[Congressional Record Volume 145, Number 73 (Wednesday, May 19, 1999)]
[House]
[Pages H3363-H3370]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




PROPOSED LEGISLATION SEEKS TO DEAL WITH HIGH COST OF PRESCRIPTION DRUGS 
                          TO NATION'S SENIORS

  The SPEAKER pro tempore (Mr. Pease). Under the Speaker's announced 
policy of January 6, 1999, the gentleman from Maine (Mr. Allen) is 
recognized for 60 minutes as the designee of the minority leader.
  Mr. ALLEN. Mr. Speaker, I want to talk tonight about prescription 
drugs, about the high cost they represent to many seniors across this 
country, and about legislation that I have introduced in the House that 
will solve a good part, or allow substantial discounts on the cost of 
prescription drugs for Medicare beneficiaries.
  But first a little history. Last June I asked for a report to be done 
by the minority staff, the Democratic staff, of the Committee on 
Government Reform on which I sit. I asked for that study to be done on 
prescription drugs, for one reason. Every time I spoke to seniors in my 
district back in Maine, I always heard the same questions: What can we 
do about the high cost of prescription drugs?
  I remember distinctly one gentleman down in Sanford who stood up and 
said, ``You know, I'm spending $200 a month now on my prescription 
medication. My doctor just told me that I have to take another pill. 
The cost is $100 a month, and I'm not going to take it, because I 
simply can't afford to spend that additional $100.''
  I heard that over and over again from seniors who simply could not 
afford to take the medication that their doctors told them they had to 
take. It is a serious problem across this country. Let us look at some 
of the numbers.
  Many seniors, as this chart shows, simply cannot afford to take the 
medication their doctors prescribe. Seniors are 12 percent of the 
population in this country, but they use 33 percent of all prescription 
drugs. Approximately 37 percent of all seniors have no coverage at all 
for prescription drugs.
  In fact, there are many seniors who do have some coverage, perhaps 
under a MediGap policy, but that coverage really does not do them very 
much good. For example, they may have a deductible of $250, a co-pay of 
50 percent, and a cap of $1,200 or $1,500 per year. That does not do 
people who are paying $5,000 a year for their prescription drugs much 
good at all.
  The average drug expenditure for Medicare beneficiaries is $942 per 
year. But in listening to seniors in my district in Maine, many are 
spending much more than that. In fact, many cannot afford to take the 
drugs that their doctor prescribes. So what do they do? One thing they 
do is they take one pill out of three, they mix and match, they cut a 
pill in half, they try to get by by taking some of their drugs but not 
all of their drugs.
  It is a serious health care problem. We have reason to believe that 
it is sending people to the hospital, where expenses are high, who 
really do not need to go there if they could afford to take their 
medications. Thirteen percent of older Americans, that is almost 5 
million people, report that they were forced to choose between buying 
food and buying medicine.
  Let me give my colleagues a couple of stories. I hear from women in 
my district, they send me letters that say, ``I don't want my husband 
to know, but I am not taking my prescription medication, because my 
husband's sicker than I am and we can't afford both his medication and 
my medication. So I'm not taking mine.''
  Back in July of 1998 when I did the first report on the study I will 
describe in a moment, I got a letter from a woman who sent me a letter 
saying, ``I'm writing to you because I don't know where else to turn. 
Here is a list of the prescription medications that my husband and I 
are supposed to take every month.'' The bottom line in prices was $650 
per month. ``And here,'' she said, ``are our two monthly Social 
Security statements that represent all of our monthly income.'' The 
bottom line was $1,350. You cannot spend $650 of a $1,300 a month 
income on prescription drugs. You simply cannot do it. People cannot 
live like that. So they

[[Page H3364]]

are making choices that represent serious health risks to them.
  Now, let me look at the study. I want to talk about a report that the 
Committee on Government Reform Democratic staff did. We went into the 
First District in Maine and asked questions. We wanted to compare the 
price that the manufacturers, the prescription drug manufacturers, give 
to their best customers, compared to the price that seniors pay in my 
district at the retail pharmacy level.
  Here is how we did it. We looked at the price that the VA gets for 
its medications, the price that Medicaid gets for its medications, we 
looked at the price that large drug wholesalers get. Then we tried to 
figure out as best we could what hospitals and big HMOs get for a 
discount. Then we went and looked up the prices at the local retail 
level.

