. 137. ADOPTION ASSISTANCE PROGRAMS.

       ``(a) In General.--Gross income of an employee does not 
     include amounts paid or expenses incurred by the employer for 
     qualified adoption expenses in connection with the adoption 
     of a child by an employee if such amounts are furnished 
     pursuant to an adoption assistance program.
       ``(b) Limitations.--
       ``(1) Dollar limitation.--The aggregate amount excludable 
     from gross income under subsection (a) for all taxable years 
     with respect to the legal adoption of any single child by the 
     taxpayer shall not exceed the excess (if any) of $5,000 
     ($7,000 in the case of an international adoption).
       ``(2) Income limitation.--The amount excludable from gross 
     income under subsection (a) for any taxable year shall be 
     reduced (but not below zero) by an amount which bears the 
     same ratio to the amount so excludable (determined without 
     regard to this paragraph but with regard to paragraph (1)) 
     as--
       ``(A) the amount (if any) by which the taxpayer's taxable 
     income (determined without regard to this section and section 
     220) exceeds $60,000, bears to
       ``(B) $10,000.
       ``(c) Adoption Assistance Program.--For purposes of this 
     section, an adoption assistance program is a plan for an 
     employer--
       ``(1) under which the employer provides employees with 
     adoption assistance, and
       ``(2) which meets requirements similar to the requirements 
     of paragraphs (2), (3), and (5) of section 127(b).
       ``(d) Qualified Adoption Expenses.--For purposes of this 
     section, the term `qualified adoption expenses' has the 
     meaning given such term by section 220(c).''.
       (2) Clerical amendment.--The table of sections for such 
     part III is amended by striking the item relating to section 
     137 and inserting the following:

``Sec. 137. Adoption assistance programs.
``Sec. 138. Cross reference to other Acts.''.

     SEC 3. EFFECTIVE DATE.

       The amendments made by this Act shall apply to taxable 
     years beginning after December 31, 1993.

  Mr. HATCH. Mr. President, I rise today to join Senators Riegle, 
Stevens, Cochran, and Jeffords in introducing the Fairness for Adopting 
Families Act. This important bill is designed to assist American 
families in adopting children.
  We should be grateful, Mr. President, that many prospective parents 
in America today form their families through adoption. Our laws should 
help alleviate the cost barriers associated with an adoption.
  The Fairness for Adopting Families Act provides adopting families 
with a desperately needed tax deduction for adoption expenses. This 
deduction is needed by children who are waiting to be adopted and it is 
needed by families who are sacrificing to finance the ever-increasing 
costs of adopting a child. In today's changing society, we must 
continue to express our support for the family unit. With the increase 
in teenage pregnancy, broken homes, and children born out of wedlock, 
adoption can provide many of these children a better chance to succeed 
in life. We all agree that strong families are the key to a strong 
America. A true pro-family policy would assist families being formed 
through adoption.
  To many seeking to adopt a child, the costs associated with such a 
procedure are simply prohibitive. Prospective parents are often 
required to pay not only court and attorney fees but also expenses for 
maternity home services, hospital and physician costs, and, at times, 
prenatal care for the birth mother. Data provided by the National 
Council for Adoption show that the actual costs connected with legal 
adoptions can easily exceed $15,000. Furthermore, the cost of adopting 
a child from another country can be even higher. It is not unheard of 
to pay up to $20,000 to adopt a child.
  One family in my home State of Utah illustrates the financial burden 
an adoption can place on a family. This family was in the process of 
adopting a foreign infant. All of the paperwork had been filed with the 
appropriate agencies when they discovered that they were required to 
pay a lump sum of $13,000 within a short period of time. This was a 
significant amount of money for this middle-class family, and they 
concluded that they could not go forward with the adoption. Their 
insurance company would reimburse them for $3,000 of this, but only 
after the adoption was finalized. Nevertheless, this heartbroken family 
simply could not afford to continue with the adoption and had to 
discontinue the proceeding. Situations like this should not have to 
happen. Family wealth should not be the determining factor in adopting 
a child. This bill recognizes the importance of the family unit by 
alleviating some of the cost barriers associated with adoption.
  This legislation has three major features. First, it should provide a 
tax deduction of up to $5,000 for domestic, unreimbursed, and 
legitimate adoption expenses. Similarly, a $7,000 tax deduction is 
available for individuals who obtain a most costly international 
adoption. This deduction would be available whether the taxpayer 
itemizes their deductions or not. Second, the bill would exclude from 
an employee's gross income up to $5,000 for domestic and $7,000 for 
international adoption expenses paid by an employer. Third, it would 
treat any employer contribution to an adoption expense plan as a 
deductible business expense. These tax deductions are specifically 
aimed by helping families that are prohibited from adopting because of 
financial reasons, so that they are gradually phased-out for families 
with taxable incomes above $60,000.
  This bill provides that as long as an adoption is in accordance with 
State and local law, the tax deduction for unreimbursed adoption 
expenses would be available. Each adopting family deserves our support. 
This is true whether the child is a healthy infant, a child with 
special needs, or a child from another country. We cannot arbitrarily 
support some children and not others. We must support all legal 
adoptions.
  This legislation does not provide, however, a deduction for expenses 
for adoptions administered through illegal practices, such as through a 
baby broker. Many adopting parents in my own State of Utah and in other 
States have been defrauded by such schemes.

