[Congressional Record Volume 145, Number 127 (Monday, September 27, 1999)]
[House]
[Pages H8860-H8869]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




             SCHOOL CONSTRUCTION AND EDUCATION IMPROVEMENT

  The SPEAKER pro tempore (Mr. Wamp). Under the Speaker's announced 
policy of January 6, 1999, the gentleman from New York (Mr. Owens) is 
recognized for 60 minutes.
  Mr. OWENS. Mr. Speaker, in order to have continuity on this question 
of prescription drugs, I would like to yield my first 5 minutes to the 
gentleman from Texas (Mr. Gonzalez).


                    High Cost of Prescription Drugs

  Mr. GONZALEZ. Mr. Speaker, I thank my distinguished colleague for 
yielding. It is a great opportunity, and I appreciate it, because it is 
a very important subject and it is an issue, I think, when we go to our 
town hall meetings, obviously this is something that is coming up over 
and over again.
  In my district, as in many congressional districts around the 
country, older Americans are increasingly concerned about the high 
prices they pay for prescription drugs. I requested that the minority 
staff of the Committee on Government Reform investigate this particular 
issue. Numerous studies have concluded that many older Americans pay 
high prices for prescription drugs and have a difficult time paying for 
the drugs that they require. The study presents disturbing evidence 
about the cause of these high prices.
  The findings indicate that older Americans and others who pay for 
their own drugs are charged far more for prescription drugs than the 
drug companies are charging their most favored customers, such as large 
insurance companies, health maintenance organizations and the Federal 
Government.
  The findings show that senior citizens in my district, the 20th 
Congressional District, San Antonio, Texas, pay more for his or her own 
prescription drugs, on average, more than twice what the home health 
organizations would pay, private insurance companies and the Federal 
Government. This is an unusually large price differential. It is seven 
times greater than the average price differential for any other 
consumer good.
  It appears that drug companies are engaged in a form of 
discriminatory pricing that victimizes those who are least able to 
afford it. Large corporate, governmental and institutional customers 
with market power are able to buy their drugs at discounted prices. 
Drug companies then raise prices for sales to seniors and others who 
pay for drugs themselves to compensate for these discounts to their 
favored customers.
  Older Americans are having an increasingly difficult time affording 
prescription drugs. By one estimate, more than one out of eight older 
Americans has been forced to choose between buying food and buying 
medicine. There is no reason in today's time, in this the greatest 
country and democracy known to mankind, that we should have this type 
of situation exist.
  Preventing the pharmaceutical industry's discriminatory pricing, 
which it is, and thereby reducing the price of prescription drugs for 
seniors and other individuals will improve the health and financial 
well-being of millions of older Americans.
  Mr. Speaker, I include for the Record a copy of this report prepared 
by the Committee on Government Reform for my district.

PRESCRIPTION DRUG PRICING IN THE 20TH CONGRESSIONAL DISTRICT IN TEXAS: 
        DRUG COMPANIES PROFIT AT THE EXPENSE OF OLDER AMERICANS

    (Prepared for Rep. Charles A. Gonzalez, Minority Staff Report, 
 Committee on Government Reform, U.S. House of Representatives, August 
                                2, 1999)


                           executive summary

       This staff report was prepared at the request of Rep. 
     Charles A. Gonzalez of Texas. In Mr. Gonzalez' district, as 
     in many other congressional districts around the country, 
     older Americans are increasingly concerned about the high 
     prices that they pay for prescription drugs. Mr. Gonzalez 
     requested that the minority staff of the Committee on 
     Government Reform investigate this issue. This report is the 
     first report to quantify the extent of prescription drug 
     price discrimination in Mr. Gonzalez' district and its 
     impacts on seniors.
       Numerous studies have concluded that many older Americans 
     pay high prices for prescription drugs and have a difficult 
     time paying for the drugs they need. This study presents 
     disturbing evidence about the cause of these high prices. The 
     findings indicate that older Americans and others who pay for 
     their own drugs are charged far more for their prescription 
     drugs than are the drug companies' most favored customers, 
     such as large insurance companies, health maintenance 
     organizations, and the federal government. The findings show 
     that a senior citizen in Mr. Gonzalez' district paying for 
     his or her own prescription drugs must pay, on average, more 
     than twice as much for the drugs as the drug companies' 
     favored customers. The study found that this is an unusually 
     large price differential--seven times greater than the 
     average price differential for other consumer goods.
       It appears that drug companies are engaged in a form of 
     ``discriminatory'' pricing that victimizes those who are 
     least able to afford it. Large corporate, governmental, and 
     institutional customers with market power are able to buy 
     their drugs at discounted prices. Drug companies then raise 
     prices for sales to seniors and others who pay for drugs 
     themselves to compensate for these discounts to the favored 
     customers.
       Older Americans are having an increasingly difficult time 
     affording prescription drugs. By one estimate, more than one 
     in eight older Americans has been forced to choose between 
     buying food and buying medicine. Preventing the 
     pharmaceutical industry's discriminatory pricing--and thereby 
     reducing the cost of prescription drugs for seniors and other 
     individuals--will improve the health and financial well-being 
     of millions of older Americans.
     A. Methodology
       This study investigates the pricing of the five brand name 
     prescription drugs with the highest sales to the elderly. It 
     estimates the differential between the price charged to the 
     drug companies' most favored customers, such as large 
     insurance companies, HMOs, and certain federal government 
     purchasers, and the price charged to seniors. The results are 
     based on a survey of retail prescription drug prices in chain 
     and independently owned drug stores in Mr. Gonzalez' 
     congressional district in Texas. These prices are compared to 
     the prices paid by the drug companies' most favored 
     customers. For comparison purposes, the study also estimates 
     the differential between prices for favored customers and 
     retail prices for other consumer items.
     B. Findings
       The study finds that:
       Older Americans pay inflated prices for commonly used 
     drugs. For the five drugs investigated in this study, the 
     average price differential was 154% (Table 1). This means 
     that senior citizens and other individuals who pay for their 
     own drugs pay more than twice as much for these drugs than do 
     the drug companies' most favored customers. In dollar terms, 
     senior citizens must pay $68.06 to $122.99 more per 
     prescription for these five drugs than favored customers.