  Here is what we found. The average retail drug prices for older 
Americans are almost twice as high as the prices that drug companies 
charge their most favored customers. We did not pick the drugs to 
investigate arbitrarily. We simply picked the five most commonly 
prescribed prescription drugs for seniors. These are branded 
prescription drugs.
  You can see that there is Zocor, manufactured by Merck; Norvasc, 
manufactured by Pfizer; Prilosec, manufactured by Astra and Merck; 
Procardia XL, a Pfizer drug; and Zoloft, another Pfizer drug. The 
prices for favored customers, the best prices at which these 
pharmaceutical drugs are sold, for Zocor was $34.80. This is now a 
nationwide study, not just the First District of Maine. The retail 
price nationwide for seniors is $107.07. The price differential is 208 
percent. Look at Norvasc. The price for favored customers, $59.71; the 
retail price for seniors $116.64, 95 percent higher than the price for 
favored customers. Prilosec, the price for favored customers is $59.10; 
the retail price for seniors, $114.56, a 94 percent increase. 
Procardia, $68.35 to favored customers; $130.33 at the retail price for 
seniors across this country, a 91 percent price differential. Zoloft, 
$115.70 for favored customers; and retail prices for seniors, $220.45, 
a 91 percent differential.
  In short, for the five most commonly prescribed prescription drugs 
for seniors, seniors when they walk into a pharmacy, when they walk in 
without prescription drug coverage, they are paying 116 percent of the 
price that the favored customers of the drug companies are getting. 
Now, those favored customers are hospitals, big HMOs, and the Federal 
Government through the VA and through Medicaid.
  That study, which was done first in Maine, has now been replicated in 
over 40 districts around this country, all of them at the request of 
Democratic Members of the House of Representatives who asked for the 
study. The results are the same. That differential means that seniors 
on average are paying more than twice as much as the drug companies' 
best customers.
  Now, there are some prices that are even higher than that. Here is a 
price, a chart showing that the price for Ticlid for favored customers 
is a little bit over $30, but it is $105 for older Americans. 
Synthroid, a prescription drug that costs about $2 to favored 
customers, is around $30 for seniors, a huge differential, almost 1,500 
percent. Micronase has a differential, its cost according to this 
chart, $7 or $8 as best we can tell, about $40 for older Americans.
  That is happening all across this country. Older Americans are paying 
inflated prices for their prescription medication. What did our study 
show about who is getting all the money? The study showed that the 
pharmacies are not the problem.
  The pharmacies in all of these studies are making a markup, to be 
sure, but a markup that ranges between 3 percent and 22 percent on 
their prescription medications. They are getting, in other words, an 
ordinary markup, and they are getting that markup because at the retail 
pharmacy level we are dealing with a competitive market. People can 
choose to go to a number of different pharmacies in their area.
  When we talk to seniors, we find that they are in fact price 
shopping. Their price shopping has become more desperate, more anxious 
now than it was in the past because, frankly, they are having a harder 
and harder time paying their bills. The bottom line is, of that 116 
percent price differential, maybe 25 percent maximum is going to the 
pharmacies. That means somewhere around 90 percent or so is going 
straight to the manufacturers.
  Now, is the pharmaceutical industry an industry about which we need 
to have grave concerns? I suggest not. Why do I say that? Fortune 
magazine reports that the most profitable industry in the country by 
any measure is the pharmaceutical industry. This chart is hard to read, 
but if we look at profitability as return on revenues, the number one 
industry is pharmaceuticals, with an 18.5 percent return in 1998. The 
next most profitable industry on that is commercial banks at something 
like 13 percent.
  If you look at return on assets, another way of measuring 
profitability, the pharmaceuticals are at 16.6 percent. Soaps and 
cosmetics are the second most profitable industry at 11 percent. If we 
look at return on equity, the number one again is pharmaceuticals at 
39.4 percent. Soaps and cosmetics are at 35 percent.

                              {time}  1830

  No matter how we look at this subject, we are talking about the most 
profitable industry in the country charging the highest prices in the 
country to seniors who do not have prescription drug coverage.
  If we look out beyond this country, we will find, as we have done 
studies comparing prices here versus prices in Canada and prices in 
Mexico, that the highest prices for prescription drugs in the world are 
charged in the United States, and within the United States the highest 
prices in the country are charged to those seniors who do not have any 
insurance for their prescription drugs.
  Now what is one possible way to deal with this problem?
  In developing this legislation we worked with the gentleman from 
California (Mr. Waxman), the ranking Democrat on the Committee on 
Government Reform and Oversight, the gentleman from Arkansas (Mr. 
Berry), a Democrat, and the gentleman from Texas (Mr. Turner), a 
Democrat, to put together legislation. I have sponsored the 
Prescription Drug Fairness for Seniors Act. It is H.R. 664, and here 
are the basic provisions:
  H.R. 664 would allow pharmacies to buy drugs for Medicare 
beneficiaries at the best price given to the Federal Government, and 
the best price is usually a price that is charged to the Veterans 
Administration or Medicaid or some other program. What the bill does is 
it gives senior citizens the benefit of the same discount received by 
hospitals, big HMOs and the Federal Government. What is unique about 
this legislation is that it does not cost the Federal Government any 
significant amount of money. We can achieve a 30 to 40 percent discount 
in prescription drug prices at no significant cost to the Federal 
Government, and how does that happen? Because it happens this way:
  All we are saying is that the Federal Government should be the 
negotiating agent, the buying agent, for people who are already 
participants in a Federal health care plan: Medicare. The Federal 
Government already provides for hospital care and doctors care and 
other benefits, but Medicare does not provide any funds at all for 
outpatient prescription drug coverage.
  Why is that? Well, back in 1965 when Medicare was created, 
prescription drugs did not cost anything. There were not, frankly, that 
many drugs with the potency and effectiveness of drugs that are 
available today, and the pharmaceutical industry gets a great deal of 
credit for developing many new drugs that have improved the quality of 
life for people. But if someone cannot afford to buy the drugs, they do 
not do them any good.
  H.R. 664 does not establish a new Federal bureaucracy, it does not 
cost any significant amount of money, but it would reduce prescription 
drugs for Medicare beneficiaries by 30 or even 40 percent.
  This is a bill that has broad support in the Democratic Caucus. There 
are 111 cosponsors to this bill, the gentleman from Vermont (Mr. 
Sanders), our Independent, and Democrats all across this country have 
lined up to say we want to reduce the cost of prescription drugs for 
seniors. To date, not one single Republican has cosponsored this 
legislation.

[[Page H3365]]

