[Congressional Record Volume 140, Number 99 (Tuesday, July 26, 1994)]
[Senate]
[Page S]
From the Congressional Record Online through the Government Printing Office [www.gpo.gov]


[Congressional Record: July 26, 1994]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]

 
              HEALTH CARE REFORM AND PHARMACEUTICAL DRUGS

  Mr. DORGAN. Mr. President, this has been a very interesting 
discussion, and I certainly share the goals of those who have spoken. I 
am most interested in the question of competition.
  I might say that in at least one area of health care, competition 
does not seem to be a regulator in which price competition produces 
reasonable prices for consumers. That is in the area of pharmaceutical 
drugs.
  Tomorrow morning, Senator Pryor and I are cochairing a hearing in the 
Governmental Affairs Committee on the question of drug prices. There 
has been a lot of discussion about different aspects of health care, 
but very little about the pricing of prescription drugs in this 
country.
  A while ago, I recall meeting a woman in her mid-eighties at a senior 
center. This woman had very little money and had significant heart 
problems--heart disease and diabetes. She told me she could not afford 
the medicine her doctor prescribed for her heart disease and diabetes. 
She said, ``I only take half the dose the doctor tells me to so my 
medicine will last twice as long.'' That is how this woman in her mid-
eighties affords her medicine. It is a shame that happens in this 
country. Part of the reason for that is the high cost of prescription 
drugs.
  Let me begin by saying that my colleague, Senator Pryor, has done an 
enormous amount of work in this area, important work and excellent 
work. When I was in the House of Representatives, I introduced the 
central piece of prescription drug legislation that Senator Pryor had 
been the principal author of in the Senate. I was pleased to do that. 
He has done a great amount of important work on this subject, and I am 
pleased tomorrow to cochair the hearing with him.
  The hearing tomorrow is going to focus on one aspect of drug pricing, 
and an interesting one. The question will be: Why do pharmaceutical 
manufacturers charge more for the same drug in almost every case in the 
United States than they charge in other countries? Why, for the same 
pill, put in the same bottle, made by the same manufacturer, do they 
charge more to the American consumer than they do the consumer in 
Mexico, in Canada, in England, in Sweden, in Germany, in France, or in 
almost any other Western nation?
  I do not know the answer to that. But I have some charts that I want 
to share this morning. Let me just run through a couple of them. I do 
not have the blowups with me, but let me tell you what about the 
international pricing of prescription drugs.
  Before I do that, remember that prescription drugs prescribed by a 
doctor are not a luxury. It is not like ordering cable television or 
like deciding to eat the next Twinkie. It is a necessity. A doctor 
prescribing a prescription drug is saying to a patient: You need to do 
this for your health.
  Let me go through some examples of drugs and their prices in 
different nations. The General Accounting Office [GAO] has done a lot 
of work to put together this sample of drugs that are sold in different 
nations. Each drug in the sample is of the same strength, the same 
dosage, and made by the same manufacturer. But let's look at the price 
charged in the United States versus other countries for a sample of 
leading drugs. GAO has given me data on 20 of the 100 best selling 
drugs in the United States.
  Here are some examples of what the GAO will tell us tomorrow.
  Premarin is a drug used for estrogen replacement. If you buy it in 
the United States, the manufacturers' wholesale price is 162 percent 
more for that same drug than if it were purchased in Canada. Buy it 
here, it will cost 197 percent more than if you buy it in England. Buy 
it here, it will cost 219 percent more than if you buy it in Sweden.
  Zantac which is used to treat ulcers--buy it here, you pay 30 percent 
more than if you buy it in Canada; buy it here, 58 percent more than if 
you buy it in England; buy it here, 109 percent higher price than in 
Sweden.
  Xanax, which is used to treat anxiety--buy it here, pay 183 percent 
more than in Canada; buy it here, pay 279 percent higher price than in 
England; buy it here, pay 488 percent higher price than in Sweden.
  Valium--also used to treat anxiety--buy it here, the price is 432 
percent higher than in Canada; 1,044 percent higher than in England, 
and nearly 1,100 percent higher than in Sweden.
  Why? By what measure do the pharmaceutical manufacturers, using the 
same pill, put in the same bottle, produced in the same way, and 
shipped to comparable markets charge a much higher wholesale price, 
which is passed on to the consumer, in the United States than virtually 
any other country in the world.
  I do not know the answer to that. They will say, well, research and 
development, we need to get the money for research and development. I 
certainly support research and development. We give very generous tax 
credits, in fact, for research and development to the pharmaceutical 
manufacturing firms. The fact is they spend more on advertising and 
promotion than they do on research and development, but research and 
development is very important. We ought to plug money into research and 
development. We do a lot of that in the public sector through 
Government spending at NIH, which, incidentally, then breeds a great 
deal of profit for the private companies that end up manufacturing 
drugs developed by NIH scientists. But private companies also invest in 