[[Page H8861]]



 TABLE 1.--AVERAGE RETAIL PRICES IN MR. GONZALEZ' DISTRICT FOR THE FIVE BEST-SELLING DRUGS FOR OLDER AMERICANS ARE MORE THAN TWICE AS HIGH AS THE PRICES
                                                 THAT DRUG COMPANIES CHARGE THEIR MOST FAVORED CUSTOMERS
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                 Differential for senior
                                                                                                       Prices for     Retail            citizens
           Prescription drug                     Manufacturer                       Use                 favored     prices for -------------------------
                                                                                                       customers     seniors      Percent       Dollar
--------------------------------------------------------------------------------------------------------------------------------------------------------
Zocor.................................  Merck........................  Cholesterol..................       $27.00      $113.94          322       $86.94
Prilosec..............................  Astra/Merck..................  Ulcers.......................        59.10       129.49          119        70.39
Norvasc...............................  Pfizer, Inc..................  High Blood Pressure..........        59.71       127.77          114        68.06
Procardia XL..........................  Pfizer, Inc..................  Heart Problems...............        68.35       142.17          108        73.82
Zoloft................................  Pfizer, Inc..................  Depression...................       115.70       238.69          106       122.99
    Average price differential........  .............................  .............................  ...........  ...........  ...........         154%
--------------------------------------------------------------------------------------------------------------------------------------------------------

       For other popular drugs, the price differential is even 
     higher. This study also analyzed a number of other popular 
     drugs used by older Americans and in some cases found even 
     higher price differentials (Table 2). The drug with the 
     highest price differential was Synthroid, a commonly used 
     hormone treatment manufactured by Knoll Pharmaceuticals. For 
     this drug, the price differential for senior citizens in Mr. 
     Gonzalez' congressional district was 1,702%. An equivalent 
     quantity of this drug would cost the manufacturer's favored 
     customers only $1.75, but would cost the average senior 
     citizen in Mr. Gonzalez' district over $31.00. For Micronase, 
     a diabetes treatment manufactured by Upjohn, an equivalent 
     dose would would cost the favored customers $10.05, while 
     seniors in Mr. Gonzalez' district are charged an average of 
     $54.81. The price differential was 445%.
       Price differentials are far higher for drugs than they are 
     for other goods. This study compared drug prices at the 
     retail level to the prices that the pharmaceutical industry 
     gives its most favored customers, such as large insurance 
     companies, government buyers with negotiating power, and 
     HMOs. Because these customers typically buy in bulk, some 
     difference between retail prices and ``favored customer'' 
     prices would be expected.