  The bill has been introduced in the Senate by Senators Ted Kennedy 
and Tim Johnson, but again not one single Republican has stood up for 
senior citizens against the pharmaceutical industry. It is not 
happening, and people need to ask why. Because a bill that provides a 
benefit of that magnitude, a 30 percent discount, and yet costs the 
Federal Government no significant amount of money is not objectionable.
  Now, one of the things that I found is that, and it has been 
interesting, is that as the prescription drug studies have been 
replicated around the country, people begin to understand that there is 
a solution out there. This is part of the solution. A Medicare 
prescription drug benefit of some kind is another part of the 
prescription. But the fact is that here is something that can be done 
right now. We do not need comprehensive Medicare reform in order to 
give seniors a discount that other people in the society already get.
  I am pleased to see so many of my colleagues here tonight. I promised 
the first person here that she would be able to stand up first, our new 
member from Cleveland, the gentlewoman from Ohio (Mrs. Jones).
  Mrs. JONES of Ohio. Mr. Speaker, I rise to join my colleagues in the 
discussion of the high price of prescription drugs for the elderly and 
in support of H.R. 664, the Prescription Drug Fairness Act for seniors, 
and I would like to thank the gentleman from Maine (Mr. Allen) for 
organizing this special order about this very important issue.
  This is a matter that will affect us all at some point in our lives. 
In my district, greater Cleveland, Ohio, I am currently conducting a 
study of the cost of prescription drugs for seniors. We are all aware 
that seniors need more money for prescription drugs. Many seniors 
cannot afford the medication their doctors prescribe to maintain their 
health. We shudder when we learn that they must choose between buying 
food and buying medication. As Congresspersons, we have an opportunity 
to do something to ease that burden by supporting H.R. 664.
  The need is obvious. As we age, our health gets worse. Medical 
technology has afforded us longer, healthier lives. Our collective 
longevity places a strain on Medicare, Social Security, health plans 
and insurance. We know these things. What perhaps we do not know is 
that seniors are being charged higher prices for medication than are 
the so-called preferred customers. One would think seniors, consumers 
of such a high volume of prescriptions, would be preferred customers. 
This is not the case.
  The gentleman from Maine (Mr. Allen) was the first Member to request 
that the Committee on Government Reform and Oversight conduct a study 
on the price of prescription drugs to seniors in June of 1998. What the 
study found is alarming, to say the least. My colleague, the gentleman 
from Ohio (Mr. Brown) subsequently did a study in the State of Ohio. 
Let me go just give a couple of examples. Let us take for instance 
Micronase, a diabetes medication by Upjohn. Micronase for a preferred 
customer is $10.05, but to a senior the vital medication costs $44.28. 
That is right, a difference of 341 percent. That is just an example of 
a laundry list of differing prices.
  I believe we need to step in to protect taxpayers from being gouged 
by drug manufacturers. We must protect our elderly from corporations 
seeking to profit from their illness. This issue is of particular 
importance to me because my parents are seniors. In fact, my father, 
Andrew Tubbs, will be 79 years old tomorrow, 63 years older than my 
son, Mervin, who turned 16 today.
  When I ran for Congress last year, throughout my district I received 
numerous complaints from seniors on this very issue. I promised to work 
on this issue, and I always try to keep my promise. That is why I rise 
in support of H.R. 664 and thank the gentleman from Maine (Mr. Allen) 
and my Democratic colleagues for bringing this issue to the floor.
  Mr. Speaker, I encourage everyone to support the Prescription Drug 
Fairness For Seniors Act.
  Mr. ALLEN. I say to the gentlewoman from Ohio (Mrs. Jones) we 
appreciate her support and hard work on this issue.
  I yield now to the gentleman from New York (Mr. Hinchey).
  Mr. HINCHEY. I want to thank the gentleman from Maine (Mr. Allen) 
very much for yielding to me to discuss this very important issue and 
also commend him for his leadership on it. I think all the Members of 
this House who are concerned about health care and particularly the 
health care of older Americans, and in fact every American who is 
concerned about this for themselves and for their parents owes him a 
debt of gratitude for the leadership that he has shown on this 
critically important issue.
  Prescription drugs, as we know, are an essential part of health care 
in America, and they are particularly essential for those who need it 
the most, and that inevitably is people as they age. As we age, we call 
upon the health care delivery system much more frequently. The elderly, 
in fact, spend three times as much of their income on health care as 
compared to that is which is spent by the average American. Our 
Nation's largest health care program, Medicare, currently does not 
provide even a minimal prescription drug benefit. Senior citizens use 
one-third of all prescriptions that are issued in our country, and yet 
nearly 40 percent of our seniors have no prescription drug coverage. 
They, therefore, must incur drug expenditures out of their pocket. 
Seniors on fixed incomes are the people who can least afford to shell 
out thousands of dollars a year for drugs on which their health and 
often their very lives depend.
  In short, we are asking them to choose often between the necessities 
of life, often between the basic essentials of life, choices between 
buying food or buying the medication they need to sustain their health. 
The irony in all of this is that in many cases the drug manufacturers 
are charging senior citizens double what they charge their most favored 
customers, as our colleague pointed out in those charts he showed us a 
few moments ago. Their favorite customers, of course, are large HMOs, 
or Federal Government or other large purchasers.
  The Committee on Government Reform and Oversight minority staff under 
the gentleman's leadership conducted a study on drug prices in the 
district that I represent as they did in districts across the country. 
The study surveyed prices at pharmaceuticals for 10 prescription drugs 
that are most commonly used by elderly Americans. The average price 
differential between what the drug companies' most favored customers 
pay and what a senior citizen in my congressional district in New York 
that stretches from the Finger Lakes across the Catskill Mountains to 
the Hudson Valley, the difference between what is paid by HMOs and 
senior citizens averaged 106 percent. So that is an extraordinary 
differential.
  For one drug, Ticlid, the price differential was in fact 270 percent 
difference. In other words, the senior citizens were paying 270 times 
what the price was for a person with a member of a large HMO, for 
example, or someone else who could purchase in bulk.
  The difference between what seniors pay and what large HMOs pay is 
not merely result of volume discounts, however. There are other factors 
that intervene. Compared to the markup on other consumer products, 
which average around 22 percent, the markup on prescription drugs was 
much higher, the average markup there being 116 percent. This price 
markup is coming directly as a result of the markup from the 
manufacturers. As my colleague pointed out, it is not the corner drug 
store that is scalping these prices. It is the drug manufacturers 
themselves that are causing these enormously high prices, and therefore 
they are the ones who are getting the huge profits.
  Our Nation's seniors deserve fair treatment. The Prescription Drug 
Fairness for Seniors Act, which we have introduced under the leadership 
here of the gentleman from Maine, would help ensure more equal 
treatment, fairer treatment, and better treatment and healthier 
treatment for our senior citizens. It would do so by allowing 
pharmacies to purchase drugs for Medicare beneficiaries at the best 
price charged by the Federal Government.
  This bill is estimated to have a benefit to senior citizens in that 
it will reduce the prices they pay for prescription drugs, as the 
gentleman has indicated to us in his charts by about 40 percent on 
average across the board. Each senior citizen will realize a 40 percent 
saving in the prescription drug