research and development.
  I do not want to stop that, and I do not want to impede that. But, 
when you look at the pharmaceutical manufacturers and find that in 1992 
they had triple the average rate of profit of all the companies in the 
Fortune 500, you wonder whether this price is for profit, maybe excess 
profit, or for research and development.
  You look at the head of one company, one pharmaceutical manufacturer, 
and he was paid a salary equivalent to all 100 U.S. Senators. The head 
of one pharmaceutical company is paid nearly $13 million, and you ask, 
is that research and development? Does that justify charging an 
American consumer double or triple or 10 times the price for the same 
drug, in the same bottle, manufactured by the same company as is 
charged in Germany or France or Sweden or Denmark? I do not think so.
  You talk about market forces. I hear it all the time in the Chamber. 
Market forces in this country do not produce drug prices that in my 
judgment are competitive or fair, and the question is, what do we do 
about that? The price of drugs for American consumers has gone up. 
Outpatient drug spending has increased from $12 to $36 billion between 
1981 to 1991; $12 to $36 billion over a period of about 10 years. The 
point of this is that this free market does not work for prescription 
drugs. You can buy the same pill, or the same drug, in the same 
container, in different countries and pay a vastly different price.
  For some reason, we are systematically being overcharged. If my 
consumers in North Dakota, wanting the same prescription drugs on which 
we now spend over $80 million, had just driven over the line north into 
Canada, they would have bought the same drugs for $20 million less. 
Why? If North Dakotans had bought all their drugs in England, instead 
of spending just over $80 million, they would have spent just over $50 
million. They would have saved about $30 million. Why? You can ask the 
same question about Germany, France, Italy, and others.
  I asked drug companies: Will you market for lower prices at a loss? 
If you sell in this country for a dollar and charge 20 cents in Mexico, 
does that mean you are marketing at a loss in Mexico? Of course, not. 
They could not sell in Mexico at 20 cents if it were a loss. So we have 
a lot of interesting questions to ask tomorrow at the hearing. What is 
this scheme of pricing drugs that charges the U. S. consumer so much 
more than other consumers in the world?
  I hope we get some answers, and I hope that we can use those answers 
in the construct of a discussion about health care reform and prices 
charged to American consumers.
  Mr. CHAFEE. I wonder if the distinguished Senator will yield for a 
question.
  Mr. DORGAN. If I have time, yes, of course, I will.
  The PRESIDING OFFICER. The Chair would inform the Senator that 
morning business is just about to close.
  Mr. CHAFEE. I ask unanimous consent for 2 additional minutes.
  The PRESIDING OFFICER. Is there objection? Without objection, it is 
so ordered.
  Mr. CHAFEE. Mr. President, I would ask that the distinguished Senator 
in his inquiries tomorrow bear in mind the biotech industry, and I 
particularly think of a small biotech company in my home city in my 
State, Providence, RI. That company is a venture capital company. It is 
called Psychotherapeutics. That company is seeking a cure for two major 
diseases affecting the elderly, Alzheimer's and Hodgkin's. I have been 
informed by that company, which so far has not produced a dollar of 
revenue, that they anticipate their total expenditures before they get 
any return will be $200 million. Now, $200 million for somebody in the 
Federal Government is not much, but $200 million for a Providence, RI, 
company is a lot of money. They are raising that money through venture 
capital, selling stock.
  So I hope that when the inquiries are devoted to a company making too 
much money, charging what they think is a lot, they bear in mind this 
little company, which I hope succeeds. I hope they get a cure for 
Alzheimer's; I hope they do something for Hodgkin's; I hope whoever 
invests in that company will make a lot of money; I hope that company 
will be a splashing success; and I hope that the head of that company, 
Dr. Seth Rudnick, will be paid a handsome salary. I want them to 
succeed.
  So my question is I hope that when the inquiries are made it is borne 
in mind that this company will not have a penny of return to anybody 
who invests in it until their total expenditures reach, in their 
judgment, $200 million. So I appreciate what the Senator is doing.
  The PRESIDING OFFICER. The Senator's time has expired.
  Mr. DORGAN. Mr. President, in order that I might respond, may I ask 
unanimous consent to extend morning business for 1 additional minute?
  The PRESIDING OFFICER. Is there objection? Without objection, it is 
so ordered.
  Mr. DORGAN. Mr. President, I share all of the hopes of my friend. He 
has talked about many hopes. I hope he would share my hope that when 
and if they find this miracle cure they are looking for with generous 
tax provisions on venture capital, generous tax provisions on research 
and development, they will not decide to price it by asking Americans 
to pay double, triple, quadruple, or 10 times the price at which they 
will market that same drug in England, Sweden, Germany, Italy, Canada, 
and other countries around the world.
  I am all for miracle cures, and I want to encourage these companies 
looking for them. I want them to price those miracle cures fairly in 
the American marketplace when they find them.
  Mr. President, I yield the floor.

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