  Two of this bill's provisions deal with the interest in adoption by 
many of America's employers. Corporations such as Dow Chemical, Wendy's 
Inc., IBM, Digital Equipment, and Honeywell, currently offer adoption 
benefits. This legislation will encourage more employers to establish 
such pro-family plans.
  The bill addresses two problems now associated with employer-provided 
adoption benefits. The first problem is that adoption payments to 
employees are taxable to the employee as income. The bill excludes from 
an employee's income those payments. The second problem is that 
employers may not treat their adoption payments to employees as 
deductible business expenses. The bill solves this problem by 
clarifying that employer contributions to an adoption expense 
reimbursement program are ordinary and necessary business expenses.
  This legislation may actually save our society money. The National 
Council for Adoption has shown savings in two ways. First, the bill 
would move thousands of children, who might otherwise have lingered in 
foster care, into permanent, loving homes. Second, the tax deduction 
encourages the shifting of medical costs to the adopting family and 
away from the more expensive AFDC and Medicaid programs.
  Mr. President, there are thousands of children waiting to be adopted. 
Many are older children, children with mental or physical disabilities, 
sibling children who must be adopted together, or who are of minority 
racial or ethnic background. Generally, States classify some of these 
as special needs children for whom financial assistance from the 
Federal Government is available upon adoption. Unfortunately, the 
definition of special needs varies from State to State. Thus, a child 
who qualifies as special needs in one State may not qualify in another. 
The tragic result is that some children who are difficult to place in 
homes do not qualify for financial adoption assistance from the 
Government under current law.
  Mr. President, all children deserve fair treatment when administering 
financial assistance for adoption. Many of the families who want to 
adopt these children have very modest incomes and need tax breaks to 
help them defray the costs of providing homes to these children. Do we 
want to deny children our support because they are healthy and normal 
children?
  Mr. President, I believe Congress needs to send a message to America 
that all children waiting for adoption are special. This bill benefits 
all children as well as sends the needed message.
  I strongly encourage my colleagues to support this legislation. We 
are representatives of a society that professes a commitment to the 
success of the family. The Tax Code should demonstrate that commitment 
by allowing for the deduction of adoption expenses.
  The most important resource America has is its families. We must do 
everything in our power to ensure their continued growth and success. 
Now is the time to demonstrate our pro-family values. All adoption is 
good, not just the adoption of children arbitrarily defined as having 
special needs. This legislation will greatly benefit not only children 
and families but society as a whole. A relatively small dollar 
investment in this bill will move us a long way toward strengthening 
the American family.
  Mr. President, I ask unanimous consent that a letter from the 
National Council for Adoption be placed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                National Council for Adoption,