[[Page H3366]]

prices they require to maintain their health and in some cases their 
lives. Making prescription drugs more affordable for seniors is a 
strong first step as we work toward expanding the Medicare program to 
include a prescription drug benefit.
  So I want to thank the gentleman from Maine (Mr. Allen) for the 
leadership that he has shown. The passage of this bill, which he has 
indicated, is unfortunately at this moment sponsored only by Democrats. 
If we manage to pass this bill, it is going to mean an enormous saving 
for every elderly American across the country.
  So I praise the gentleman for his leadership in this very, very 
important issue, and I am very pleased to join with him in cosponsoring 
this bill, and he and I and all the others of us that are working so 
hard to get it passed will succeed, this bill will succeed, and the 
beneficiaries will be elderly Americans all across our country.
  Mr. ALLEN. Mr. Speaker, I thank the gentleman from New York, and I 
want to thank him for all his work on this legislation here within the 
House and also for conducting that study back in his district, which 
shows basically the same kind of pattern that we have seen across the 
country.
  I would like now to yield to the gentlewoman from Texas (Ms. Eddie 
Bernice Johnson).
  Ms. EDDIE BERNICE JOHNSON of Texas. Mr. Speaker, I rise to 
participate in today's special order to highlight the high cost of 
prescription drugs for seniors in America, and I wish to compliment the 
gentleman from Maine (Mr. Allen) for first organizing this special 
order and, secondly, for introducing the Prescription Drug Fairness for 
Seniors Act, H.R. 664.
  Sooner or later every American will be affected by Medicare. Like 
death and taxes, the coming of old age is inevitable for the living. 
The need for affordable and quality health care for seniors, therefore, 
is in everyone's best interest. When one's resources are limited like 
many of our constituents, we know we need to give this attention.
  Mr. Speaker, Texas is no different from anyone else.

                              {time}  1845

  Its health care, the need for health care, becomes even more acute. 
Currently, Medicare offers health care insurance protection for 39 
million seniors and disabled Americans. The program provides broad 
coverage for the cost of many primarily acute health services. However, 
there are many gaps in program coverage. The most glaring shortcoming 
is the fact that Medicare has a very limited prescription drug benefit.
  Most beneficiaries have some form of private or public health care 
insurance to cover expenses not met by Medicare. The reality is that 
many of these plans do not offer coverage or offer very limited 
protection for drug expenses. The result is that Medicare beneficiaries 
pay approximately half of their total drug expenses out-of-pocket.
  For many seniors, the existing system imposes quite a financial 
burden, and for many it means choosing between medication or food or 
utilities or other essentials. The average drug expenditure for 
Medicare enrollees living in the community was $600 in 1995. Total 
spending for persons with some drug coverage was $691 compared to $432 
for those with no coverage, according to data compiled by the 
Congressional Research Service.
  The average expenditure per person varied widely depending upon the 
type of insurance coverage. In every category, spending was 
significantly higher for those who had supplementary drug coverage than 
those who did not. Higher spending reflects higher use rates. In 1995, 
persons with coverage used 20.3 prescriptions per year compared to 15.3 
prescriptions for those with no supplementary drug coverage.
  One inference that the Congress and the President should take to 
heart from these figures is obvious. Based on their limited income, 
some seniors are foregoing the purchase of needed prescription drugs so 
that they can eat, pay bills or submit their rent checks on time.
  It is absolutely amazing to me that the U.S. Government would foster 
a Medicare policy that directs seniors to choose whether they have 
prescription drugs or whether their electric bill is paid on time. That 
is a choice without a favorable outcome.
  Based on this problem, the Congress and the President should be 
spurred into action to approve the legislation of the gentleman from 
Maine (Mr. Allen) or some legislation that brings additional 
prescription coverage for Medicare beneficiaries. Obviously, this 
benefit will be expensive, but I am confident that the Congress and the 
President, working with the drug manufacturers and health care 
community, can achieve this goal.
  A second concern that exists in the current Medicare system, that 
does not feature a drug benefit, is the difference between what seniors 
pay versus what other purchasers of health insurance paid. It affects 
them as their limited income begins.
  Studies by the staff of the gentleman from California (Mr. Waxman), 
who is on the Committee on Government Reform, have revealed that 
pharmaceutical companies are taking advantage of older Americans 
through price discrimination. These studies show that in Texas and 
other States seniors pay for prescription drugs, on average, nearly 
twice as much as the drug companies' favored customers, such as the 
Federal Government and large health maintenance organizations.
  This price difference is approximately 5 times greater than the 
average price difference in other consumer goods. I intend to work with 
the Committee on Government Reform to determine the extent of this 
problem as we complete the study in my district.
  In the meantime, the Congress and the President need to address the 
lack of Medicare prescription drug benefits. As a cosponsor of the bill 
offered by the gentleman from Maine (Mr. Allen), I would urge all 
Members to cosponsor it. This is not a partisan piece of legislation. 
This is for all seniors.
  This legislation allows pharmacies to purchase drugs for Medicare 
beneficiaries at the best price charged to the Federal Government 
through programs such as the Veterans Administration or Medicaid. The 
legislation has been estimated to reduce prescription costs for seniors 
by more than 40 percent.
  Mr. Speaker, I thank the gentleman for allowing me to participate 
this evening.
  Mr. ALLEN. Mr. Speaker, I thank the gentlewoman for her remarks. She 
has done great work on this issue. We appreciate her leadership.
  Mr. Speaker, I now yield to the gentleman from Massachusetts (Mr. 
Tierney). We have talked about this issue on numerous occasions and he 
has told me a good many stories about how the high cost of prescription 
drugs affects people in his district.
  Mr. TIERNEY. Mr. Speaker, I thank the gentleman from Maine (Mr. 
Allen) for yielding.
  Mr. Speaker, I want to thank the gentleman from Arkansas (Mr. Berry) 
for allowing me to step up before him for a second because I do have to 
leave.
  Mr. Speaker, I thought I wanted to come here this evening and talk 
with all the others that think this is an important issue. I want to 
take a little leave from the prepared remarks that I had to compliment 
the gentleman from Maine (Mr. Allen) for the leadership that he has 
shown on this.
  To let people know it goes beyond just filing the bill, the gentleman 
from Maine (Mr. Allen) and I shared time on the Committee on Government 
Reform, which unfortunately under its current leadership has been 
wasting a lot of time on issues that apparently are not getting that 
committee too far into anything concrete.
  The gentleman from Maine (Mr. Allen) has understood that that 
committee has great progress in line, it has great potential, and he 
has taken on an issue here that is important to the American people and 
is what that committee ought to be doing on a regular basis. So I 
commend the gentleman from Maine for stepping forward on that.
  Shortly after the gentleman from Maine (Mr. Allen) did his study, he 
was kind enough to share it. I did another study after the gentleman 
from Texas (Mr. Turner) did his, and the gentleman from Arkansas (Mr. 
Berry) did his. It was one of those succeeding studies that sort of 
went domino effect right across the country, as we have heard mentioned 
here.
  The results in my district were no different than they were in 
others. Seniors that are not covered in a large