                        TABLE 2.--PRICE DIFFERENTIALS FOR SOME DRUGS ARE MORE THAN 1,700%
----------------------------------------------------------------------------------------------------------------
                                                                           Prices for     Retail        Price
      Prescription drug           Manufacturer               Use            favored     prices for  differential
                                                                           customers     seniors     for seniors
----------------------------------------------------------------------------------------------------------------
Synthroid...................  Knoll                 Hormone Treatment...        $1.75       $31.54        1,702%
                               Pharmaceuticals.
Micronase...................  Upjohn..............  Diabetes............        10.05        54.81          445%
----------------------------------------------------------------------------------------------------------------

       The study found, however, that the differential was much 
     higher for prescription drugs than it was for other consumer 
     items. The study compared the price differential for 
     prescription drugs to the price differentials on a selection 
     of other consumer items. The average price differential for 
     the five prescription drugs was 154%, while the price 
     differential for other items was only 22%. Compared to 
     manufacturers of other retail items, pharmaceutical 
     manufacturers appear to be engaging in significant price 
     discrimination against older Americans and other individual 
     consumers.
       Pharmaceutical manufacturers, not drug stores, appear to be 
     responsible for the discriminatory prices that older 
     Americans pay for prescription drugs. In order to determine 
     whether drug companies or retail pharmacies were responsible 
     for the high prescription drug prices paid by seniors in Mr. 
     Gonzalez' congressional district, the study compared average 
     wholesale prices that pharmacies pay for other drugs to the 
     prices at which the drugs are sold to consumers. This 
     comparison revealed that the pharmacies in Mr. Gonzalez' 
     district appear to have relatively small markups between the 
     prices at which they buy prescription drugs and the prices at 
     which they sell them. The retail prices in Mr. Gonzalez' 
     district are just 6% above the published national Average 
     Wholesale Price, which represents the manufacturers' 
     suggested price to pharmacies. The differential between 
     retail prices and a second indicator of pharmacy costs, the 
     Wholesale Acquisition Cost, which represents the average 
     price pharmacies actually pay for drugs, is only 31%. This 
     indicates that it is drug company pricing policies that 
     appear to account for the inflated prices charged to older 
     Americans and other customers.

      I. The Vulnerability of Older Americans to High Drug Prices

       This report focuses on a continuing, critical issue facing 
     older Americans--the cost of their prescription drugs. 
     Numerous surveys and studies have concluded that many older 
     Americans pay high costs for prescription drugs and are 
     having a difficult time paying for the drugs they need. The 
     cost of prescription drugs is particularly important for 
     older Americans because they have more medical problems, and 
     take more prescription drugs, than the average American. This 
     situation is exacerbated by the fact that the Medicare 
     program, the main source of health care coverage for the 
     elderly, fails to cover the cost of most prescription drugs.
       According to the National Institute on Aging, ``as a group, 
     older people tend to have more long-term illnesses--such as 
     arthritis, diabetes, high blood pressure, and heart disease--
     than do younger people.'' Other chronic diseases which 
     disproportionately affect older Americans include depression 
     and neurodegenerative diseases such as Alzheimer's disease, 
     Lou Gehrig's disease, and Parkinson's disease. Older 
     Americans spend almost three times as much of their income 
     (21%) on health care than those under the age of 65 (8%).
       The latest survey data indicate that 86% of Medicare 
     beneficiaries are taking prescription drugs. Almost 14 
     million senior citizens, 38% of all Medicare beneficiaries, 
     use more than $1,000 of prescription drugs annually. The 
     average older American uses 18.5 prescriptions annually, 
     significantly more than the average under-65 population. It 
     is estimated that the elderly in the United States, who make 
     up 12% of the population, use one-third of all prescription 
     drugs.
       Although the elderly have the greatest need for 
     prescription drugs, they often have the most inadequate 
     insurance coverage for the cost of these drugs. With the 
     exception of drugs administered during inpatient hospital 
     stays, Medicare generally does not cover prescription drugs. 
     According to a recent analysis by the National Economic 
     Council, approximately 75% of Medicare beneficiaries lack 
     dependable, private-sector prescription drug coverage.
       Thirty-five percent of Medicare recipients, over 13 million 
     senior citizens, do not have any insurance coverage for 
     prescription drugs. In rural areas, the problem is even 
     worse, with 48% of Medicare recipients lacking any 
     prescription drug coverage. In total, Medicare beneficiaries 
     pay more than half of their drug costs out of their own 
     pockets.
       Even when seniors have prescription drug coverage, the 
     coverage is often inadequate. The number of firms offering 
     retirees prescription drug coverage is declining, from 40% in 
     1994 to 30% in 1998. Medigap policies are often prohibitively 
     expensive, while offering inadequate coverage. Medicare 
     managed care plans are also sharply reducing benefits and 
     coverage.
       The high cost of prescription drugs and the lack of 
     insurance coverage cause enormous hardships for older 
     Americans. In 1993, 13% of older Americans surveyed reported 
     that they were forced to choose between buying food and 
     buying medicine. By another estimate, five million older 
     Americans are forced to make this difficult choice.