                                     Washington, DC, June 7, 1994.
     Hon. Orrin G. Hatch,
     U.S. Senate,
     Washington, DC.
       Dear Senator Hatch: The National Council For Adoption 
     supports the ``Fairness for Adopting Families Act'' 
     introduced today by Senators Riegle and Hatch. We believe 
     that Congress should eliminate the current inequities in 
     federal law which treat families formed by adoption 
     differently than families formed through childbirth. We 
     applaud the persistence of Senator Hatch and his unfailing 
     commitment to adoption as we implore all Members of Congress 
     to pass this long overdue, non-controversial legislation, 
     which previously passed the Senate but was not accepted by 
     the House in Conference.
       The question of fairness is raised when we compare the 
     treatment of adoption costs to those expenses related to the 
     conception, delivery and birth of a child--or high technology 
     medical expenses for in-vitro conception, etc. Parents could 
     in most cases itemize and deduct the latter costs as medical 
     expenses. No similar relief is currently available for 
     adoptive families. In addition, in an adoption, medical 
     expenses related to the child's birth are not covered by the 
     (adoptive) parents' health insurance, a benefit which is 
     available to most traditionally-formed families, but are paid 
     for out-of-pocket by adoptive families.
       The costs of adoption can be very high, often prohibitively 
     so, particularly for lower income couples who can support a 
     child but cannot afford the average one-time costs (ranging 
     $5,000-$20,000, but averaging $9,000) for adoption of a child 
     through a non-governmental agency.
       The number of unrelated adoptions peaked in 1970, declined 
     and for the past decade has held fairly steady at about 
     51,000 in 1986. Every child available for adoption is a child 
     with a special need for a loving home. Children who are 
     adopted do very well in life: they do well in terms of 
     education, employability, and psychologically. Adoption 
     produces productive citizens. Indeed, it is the wise 
     government that subsidizes activities that will lead to a 
     citizenry that is productive. It is the fair government that 
     treats similarly-situated families alike.
       Senator Hatch, we join you in urging your colleagues to 
     pass the ``Fairness for Adopting Families Act.''
           Sincerely,
     William Pierce, Ph.D.,
       President.
     Carol Statuto Bevan, Ed.D.,
       Director, Public Policy.
                                 ______

      By Mr. WOFFORD (for himself and Mr. Warner):
  S. 2166. A bill to amend title 10, United States Code, to authorize 
the Secretary of Defense to transfer certain excess equipment to 
educational institutions and training schools; to the Committee on 
Armed Services.


                         tools for schools act

 Mr. WOFFORD. Mr. President, the Department of Defense 
currently lends surplus tools to vocational schools and community 
colleges across the Nation. Schools across the country are using these 
power tools, including grinding machines, drills, and lathes to train 
the work force of the 21st century. But the program has been 
terminated--and schools are now required to return these tools to the 
Government at their own expense--even though the Department of Defense 
no longer needs these basic tools, and would probably sell them for 
scrap metal.
  The return and replacement of these tools would cost each school 
thousands of dollars. For instance, the principal of the Butler Area 
Vocation Technical School in Butler, PA, said that his students are 
currently using metal working tools that they borrowed from the 
Department of Defense. It would cost over $9,000 to return the tools--
and over $70,000 to replace them.
  That is why today I am introducing legislation with Senator Warner to 
correct this situation. The Tools for Schools Act will help schools 
immediately by allowing them to keep the tools they currently have on 
loan. This legislation will enable the Defense Logistics Agency to give 
surplus power tools to schools.
  I am pleased to work with Senator Warner again on an issue of concern 
to youth. We worked together in creating a new version of the Civilian 
Conservation Corps that is now up and running, and we are again working 
on legislation to enable the Department of Defense to use its resources 
to help our young people.
  Mr. President, reinventing Government must mean not only spending 
less but also spending more wisely. This is simple common sense 
legislation. This is simple, common sense legislation. The Defense 
Department can't use these tools. The schools can. This legislation 
will make this happen. In these times of tight Federal budgets and 
tight local budgets, we must be more creative, adaptable, and 
accountable in how we spend taxpayer dollars. The Tools for Schools Act 
would enable us to keep the tools in the schools--where they belong. It 
is better for the schools, better for the students, and better for the 
U.S. taxpayers.
  Mr. President, I ask unanimous consent that the text of the bill be 
printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 2166