[[Page H3367]]

plan are paying an extraordinary high amount for prescription drugs.
  This whole health care system that we have is imploding at the 
current time. We said this in 1993 and 1994. We told people then that 
if we did not do something about the systemic problems that we had in 
our health care delivery system, we were going to find that managed 
care companies would take every ounce of profit that they had out of 
it, squeeze it out and hand back to the American people a problem.
  Essentially, that is happening in large part, and aggravating that 
situation is the huge cost of prescription drugs; the cost to managed 
care systems themselves, the cost to hospitals, and the cost to 
individuals that are not covered on a plan large enough to drive a 
lower price.
  The gentleman from Maine (Mr. Allen) and I have both heard the 
prescription drug manufacturing companies come out and tell us that 
this is cost fixing, price fixing. We both smiled at that because we 
know it is the exact opposite of that. They do not have a free market 
system. In fact, the prescription drug companies are running 
monopolies. They have patents on those drugs and they are determining 
the prices on them.
  They are discriminating in two different ways that we found out 
through our reports. Overseas, where people have universal or single 
payer health care or they have some system to buy en gros for people, 
they are driving the prices down and then that cost is being made up, 
that profit for the company made up by shifting the higher costs to 
people that are not covered in this country. Then within this country, 
people that are covered in plans get a lower price because the plan is 
large enough to bargain, and that cost is then shifted onto those that 
are not in that position.
  We need to have the majority understand that this is not a partisan 
issue. They have made it a partisan issue. The fact that we can have 
111 or 112 sponsors to a bill and none of them be from the majority 
party, when it is a bill that talks to an issue that the American 
people speak about every day, and there is not one person that is going 
to speak here this evening that is not going to say that they took the 
studies and reports in their district and went to seniors and went to 
others in their district and talked about it, received a tremendous 
response from people who have said, ``That has been an issue for years. 
We are glad that Congress is listening. Something has to be done.''
  Now, obviously, what has to be done is Medicare has to include 
prescription drugs in that program in long range, and that, I hope, 
will come to fruition at some point this time. In the interim, the 
gentleman from Maine (Mr. Allen) has had the foresight to put this bill 
together, and I have been fortunate enough to cosponsor it and move it 
forward to allow people to have the benefit of the Federal supply 
system.
  Strangely enough, well, it is not really strange, it is no 
coincidence at all that the gentleman from Maine (Mr. Allen) is a 
cosponsor of significant campaign finance reform, as am I and most of 
the other people that will speak here this evening.
  Amazingly, in the early 1990s when many products were lifted and 
allowed States to buy under the Federal supply system, originally 
prescription drugs were on that list. Consequently, by the end of that 
fall when the appropriations bill was done, there was a single sentence 
in there that took prescription drugs out. So now prescription drug 
companies make 28 percent profit in some instances. Other companies in 
the Fortune 500 would be happy to have 10 percent profits.
  Nobody is saying we do not want them to have profits. They have been 
the top 20 profitable companies across the world in the last years. We 
want them to make a profit. We do not want them to shift the 
responsibility to the most vulnerable part of this population. We need 
to improve our health care system. We need to make sure that people can 
do it.
  And when we get through with this bill, when it passes, I am hoping 
we move on and allow legislation to pass to take away any impediments, 
anything that would stand in the way of States or entire regions of 
this country joining together to get their prescription drugs at even 
lower prices. We can put in protections for the manufacturers to make 
sure that their prices are not driven down worldwide, but we have to 
make sure that we move in that direction.
  Let me leave the gentleman from Maine (Mr. Allen) with one story that 
we have shared and that I think drives it home. There is a woman in my 
district who lives in Newburyport, Massachusetts, who wrote a letter 
and then she shared it later with the newspaper, and the letter begins, 
``I am sitting at my desk with an involuntary flow of tears streaming 
down my cheeks. My husband sits close by silently eating his heart out. 
I am angry. I am distraught. I am feeling extremely defenseless.''
  She goes on to say, ``My husband just returned from the drugstore. 
When I read the receipt, I felt a sense of panic and my eyes welled up. 
$250? This has to be a mistake. No, it is $250. But how can that be? We 
just paid $400 two weeks ago. We cannot keep on doing this. Our income 
tax return bailed us out last time. Now what? I took a quick mental 
inventory of our financial status. Our one credit card is maxed. Our 
bankruptcy prevents us from obtaining a loan. We are living paycheck to 
paycheck. We have overdraft but when that is exhausted, what will we 
do? I have no aces in the hole. All I have left is hope and prayer.''
  What people like her are hoping and praying is that Congress will not 
make this a partisan issue; Congress will understand that we are here 
not to waste time, as the Committee on Government Reform does all too 
often. It is here to act on legislation that is important to the 
American people, legislation like H.R. 664.
  Again, I congratulate the gentleman from Maine (Mr. Allen) for 
bringing this matter to the attention of the Congress and helping us 
getting it passed.
  Mr. ALLEN. Mr. Speaker, I thank the gentleman from Massachusetts (Mr. 
Tierney) for his good work. He is working hard on this, and the story 
that he told about his constituent is repeated in stories from others 
all across this country, because everywhere across this country there 
are people who are unable to pay for all their prescription drugs and 
their food and their electricity and their other living expenses that 
they have.
  Mr. Speaker, I yield now to the gentleman from Arkansas (Mr. Berry), 
who as a registered pharmacist took the lead in setting up the 
prescription drug task force. I can say honestly no one has worked 
harder on this legislation than the gentleman from Arkansas (Mr. 
Berry).
  Mr. BERRY. Mr. Speaker, I thank my distinguished colleague, the 
gentleman from Maine (Mr. Allen), for yielding, and I want to thank him 
for this outstanding bill and for this idea that has helped create this 
bill. He has provided the leadership that has gotten us where we are 
with this effort, and I appreciate very much what he has done.
  I also want to thank our colleagues, the gentleman from California 
(Mr. Waxman) and the gentleman from Texas (Mr. Turner), and all of the 
others that have joined us here this evening and that are cosponsors of 
this bill.
  I think this is something that for most of us it is just a simple 
matter of fairness. It is unbelievable that we would allow a situation 
to develop in this country because of our laws and our regulations that 
we have put in place, that would create a system where our senior 
citizens could be so grossly abused as they are right now by the 
prescription drug manufacturers in this country. It is a very 
distressing thing.
  We are the greatest Nation that has ever been in the history of the 
world. No other country has ever had our economic or our military or 
political power, and yet we allow a situation like this to become 
dominant and to take advantage of our senior citizens.
  When I first began the campaign in 1996, one of the first experiences 
I had was encountering a senior citizen that came to me and he said, 
``Medicare does not pay for my medicine. I have a $500-a-month Social 
Security check. My medicine is $600 a month. What do I do?'' I didn't 
have an answer for him. I thought I knew a lot about this business at 
that time, but that man has plagued me ever since. I think about him 
every day.

