[Congressional Record Volume 142, Number 46 (Friday, March 29, 1996)]
[Senate]
[Pages S3202-S3204]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                       MEDICARE FINANCING CRISIS

  Mr. DOMENICI. Mr. President, I wish to speak for a moment about the 
Medicare Program which our senior citizens are very concerned about and 
most Americans are very concerned about.
  Last year, the Medicare trustees told the President and the Congress 
that the Medicare Program is in financial crisis. Specifically, they 
said, and I quote, ``The Federal hospital insurance trust fund which 
pays inpatient hospital expenses will be able to pay benefits for only 
about 7 years and is severely out of financial balance in the long 
run.''
  The Medicare trustees were even more blunt. ``The Medicare Program is 
clearly unsustainable in its present form,'' they said. ``The hospital 
insurance trust fund continues to be severely out of financial balance 
and is projected to be exhausted in 7 years.''
  That is what they said last year--7 years. In 1995, the trustees were 
telling us we have 7 years before the part A trust fund ran out of 
money. Last year's report projected that this fund would be insolvent 
in the year 2002. Based on the same data, I made a more precise 
prediction that bankruptcy would occur in early February 2002.
  Very soon, we are going to receive from the Medicare trustees an 
annual update to this report. I have looked at the data that the 
trustees used to generate their report, and I can say now that last 
year's projections were too optimistic. This year's report will show 
that the hospital trust fund is going bankrupt in the year 2001--not 
2002. The projections were too optimistic last year.
  A year ago my colleagues and I were urging the Senate and the 
President to follow the trustees' recommendation and address the 
Medicare financing crisis. This is why the reforms in Medicare were 
proposed last year. This Congress had a choice in 1995, and the choice 
was to address the Medicare financing crisis, restructure Medicare for 
the next century by providing seniors with more choices and containing 
costs to providers, or to ignore the crisis and let the problem 
languish for another year.
  This Congress chose to act to try to save Medicare from the pending 
bankruptcy. When we made the choice, we had a 7-year window available 
to us and to the American people--7 years before part A would be 
bankrupt, without sufficient money to pay its bills.
  Mr. President and fellow Senators, that is now down to 5 years. We 
spent a year trying to reform Medicare, only to have the reform fail 
and to have the President veto the reform measures. And we will soon 
officially hear from the trustees that we lost another year.
  Last year we were told that we had until 2002. Now we will learn that 
we have until 2001. The Medicare part A problem is now worse than it 
was a year ago. Based on the data the trustees will be using in their 
annual report, which we have now had an opportunity to review, I can 
predict for the Senate and for those who are interested, the seniors 
across America, that the Medicare part A trust fund will be without 
sufficient funds to pay its bills in late May of 2001. Essentially, it 
will be bankrupt in May of 2001 instead of 2002. This is 5 years and 2 
months from now--5 years and 2 months, not 7 years.
  It is important to remember that while attention has focused on the 
impending bankruptcy of part A, the hospital plan, the underlying 
problem is the uncontrolled spending and the growth of the entire 
program.
  Last year, the Congressional Budget Office projections showed that 
Medicare part A spending was growing at 8 percent a year, and it showed 
that part B spending was growing at 14 percent a year. There is no 
question that if we can slow the growth by reform, if we can make both 
part A and part B more streamlined and in touch and in tune with the 
modern delivery of health care, we can slow the growth. Our present 
spending is just not sustainable. Simply put, the trust fund will be 
bankrupt in 5 years and 2 months. The remainder is growing at 14 
percent a year.