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. TRANSFER OF CERTAIN EXCESS DEPARTMENT OF DEFENSE 
                   PROPERTY TO EDUCATIONAL INSTITUTIONS AND 
                   TRAINING SCHOOLS.

       (a) Authority To Transfer.--Subsection (b)(1) of section 
     2535(b) of title 10, United States Code, is amended--
       (1) in subparagraph (F), by striking out ``and'';
       (2) by redesignating subparagraph (G) and subparagraph (H); 
     and
       (3) by inserting after subparagraph (F) the following new 
     subparagraph (G):
       ``(G) notwithstanding title II of the Federal Property and 
     Administrative Services Act of 1949 (40 U.S.C. 481 et seq.) 
     and any other provision of law, authorize the transfer, on a 
     nonreimbursable basis, of any such property to any nonprofit 
     educational institution or training school whenever the 
     program proposed by such institution or school for the use of 
     such property will contribute materially to national defense; 
     and''.
       (b) Treatment of Property Loaned Before September 30, 
     1993.--Except for property determined by the Secretary to be 
     needed by the Department of Defense, property loaned before 
     September 30, 1993, to an educational institution or training 
     school under section 2535(b) of title 10, United States Code, 
     or section 4(a)(7) of the Defense Industrial Reserve Act (as 
     in effect before October 23, 1992) shall be regarded as 
     surplus property. Upon certification by the Secretary to the 
     Administrator of General Services that the property is being 
     used by the borrowing educational institution or training 
     school for a purpose consistent with that for which the 
     property was loaned, the Administrator may authorize the 
     conveyance of all right, title, and interest of the United 
     States in such property to the borrower if the borrower 
     agrees to accept the property. The Administrator may require 
     any additional terms and conditions in connection with a 
     conveyance so authorized that the Administrator considers 
     appropriate to protect the interests of the United 
     States.
                                 ______

      By Mr. ROCKEFELLER (by request):
  S. 2167. A bill to increase, effective as of December 1, 1994, the 
rates of disability compensation for veterans with service-connected 
disabilities and the rates of dependency and indemnity compensation for 
the survivors of such veterans; to the Committee on Veterans' Affairs.


        veterans' benefits cost-of-living adjustment act of 1994

 Mr. ROCKEFELLER. Mr. President, as chairman of the Committee 
on Veterans' Affairs, I have today introduced, at the request of the 
Secretary of Veterans Affairs, S. 2167, a bill to provide a cost-of-
living increase, effective December 1, 1994, in the rates of 
compensation for service-disabled veterans and of dependency and 
indemnity compensation [DIC] for the survivors of veterans who die as a 
result of service. The rate of increase, currently estimated to be 3 
percent, would be the same as the cost-of-living adjustment [COLA] that 
will be provided under current law to veterans' pension and Social 
Security recipients. The Secretary of Veterans Affairs submitted this 
legislation to the President of the Senate by letter dated May 10, 
1994.
  My introduction of this measure is in keeping with the policy which I 
have adopted of generally introducing--so that there will be specific 
bills to which my colleagues and others may direct their attention and 
comments--all administration-proposed draft legislation referred to the 
Committee on Veterans' Affairs. Thus, I reserve the right to support or 
oppose the provisions of, as well as any amendment to, this 
legislation.
  Mr. President, I ask unanimous consent that the text of the bill be 
printed in the Record with Secretary Brown's transmittal letter.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                S. 2167

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Veterans' Benefits Cost-of-
     Living Adjustment Act of 1994''.