[[Page H3368]]

  It seems so unfair that we would let the manufacturers, the 
pharmaceutical manufacturers in this country, create a situation where 
that man who had worked hard, played by the rules, tried to do 
everything that he thought he was supposed to do to be prepared for his 
old age, get taken advantage of in that way.

                              {time}  1900

  If we had someone out here going door to door, taking the food out of 
our senior citizens' mouths, we would have them arrested, and yet that 
is exactly what is happening here with our senior citizens in this 
country. We all pay too much for prescription medication. The gentleman 
has done an outstanding job this evening of explaining that these are 
the most profitable companies anyplace. They are the most profitable 
legal businesses that exist. And yet, we allow them to take advantage 
of our senior citizens like this. We all encourage making a profit. We 
want these companies to be profitable, but when they make a profit at 
the expense of taking advantage and abusing senior citizens who cannot 
protect themselves, it becomes a moral issue, and that is the reason we 
have to do something about it.
  As the United States Congress, we should pass H.R. 664 and do 
everything that we can to at least give our seniors an even break. It 
is almost unbelievable to me that we have not done this a long time 
ago. This does not cost the government anything. All it does is make 
our seniors part of a very large purchasing pool and give them a good 
deal. For once in their lives, they get an even break.
  As we see the way the system is structured, it is unbelievable to me 
that the Federal Government has allowed it to go on and on and on. 
Every time that we have held the prescription drug manufacturers 
responsible, when we created generic drugs basically in this country, 
the prescription drug manufacturers came to us and they said, oh, this 
will be a terrible thing. We will not get any new products. The fact 
is, the investment they made in creating new products has more than 
quadrupled. It just simply does not hold water that they are not going 
to continue to invest in creating new products. We all know what an 
essential thing that this is. As I have said, it is a matter of basic 
fairness.
  I appreciate again the gentleman's efforts this evening to bring this 
to the public's attention, to bring it to our attention. I thank all of 
my colleagues for being here to support this effort and I look forward 
to the day when we can stand here and say, this is law. We have done 
the right thing, we have done the fair thing, and America is going to 
be a better place for it. I thank the gentleman.
  Mr. ALLEN. Mr. Speaker, I thank the gentleman. As I said before, no 
one has worked harder on this legislation than the gentleman has, and I 
agree with the gentleman, we will pass this legislation before we are 
done.
  I would now like to recognize one of our new Members, the gentleman 
from New Mexico (Mr. Udall).
  Mr. UDALL of New Mexico. Mr. Speaker, I thank the gentleman for his 
leadership on this issue. I think the gentleman has been out there on 
the front and he has really demonstrated why we need to do something 
about this cause.
  I rise today to talk about the problem of prescription drug costs. I 
have held a series of town hall meetings around my district in New 
Mexico and I ask senior citizens in these town hall meetings about 
health care and what their problems are. It became apparent to me very 
early on that one of the most frequently mentioned problems was how to 
deal with rising prescription drug costs.
  As one woman put it, she said, on a fixed income, I have to make a 
tough choice between my prescriptions and food and other essentials. So 
imagine having to make a choice between food and one's prescription 
drugs. There could not be a tougher choice.
  Well, basically we have heard some discussion here about what the 
problem is, and I would like to identify a little bit further where I 
think it is coming from. First of all, I think it is absolutely clear 
that we have an increasing drug cost situation going on. Clearly, 
Medicare does not cover the cost of prescription drugs. When I ask in 
my district, people said they got insurance, supplemental insurance, 
but found out that it did not even cover most of the cost of 
prescription drugs. The HMOs, although many of them say they cover the 
cost of prescription drugs, there are problems getting drugs there. So 
we have seniors paying out of their own pocket in order to cover those 
prescription drug costs, and we have big drug companies who are making 
record profits, and yet they discriminate between preferred customers 
and senior citizens.
  So this is an issue that Congress can really do something about. 
First, we can attack it with the gentleman's piece of legislation, 
which I think goes a long way toward trying to sort out this 
discrimination issue. We can require that the large, big drug companies 
sell at that preferred customer cost to the small pharmacies who, in my 
district, have said they would just pass that on to senior citizens, 
pass on that savings.
  Second, we can pass a real tough patient Bill of Rights. That patient 
Bill of Rights would say that if a doctor prescribes a drug, then it is 
going to be required that it be paid for, and we have such a proposal, 
a Democratic proposal that is circulating that I have signed on to and 
I am sure many others have signed on to here.
  Third, when we get into the whole issue of Medicare and making sure 
that Medicare is solvent, we can at least say that part or all of 
prescription drugs should be covered under that program which has 
helped so many since it was put in place in the 1960's.
  So let me just finish by saying, it is time we do something now; it 
is time that we move forward. I appreciate so much having the 
opportunity to speak and to have all of my other colleagues here that 
are working on this issue. I want to once again thank the gentleman for 
his leadership on this issue.
  Mr. ALLEN. Mr. Speaker, I thank the gentleman. I read some of the 
material that came out when the gentleman did his report in New Mexico 
and it was compelling information. I am so glad to have the gentleman 
working with us on this issue.
  I would like now to yield to the gentleman from Ohio (Mr. Brown), the 
distinguished and more-senior-than-many-of-us-Member from Ohio who has 
shown great enthusiasm and leadership on this issue since we started. I 
really appreciate all of the gentleman's help. I yield to the gentleman 
from Ohio (Mr. Brown).
  Mr. BROWN of Ohio. Mr. Speaker, I thank the gentleman from Maine and 
I want to also thank and laud the gentleman from New Mexico (Mr. Udall) 
for all of the good work that he has done, and all the others here this 
evening who have shown leadership on perhaps the most important issue 
facing America, America's elderly population.
  Last year the CEO of Bristol-Myers Squibb made a $1.2 million salary, 
a $1.9 million bonus, and $30.4 million in stock options. Last year, 
drug company profits outpaced those of every other industry by more 
than 5 percentage points. Millions of dollars for executives, billions 
of dollars in profits.
  Last year, 4.5 million seniors filled their prescriptions OR 
purchased food. They had to make that choice. They could not afford 
both. Millions of dollars for executives, billions of dollars in 
profits, yet senior citizens had to choose between food and medication.