  When we pursue that goal of making it sustainable, of slowing 
Medicare spending, one result will be that we will save the part A 
trust fund, the hospital trust fund. The Balanced Budget Act passed 
this year by Congress--that is last year, in this year's cycle--and 
vetoed by the President, would have extended the life of part A past 
the year 2010. That same Medicare reform took the necessary steps 
toward addressing our long-term entitlement problem. Unfortunately, it, 
too, was vetoed when the Balanced Budget Act was vetoed.
  I do not relish being the bearer of bad news. No one likes to hear 
that a program as valuable and as important as Medicare is in financial 
trouble. But we cannot simply bury our heads and hope that the problem 
will go away. It will not. We spent a year trying to address a problem 
here in the Congress, and now it appears that that effort may fall 
victim to a Presidential election. If we wait another year to address 
Medicare, we will be 4 years, if not shorter, from bankruptcy. I am 
concerned that 1 year from now I will be standing here on the floor of 
the Senate, reporting on the impending bankruptcy of the part A trust 
fund, and we will have spent a year doing nothing to address it.
  I hope that is not the case. But I hope that more Senators and more 
leadership in this country will understand that if we do not change 
some things about the program there will be no program--not for the 
younger generation, but for seniors who are on the program right now. 
Because there are many senior citizens who are on the program right now 
who will still need hospitalization in the year 2001, 5 years from now. 
Unless we choose to do something now, it will not be available to them. 
We will have spent the money in the trust fund and the bills will be 
coming in faster than the revenue, and that equals bankruptcy.
  So, I thought, today, after a careful study of the facts, that I 
would share this news, bring it to the floor and share it right now. I 
thought, as soon as I had it, I ought to share it with everyone. I 
believe what I am saying is correct. I believe I am slightly ahead of 
the trustees, but I know the information they have, and their experts, 
for that is shared information. There is no question in my mind the 
fund is going bankrupt faster than was estimated last year, and we are 
now 5 years and 2 months away from the fund not having money to pay the 
bills of senior citizens who are in hospitals.
  I yield the floor.
  Mr. KENNEDY addressed the Chair.
  The PRESIDING OFFICER (Mr. Burns). The Senator from Massachusetts.
  Mr. KENNEDY. Are we in morning business at this time?
  The PRESIDING OFFICER. We are.
  Mr. KENNEDY. I ask unanimous consent I might be able to proceed in 
morning business.
  The PRESIDING OFFICER. Without objection, it is so ordered.

[[Page S3203]]



                         THE FDA REFORM MARKUP

  Mr. KENNEDY. Mr. President, today when Americans get up in the 
morning and brush their teeth, they do not think about whether the 
toothpaste they are using is safe. When they eat their breakfast they 
do not think about the safety of the food they are eating. When they 
take a pill to treat an illness they do not worry about whether the 
drugs are safe. They do not worry about whether those drugs work. 
Americans have confidence in all of these products because the Food and 
Drug Administration is an independent agency with enormous credibility.
  Yesterday, the Senate labor and human resource committee approved a 
FDA reform bill, S. 1477, that will destroy that confidence. S. 1477 
will cripple the FDA, and turn many of its functions over to private 
industry.
  The history of food and drug legislation is that we have learned from 
the tragedies of the past. The United States was fortunate to avoid the 
Thalidomide tragedy in the 1950's. But in the 1950's and 1960's, we did 
not avoid the tragedy of DES, Diethylstilbestrol, which causes cancer 
in the daughters of women who took it.