     SEC. 2. INCREASE IN RATES AND LIMITATIONS.

       (a) In General.--(1) The Secretary of Veterans Affairs 
     shall, as provided in paragraph (2), increase, effective 
     December 1, 1994, the rates of and limitations on Department 
     of Veterans Affairs disability compensation and dependency 
     and indemnity compensation.
       (2)(A) The Secretary shall increase each of the rates and 
     limitations provided for in sections 1114, 1115(1), 1162, 
     1311, 1313, and 1314 of title 38, United States Code. The 
     increase shall be by the same percentage that benefit amounts 
     payable under title II of the Social Security Act (42 U.S.C. 
     401 et seq.) are increased effective December 1, 1994, as a 
     result of a determination under section 215(i) of such Act 
     (42 U.S.C. 415(i)).
       (B) In the computation of increased rates and limitations 
     pursuant to subparagraph (A), amounts of $0.50 or more shall 
     be rounded to the next higher dollar amount and amounts of 
     less than $0.50 shall be rounded to the next lower dollar 
     amount.
       (b) Special Rule.--The Secretary may adjust 
     administratively, consistent with the increases made under 
     subsection (a), the rates of disability compensation payable 
     to persons within the purview of section 10 of Public Law 85-
     857 (2 Stat. 1263) who are not in receipt of compensation 
     payable pursuant to chapter 11 of title 38, United States 
     Code.
       (c) Publication Requirement.--At the same time as the 
     matters specified in section 215(i)(2)(D) of the Social 
     Security Act (42 U.S.C. 415(i)(2)(D)) are required to be 
     published by reason of a determination made under section 
     215(i) of such Act during fiscal year 1994, the Secretary 
     shall publish in the Federal Register the rates and 
     limitations referred to in subsection (a)(2)(A) as increased 
     under this section.
                                  ____



                            The Secretary of Veterans Affairs,

                                         Washington, May 10, 1994.
     Hon. Albert Gore,
     President of the Senate, Washington, DC
       Dear Mr. President: There is transmitted herewith a draft 
     bill entitled the ``Veterans' Benefits Cost-of-Living 
     Adjustment Act of 1994.'' I request that this bill be 
     referred to the appropriate committee for prompt 
     consideration and enactment.
       This draft bill would provide a cost-of-living increase, 
     effective December 1, 1994, in the rates of compensation for 
     service-disabled veterans and of dependency and indemnity-
     compensation [DIC] for the survivors of veterans who die as a 
     result of service. The rate of increase, currently estimated 
     to be 3 percent, would be the same as the cost-of-living 
     adjustment [COLA] that will be provided under current law to 
     veterans' pension and Social Security recipients.
       Compensation under title 38, United States Code, is payable 
     only for disabilities resulting from injuries or diseases, 
     incurred or aggravated during active service. Payments are 
     based upon a statutory schedule of rates which vary with the 
     degree of disability assigned by the Department of Veterans 
     Affairs [VA], and additional amounts are payable to veterans 
     with spouses and children if the veteran's disability is 
     rated 30-percent or more disabling. DIC benefits are payable 
     at statutorily directed rates to the surviving spouses of 
     children of veterans who die of service-connected causes, or 
     who die of other causes if they suffered service-connected 
     total disability for prescribed periods immediately preceding 
     their deaths. This proposed cost-of-living increase will 
     protect these benefits against inflation.
       Enactment of this increase would result in estimated 
     additional costs of $347 million in fiscal year 1995 and $2 
     billion over the five-year period fiscal year 1995 through 
     fiscal year 1999.
       The effect of this draft bill on the deficit is:

                              FISCAL YEARS                              
                        [In millions of dollars]                        
------------------------------------------------------------------------
                              1995   1996   1997   1998   1999   1995-99
------------------------------------------------------------------------
Outlays....................  .....  .....  .....  .....  .....  ........
------------------------------------------------------------------------

       Section 257 of the Balanced Budget and Emergency Deficit 
     Control Act of 1985, as amended, requires that the baseline 
     for veterans' compensation assume a COLA equal to the 
     veterans' pension program COLA. We currently estimate a 3.0 
     percent COLA for veterans' pensions. The COLA increase in 
     this draft bill would be the same as that for the veterans' 
     pension programs. Therefore, the pay-as-you-go effect of the 
     COLA is zero. However, if Congress were to enact a VA 
     compensation COLA different from the increase for veterans' 
     pension, then the difference between the two COLAs would be 
     subject to the pay-as-you-go requirement of the Budget 
     Enforcement Act.
       We urge that the House promptly consider and pass this 
     legislation.
       The Office of Management and Budget advises that there is 
     no objection to the submission of this legislation proposal 
     to the Congress and that its enactment would be in accord 
     with the program of the President.
           Sincerely yours,
                                              Jesse Brown.
                                 ______

      By Mrs. KASSEBAUM:
  S. 2168. A bill to amend the Federal Food, Drug, and Cosmetic Act to 
prohibit the distribution of samples of prescription drugs; to the 
Committee on Labor and Human Resources.


             prescription drug marketing reform act of 1994

 Mrs. KASSEBAUM. Mr. President, today I am introducing 
legislation, the Prescription Drug Marketing Reform Act of 1994, to 
prohibit the distribution of prescription drug samples. I believe it is 
time to consider the public health problems posed by sampling, the 
substantial costs manufacturers incur in operating sampling programs, 
and the extent to which eliminating sampling programs could result in 
more funds available for the development of new drugs and in lower 
costs for prescription drugs.
  Prescription drug sampling involves the distribution of free drug 
samples to physicians to introduce them to new products or to retain 
brand loyalty to drugs already on the market. Many companies distribute 
literally hundreds of millions of sample units annually. Sampling 
programs are labor intensive and very expensive to operate.
  I recognize that drug samples may directly benefit patients. 
Physicians may provide them to lower-income patients who might be 
unable to afford prescriptions. Samples also allow physicians to begin 
treatment more quickly and to test the efficacy and appropriateness of 
a drug before writing a full prescription. My proposal would allow the 
Secretary of Health and Human Services to define, through regulations, 
exceptions to the prohibition on the distribution of drug samples when 
such samples may be necessary for medical care. The legislation also 
allows for the continuation of pharmaceutical manufacturers' patient 
assistance programs, under which the manufacturers make drugs available 
at no or discounted cost to patients who may otherwise be unable to 
afford them.
  But samples can also pose a serious threat to public health. Sampling 
may inappropriately influence prescribing decisions and may result in 
the inappropriate disposal of large quantities of outdated samples. 
Samples also contribute to the problem of drug diversion to grey 
markets, where samples are adulterated, repackaged in unsanitary ways, 
and sold to unsuspecting consumers. Although the strict regulations 
placed on sampling by the Prescription Drug Marketing Act of 1987 
appear to have substantially reduced sample diversion, several recent 
FBI sting operations reveal that this public health threat has not been 
eliminated.
  I am hopeful that the legislation I am introducing today will promote 
the reconsideration within the pharmaceutical industry and here in 
Congress of the costs and public health problems associated with 
sampling. I also recognize that others who share my interest in this 
issue may have other ways in mind to address it, and I am certainly 
open to discussion.
  Mr. President, I ask unanimous consent that the text of the bill be 
printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 2168

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE AND REFERENCE.