  Seniors are paying higher prices for prescription drugs than any 
other purchaser because drug companies simply know they can get away 
with it. Medications are not luxury items, seniors have little market 
clout, and drug companies wield monopoly power. As a result, seniors 
pay prices set high enough to generate unrivaled profit margins and 
compensate for the discounts offered to other, more influential 
purchasers. The highest prices are charged to those least able to 
afford prescription drugs and most likely to need prescription drugs.
  What kind of system is that?
  Drug companies tell us it is the right system. They say if the United 
States no longer permits drug companies to gouge individual senior 
citizens, or even if we provide a meaningful insurance vehicle that 
puts seniors on an equal footing with other large purchasing groups, 
drug industry profits, they tell us, will be so stifled that innovation 
in medical progress will stop dead. That is what they tell us.

[[Page H3369]]

  But how much do these companies need to earn over and above their 
research and development costs to feel sufficiently appreciated? Drug 
companies earn exorbitant profits by charging seniors double, sometimes 
triple, even occasionally quadruple, what they charge large purchasers 
inside the United States and individual purchasers, and large 
purchasers outside the United States.
  Even seniors with prescription drug coverage are often overwhelmed by 
their prescription expenses. In Medicare supplemental plans, for 
example, when one gets past the deductible, the modest annual limit and 
the 50 percent coinsurance, coverage just does not look much like 
coverage anymore.
  In 1999, 5 million seniors, some with and others without drug 
coverage, will pay more than $1,000 out-of-pocket for prescription 
drugs. About 1 million will pay $2,000 or more for prescription drugs. 
These numbers could be significantly lower if seniors were simply 
treated like other customers.
  Prescription drug companies claim that if we take action to protect 
seniors from price gouging, everyone else's prescription drug prices 
will go up. Apparently, drug companies cannot tolerate any reduction in 
their record-breaking profits. They must compensate for charging 
seniors reasonable prices by upping the prices charged to other payers.
  I would like to again thank the gentleman from Maine (Mr. Allen) for 
the Democratic proposal, the Prescription Drug Fairness For Seniors 
Act, which prevents drug companies from singling the elderly out, 
charging them distorted prices relative to other purchasers. This bill 
makes sense. I hope the Republican leadership will do its jobs and 
demand that drug companies are held accountable.
  Mr. ALLEN. Mr. Speaker, I thank the gentleman from Ohio for his 
leadership on this. I welcome the gentleman from Mississippi (Mr. 
Shows).
  Mr. SHOWS. Mr. Speaker, it is good to be here. I thank the gentleman. 
No Americans, especially our senior citizens, should ever be forced to 
choose between buying food or medicine and they should not have to 
decide between paying the electric bill and their prescription bill. 
That is a shame to say, but in America today we allow that to happen.
  Early this month I read an article in The Washington Post where a 
woman with stomach tumors stopped taking her prescription medication 
because she could not afford to pay for it. She said not taking her 
medicine caused unbearable pain, but she really had no choice, because 
she could not afford it. There is just something about that that is not 
right.
  We have millions and millions of Americans suffering from high blood 
pressure and diabetes and heart disease and medicines that are 
absolutely necessary for these people to take. These are not luxuries, 
this is something that we have to have. It is not an option. Yet, 
prescription drugs costs continue to rise and many seniors just do not 
have the money to pay for it.
  I can give a personal example. My mother-in-law is on a fixed income. 
If it was not for family, she really would not be able to do it. 
Something has to do it for them. If a senior citizen has to pay $250 a 
month for just one prescription drug, that adds up to $1,000 annually. 
Think about it. Most of them have more than one.
  Our seniors spend a lifetime working hard and paying taxes. They help 
build our roads, educate our children, help provide for the defense of 
this country, a lot of them are our veterans; and after all of these 
sacrifices they have made, they deserve the peace of mind knowing that 
they can get medication that is affordable.
  That is why I am a cosponsor of the gentleman's bill, the 
Prescription Drug Fairness For Seniors Act of 1999. I think it is a 
fine piece of legislation.
  This legislation would substantially lower the cost of what the 
senior citizen would have to pay. Right now, they pay almost twice as 
much for prescription drugs as the drug companies. That is what they 
call favored customers or volume customers such as the Federal 
Government and large HMOs. This legislation will allow pharmacies to 
purchase drugs for Medicare beneficiaries at the same rate as the so-
called preferred customers.
  But we can do more to help alleviate the cost of prescription drugs. 
We should also pass H.R. 805, the legislation of the gentleman from New 
Jersey (Mr. Pallone), to allow seniors to have access to FDA-approved 
generic medicines. These generic brands can be bought, as we know, 30 
to 40 percent cheaper and they provide the same services. If seniors 
are having to pay more for a name brand when they can get the same 
effect from a generic brand they should be able to do that at that 
reduced price.
  Our long-term goal should be to figure out how to add prescription 
drug benefits to Medicare. Seniors ought not have to worry about that. 
We ought to be doing it for them.
  Let us make prescription drugs more accessible and affordable to our 
seniors. Let us pass H.R. 664 and H.R. 805 and make it so our seniors 
in America never have to choose in America between buying food and 
their medicine. Let us make sure our seniors never have to go without 
their medication because they cannot afford it. Let us add a 
prescription drug benefit to Medicare. We know it is the right thing to 
do. I thank the gentleman.
  Mr. ALLEN. Mr. Speaker, I thank the gentleman for being here tonight 
and for all of his hard work on this issue.
  I yield now to the gentlewoman from the District of Columbia (Ms. 
Norton).
  Ms. NORTON. Mr. Speaker, I thank the gentleman from Maine for 
yielding, but I especially thank him for his consistent leadership on 
this very important issue.
  Yesterday, in the District of Columbia, I had my Senior Legislative 
Day. There I released the study for the District of Columbia entitled, 
Prescription Drug Pricing in Washington DC: Drug Companies Profit at 
the Expense of Older Americans. That study was prepared by the minority 
staff of the Committee on Government Reform and Oversight on which both 
the gentleman from Maine (Mr. Allen) and I serve.
  The gentleman's bill is very important, but it is a very moderate 
bill.