  In the 1970's we did not avoid the tragedy of the Dalkon Shield, 
which caused thousands of cases of infertility in women who used it. In 
recent years we did not avoid the tragedy of the Shiley Heart Valve 
which broke and caused many deaths.
  As a result of the Thalidomide tragedy, we strengthened our drug laws 
in 1962. As a result of the Dalkon Shield tragedy we strengthened our 
medical device laws in 1976 and we strengthened them again in 1990 
after the Shiley valve tragedy.
  Most recently, we reduced the delays in approving prescription drugs 
with user fees. As a result, we are now approving drugs faster than the 
United Kingdom. We have fixed the drug lag. In fact, the United States 
approves more important new drugs faster than any other country in the 
world.
  But equally important, we have the best record in the world of 
blocking the approval of unsafe or ineffective drugs that have to be 
withdrawn after patients have been killed or injured.
  The bill reported from the committee goes in the wrong direction. The 
lessons of the past have been turned on their heads, and those who have 
failed to learn from the history of Thalidomide, Dalkon Shield and DES, 
will condemn the American public to new device and drug tragedies. The 
basic theme of the legislation the committee approved is privatization. 
It says, ``let us return to the days when drug manufacturers decided 
what was safe and effective.'' It says, ``let device manufacturers pay 
private bodies to determine if their heart valves and pacemakers will 
help or harm patients, instead of relying on the scientists at the FDA, 
who have no interest except the public interest.'' If this bill is 
enacted into law, the Food and Drug Administration will no longer have 
the principle responsibility for making critical decisions about the 
safety of the food supply and the safety and effectiveness of drugs and 
medical devices. Instead, those decisions will be made by private 
companies.
  In the cases of medical devices, those companies will be selected and 
paid by the medical device industry to decide the safety and 
effectiveness of the products. No company that is paid to do product 
reviews can be objective, if future business depends on whether it 
grants a favorable decision. And to make the conflict of interest even 
more blatant, it will be up to the regulated industry to determine how 
much compensation the regulator will receive for the review.
  Do you get this? That the medical device company will make the 
judgment as to which individual will come and inspect their particular 
medical device, and they, the inspector and the company, will work out 
the terms of payments.
  If you were one of those inspectors, how long do you think you will 
make adverse judgments against those companies if you ever expect to 
get paid or hired again? You have a basic, fundamental conflict of 
interest. Compare this with the current situation where an inspector 
has no financial interest in making the judgment and bases decisions 
only upon pure science. That is how we do it at the present time.
  As I said, we do it very successfully with regard to drugs and 
biologicals. It is slower with regard to medical devices, and various 
animal vaccines. We grant the FDA has not done well enough. But over 
the 30 years that our committee has been reviewing how to speed up the 
FDA, we have only been successful with one major change and that is 
when we put on the user fees, with the support of the pharmaceutical 
industry, with the support of President Bush, and with the support of 
Congress. And we have seen a dramatic change in terms of performance, 
in the approvals; significant reductions in terms of the considerations 
of those items. It has been successful. Now we are about to tamper with 
that particular effort, which has been reviewed by GAO, and by the 
Tufts Medical School, which has been constantly critical of the FDA, 
but all of them say that this is a program that is working.
  It is not working as well in the device areas, as I mentioned, but 
what we are doing, I believe, is putting seriously at risk the 
successful programs that have been enacted in recent times.
  In Britain in the last few weeks, we have had a stark demonstration 
of what can happen when the regulatory body charged with protecting the 
public interest has a conflict of interest.
  Britain is in a food safety crisis over the meat from cattle with 
mad-cow disease because the Government paid too much attention to 
commercial interests and not enough attention to the health of 
consumers. Now, because there is growing concern that mad-cow disease 
can be linked to a fatal disease in humans, British meat is being 
banned in every country in the world.
  In Britain, the public is demanding to know why there is no 
independent body like America's Food and Drug Administration to protect 
the public. That is the question on the minds of British consumers.
  How ironic that just a few days after the mad-cow disease disaster 
came to light, legislation was approved by our committee to dismantle 
the regulatory agency that is universally recognized abroad as the gold 
standard for the world. The FDA is our strongest defense against this 
kind of crisis in the United States. We have the safest food supply and 
the safest medical products in the world. We should not take any steps 
that jeopardize the confidence of American consumers in the safety of 
food and medical products. Yet this bill would seriously weaken current 
protections.
  In addition to privatizing review of medical devices, this bill tells 
the public to trust drug manufacturers to make changes in the 
manufacturing process without FDA review to determine whether the 
changes affect safety or effectiveness. Companies under pressure to 
increase profits sometimes put profits first or simply sometimes make 
mistakes. In fact, most experts believe that mad-cow disease spread 
throughout Britain by a change in the manufacturing process of animal 
feed by some companies, the kind of change that S. 1477 leaves up to 
American companies to decide on their own.
  Under this legislation, no change in the manufacturing process would 
require prior approval from the FDA. Yet, a change in the manufacturing 
process can determine whether a polio vaccine prevents polio or causes 
it. A change in the manufacturing process can determine whether a blood 
transfusion is life saving or whether it transmits AIDS or hepatitis to 
the patient. An independent FDA is needed to protect the public against 
these tragedies. Commercial interests should not prevail.
  Further, the bill sets excessive time limits for review with no 
additional resources. The FDA will be unable to meet these requirements 
and do its job.
  Even worse, the bill sets the wrong priorities so that every ``me-
too'' drug of little additional therapeutic value receives the same 
priority as urgently needed new cures, and if FDA cannot meet the 
unrealistic time limits in the bill, the agency is required to contract 
its responsibility out, leading to further unacceptable privatization.
  What did we do in the earlier legislation? We said on the priority 
drugs, we are going to make sure that these are going to be addressed 
within the first 6 months and then those that are of lesser 
significance and importance within 12 months. Therefore, the FDA is 
able to use some discretion in the areas of breakthrough drugs. The 
last drug on