       (A) Short Title.--This Act may be cited as the 
     ``Prescription Drug Marketing Reform Act of 1994''.
       (b) Reference.--Whenever in this Act an amendment or repeal 
     is expressed in terms of an amendment to, or repeal of, a 
     section or other provision, the reference shall be considered 
     to be made to a section or other provision of the Federal 
     Food, Drug, and Cosmetic Act.

     SEC. 2. PROHIBITION OF DRUG SAMPLES.

       Section 503 (21 U.S.C. 353) is amended--
       (1) in the first sentence of subsection (c)(1), by 
     inserting ``distribute,'' after ``No person may'',
       (2) in the second sentence of such subsection, by striking 
     ``and subsection (d)'',
       (3) by inserting after the second sentence of such 
     subsection the following: ``For purposes of this subsection, 
     the term `distribute' does not include providing a drug 
     sample to enable a practitioner licensed to prescribe a drug 
     subject to subsection (b) or a health care professional 
     acting under the direction and supervision of such a 
     practitioner to provide for the dispensing of or to dispense 
     a sample of such drug if the sample is made available to a 
     patient in accordance with regulations of the Secretary 
     specifying conditions under which such drug is necessary for 
     medical care.'',
       (4) in paragraph (2), by inserting ``distribute,'' after 
     ``No person may'',
       (5) by redesignating paragraph (3) as paragraph (4) and by 
     adding after paragraph (2) the following:
       ``(3) Nothing in paragraphs (1) and (2) precludes 
     distribution of a drug subject to subsection (b) at no cost 
     or nominal cost pursuant to a program established by the 
     manufacturer or distributor of such drug to provide it to 
     specific identified patients who, for financial reasons, 
     would not otherwise have access to such drug. The Secretary 
     shall promulgate regulations to specify the documentation and 
     record keeping required for such a program.'', and
       (6) by repealing subsection (d) and redesignating 
     subsections (e), (f), and (g) as subsections (d), (e), and 
     (f), respectively.

     SEC. 3. ENFORCEMENT.

       (a) Prohibited Act.--Section 301(t) (21 U.S.C. 331(t)) is 
     amended to read as follows:
       ``(t) The importation of a drug in violation of section 
     801(d)(1), the distribution, sale, purchase, or trade of a 
     drug or drug sample or the offer to distribute, sell, 
     purchase, or trade a drug or drug sample in violation of 
     section 503(c), the distribution, sale, purchase, or trade of 
     a coupon or the offer to distribute, sell, purchase, or trade 
     such a coupon in violation of section 503(c)(2), or the 
     distribution of drugs in violation of section 503(d) or the 
     failure to otherwise comply with the requirements of section 
     503(d).''.
       (b) Penalty.--
       Section 303(b) (21 U.S.C. 333(b)) is amended--
       (1) in subparagraph (B), by inserting ``distribute,'' after 
     ``knowingly'',
       (2) in subparagraph (C), by inserting ``distributing,'' 
     after ``knowingly'',
       (3) in subparagraph (D), by striking ``503(e)(2)(A)'' and 
     inserting ``503(d)(2)(A)'',
       (4) in paragraph (5), by striking ``because of the sale'' 
     through ``503(c)(1)'' and inserting ``of a violation of 
     section 503(c)'', and
       (5) by striking paragraphs (2), (3), and (4) and 
     redesignating paragraph (5) as paragraph (2).

     SEC. 4. EFFECTIVE DATE AND REGULATIONS.

       The amendments made by this Act shall take effect upon the 
     expiration of 180 days after the date of the enactment of 
     this Act. During such 180 day period the Secretary of Health 
     and Human Services shall promulgate regulations to implement 
     the amendments made by this Act. If final regulations are not 
     promulgated before the expiration of such 180 days, the 
     Secretary may not take any action to prevent a program, 
     established before the expiration of such days, from 
     providing a drug or a coupon for a drug to patients who would 
     not otherwise be able financially to use such drug.

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