                              {time}  1915

  It would only level the playing field so that seniors can take 
advantage of bulk pricing the way many Americans, most of them younger 
than seniors, already do. I do not have any problem with bulk pricing. 
It is a standard American practice. In fact, it is a standard practice 
throughout the world.
  In the case of the drug companies, the bill of the gentleman from 
Maine (Mr. Allen) would allow them to share some of the profits, they 
are now hoarding $25 billion a year, by spreading the standard practice 
of bulk buying more widely to cover those who can least afford to buy 
their drugs individually.
  But I want to say right here and now that while I support the 
gentleman's bill, I am a cosponsor of the gentleman's bill, I believe 
that we can afford a prescription drug benefit in Medicare, and I want 
to say why.
  There has been a revolution in American medicine. At the time that 
Medicare was passed, seniors could go to the drugstore and for a couple 
of dollars, buy the couple of pills that were available for what ails 
them. Today there has been a shift from invasive procedures to drug 
therapy, in effect.
  If I could ask the gentleman a question, does the gentleman know 
whether there has been a study as to how much the use of drugs and 
medicines is saving the Medicare program?
  Mr. ALLEN. Mr. Speaker, I would tell the gentlewoman that I am not 
familiar with the study, but it has to be saving substantial amounts. 
Spending on prescription drugs is going up 15 percent a year, and we 
all know that the number of hospital beds in use is going down, at the 
very time that seniors are living longer. So there have to be 
substantial savings here, but I am not aware of a study that would 
quantify that.
  Ms. NORTON. I raise the question for the gentleman only because this 
much seems clear: We are forcing down costs in the Medicare program. 
Nothing is forcing down the costs of drugs. So I would wager that there 
are billions of dollars being saved by the Medicare program by not 
having to pay for drugs.
  What I am suggesting is that precisely because they are saving that 
money, that the Medicare program

[[Page H3370]]

ought to allow some of those costs to shift to the program itself.
  After all, that program is willing to pay for the most costly 
procedures if prescribed by a physician, but it is not willing to pay 
for procedures under the direction of a pharmacist. This is absolutely 
irrational. The cost is greatly out of proportion and is quite 
outrageous. We will pay for institutional care by allowing a senior to 
spend down her resources until she gets nursing home care paid for 
entirely by Medicaid, but we will not pay for a drug benefit that will 
keep her out of a nursing home altogether.
  Seniors cannot possibly take this much longer. I cannot believe that 
the seniors who have saved colas and social security will not force 
prescription drugs into their Medicare. If we are going to change how 
we treat people from invasive procedures and save the taxpayer money, 
then it seems to me we have a moral obligation to shift some of that 
savings to seniors who are on limited incomes and cannot possibly 
continue to shoulder the burden they are shouldering now.
  In the report done for my own district, we found that my seniors were 
paying 137 percent more than preferred customers. An example, and that 
is six times, by the way, more than they pay for other consumer goods, 
an example was Synthroid, a thyroid hormone drug where the drug to the 
preferred customer is $1.75 a dose, and $31.43 a dose to the senior.
  The gentleman's bill, minimally, must be passed, and it must move us 
on to making prescription drugs a benefit of Medicare.
  Mr. ALLEN. Mr. Speaker, I thank the gentlewoman, and I will return 
again on another occasion to the gentlewoman from Texas (Ms. Jackson-
Lee).
  I want to thank all Members who have been here tonight.
  Mr. FROST. Mr. Speaker, I rise today in support of the Prescription 
Drug Fairness for Seniors Act. This issue is one of great concern to a 
number of my constituents who are Medicare beneficiaries who use one 
third of all prescription drugs in the United States.
  On average, seniors pay nearly twice as much as the drug companies' 
favored customers, such as the federal government and large HMOs and 
37% of our nation's seniors do not have prescription drug coverage. In 
my district in Texas alone, many seniors are forced to pay up to 109% 
or more for the most commonly used prescription drugs. It is time to 
show our nation's seniors that their health is more important than drug 
company profits.
  I have had a great number of constituents contact me personally to 
share their concerns for those seniors that are literally having to 
choose between buying food and buying their prescriptions. An even 
greater number of individuals endanger their lives every day by not 
taking the required dosage or only filling some of their prescription 
medications since they can not afford to meet all of their medical 
needs.
  It is high time that the U.S. Congress address the issue of a 
Medicare benefit for prescription drugs. How much longer are we going 
to allow the pharmaceutical industry, which is currently enjoying 
record profits, to dictate the health care choices of our senior 
citizens?
  I support H.R. 664, the Prescription Drug Fairness for Seniors Act 
because it allows pharmacies to purchase drugs for Medicare 
beneficiaries at the best price charged to the federal government 
though programs such as the VA or Medicaid. This legislation would 
reduce prescription drug prices for seniors by more than 40%, and 
without imposing price controls, but putting an end to price 
discrimination.
  It is time to show our nation's seniors that their health is more 
important than drug company profits.

                          ____________________