[[Page S3204]]

AIDS was only about 2\1/2\ months under review because FDA had worked 
with the company further up the line to accelerate the consideration 
and the whole development time.
  So FDA has been moving in the area of priority drugs. Now what does 
the legislation say? The legislation says you have to examine all of 
them, all of the drugs within the 6 months. The fact of the matter is, 
as anybody who understands what goes on out at the FDA knows, the vast 
majority of those other drugs are ``me-too'' drugs, not the 
breakthrough drugs.
  So now instead of bringing focus and attention of the gifted and able 
scientists out at FDA on those drugs that could be breakthrough drugs 
in cancer, in AIDS, in hepatitis, in all kinds of diseases, we are 
going to divert their attention to looking after the ``me-too'' drugs 
that can make extra bucks for the pharmaceutical companies. Is the 
public interest served there? It is not.

  This is a direct result of the pharmaceutical companies wanting to 
get some additional attention so that they can put on the market and 
promote and advertise and make additional profits from those ``me-too'' 
drugs. This is unwise, ill-conceived, and bad health policy. Mr. 
President, we all know that when the Congress previously acted in a 
bipartisan way with the Executive together with the pharmaceutical 
companies, all of them working together, setting the goals, setting the 
standards, setting the accountability on what the FDA should do--96 
percent of the goals that were established were achieved, and now we 
are saying, ``Well, that isn't good enough. That isn't good enough even 
though the GAO says we are the best in the world. That isn't good 
enough, and we are going to change that system,'' alter that system in 
a way which I think diminishes the efficiency of the FDA and could very 
well diminish the opportunities of moving the breakthrough drugs to the 
consumer in a more orderly, effective, and rapid way.
  Mr. President, I was talking about the changes in both time limits 
for the consideration of priority drugs and also about the changes in 
the manufacturing processes that do not have to have prior approval by 
the FDA.
  FDA is the most respected regulatory agency in the world. With too 
few resources now, FDA still gives us the safest food supply in the 
world and the best medical products. The FDA seal of approval is 
accepted with confidence and trusted worldwide. American companies 
benefit immensely from that confidence. This bill will turn that seal 
of approval into a label that cannot pass the truth-in-advertising 
test. Whether the product is heart valves or blood derivatives or 
vaccines or food, the American people will be at risk.
  There are ways that FDA should improve. Some products do need to get 
to market faster. FDA should collaborate as much as possible with 
companies and researchers to reduce the time of bringing safe and 
effective products to market. They are doing a good job now; they ought 
to do a better one. But we should not gut FDA's independence or the 
laws that give it that independence.
  This legislation puts the commercial interests of companies ahead of 
the best interest of consumers. I am hopeful, Mr. President, that the 
provisions of S. 1477 that undermine health and safety can be revised 
before the bill comes to the floor. I know that Senator Kassebaum is 
committed to working with all interested Senators, and I pay tribute to 
Senator Kassebaum. She has spent an enormous amount of time herself on 
this issue. She has listened to different positions taken by those who 
are committed to the public health interests. She has listened to 
Members of the Senate.
  I have the highest regard for her and the way that she has conducted 
the hearings and the leadership she has provided in this area, but I do 
find that I come out on a different side than she does with regard to 
the bill itself.
  The present bill would destroy the safeguards protecting the American 
people that have been built up over the decades. It will cripple the 
world's best regulatory agency. It would be tragic if it became law. 
When the American people understand what is in it, I believe they will 
reject it.
  Mr. President, I yield the floor.
  Mr. INHOFE addressed the Chair.
  The PRESIDING OFFICER. The Senator from Oklahoma.

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