II. Are Drug Companies Exploiting the Vulnerability of Older Americans?

       Rep. Charles A. Gonzalez of Texas asked the minority staff 
     of the Committee on Government Reform to investigate whether 
     pharmaceutical manufacturers are taking advantage of older 
     Americans through price discrimination, and, if so, whether 
     this is part of the explanation for the high drug prices 
     being paid by older Americans in his congressional district. 
     This report presents the results of this investigation.
       Industry analysts have recognized that price discrimination 
     occurs in the prescription drug market. According to a recent 
     Standard & Poor's report on the pharmaceutical industry, 
     ``[d]rugmakers have historically raised prices to private 
     customers to compensate for the discounts they grant to 
     managed care customers. This practice is known as `cost 
     shifting.' '' Under this practice, ``drugs sold to wholesale 
     distributors and pharmacy chains for the individual 
     physician/patient are marked at the higher end of the 
     scale.''
       Although industry analyses acknowledge that price 
     discrimination occurs, they have not estimated its degree or 
     impact. This report, prepared at Mr. Gonzalez' request, is 
     the first attempt to quantify the extent of price 
     discrimination and its impact on senior citizens in the 20th 
     Congressional District in Texas.
       The study design and methodology used to test whether drug 
     companies are discriminating against older Americans in their 
     pricing are described in part III. The results of the study 
     are described in part IV. These results show that drug 
     manufacturers appear to be engaged in substantial price 
     discrimination against older Americans and other individuals 
     who must pay for their own prescription drugs. The impact of 
     the manufacturers' pricing policies on corporate profits is 
     discussed in part V.

[[Page H8862]]

                            III. Methodology

     A. Selection of Drugs for this Survey
       This survey is based primarily on a selection of the five 
     patented, nongeneric drugs with the highest annual sales to 
     older Americans in 1997. The list was obtained from the 
     Pennsylvania Pharmaceutical Assistance Contract for the 
     Elderly (PACE). The PACE program is the largest outpatient 
     prescription drug program for older Americans in the United 
     States for which claims data is available, and is used in 
     this study, as well as by several other analysts, as a proxy 
     database for prescription drug usage by all older Americans. 
     In 1997, over 250,000 persons were enrolled in the program, 
     which provided over $100 million of assistance in filling 
     over 2.8 million prescriptions.
     B. Determination of Average Retail Drug Prices for Seniors
       In order to determine the prices that senior citizens are 
     paying for prescription drugs in Mr. Gonzalez' congressional 
     district, the minority staff and the staff of Mr. Gonzalez' 
     congressional office conducted a survey of 11 drug stores--
     including both independent and chain stores. Mr. Gonzalez 
     represents the 20th Congressional District in southern Texas, 
     which includes central San Antonio and rural areas to the 
     west and southwest of the City.
     C. Determination of Prices for Drug Companies' Most Favored 
         Customers
       Drug pricing is complicated and drug companies closely 
     guard their pricing strategies. For example, drug companies 
     require HMOs to sign confidentiality agreements before 
     offering them pricing discounts. The best publicly available 
     indicator of the prices drug companies charge their most 
     favored customers is the prices the companies charge the 
     federal government.
       The federal government pays for prescription drugs through 
     several different programs. One important program is the 
     Federal Supply Schedule (FSS), which is a price catalogue 
     containing goods available for purchase by federal agencies. 
     Drug prices on the FSS are negotiated by the Department of 
     Veterans Affairs (VA) and often approximate the prices that 
     the drug companies charge their most favored non-federal 
     customers. According to the U.S. General Accounting Office, 
     ``[u]nder GSA procurement regulations, VA contract officers 
     are required to seek an FSS price that represents the same 
     discount off a drug's list price that the manufacturer offers 
     its most-favored nonfederal customer under comparable terms 
     and conditions.'' To obtain additional price discounts 
     available to the private sector, the VA has established at 
     least two additional negotiated-price programs: (1) a VA 
     formulary that operates similarly to the formularies 
     established by well-managed HMOs, and (2) a Blanket Price 
     Agreement (BPA) program, under which the VA commits to 
     purchasing minimum quantities of particular prescription 
     drugs. Yet another program through which the federal 
     government obtains prescription drugs is section 340(b) of 
     the Public Health Service Act, which entitles four agencies 
     (the VA, the Indian Health Service, the Department of 
     Defense, and the Public Health Service) to purchase drugs at 
     a maximum price of 24% below the manufacturer's average 
     nonfederal price.
       This analysis uses the lowest price paid by the federal 
     government as a proxy for the prices paid by drug companies 
     most favored customers. All prices were updated in June 1999 
     to reflect current pricing.
     D. Determination of Prices Paid by Pharmacies
       The survey also looked at two other pricing indicators: (1) 
     the Average Wholesale Price (AWP) and (2) the Wholesale 
     Acquisition Cost (WAC). These two prices provide an indicator 
     of the extent of markups that are attributable to the 
     pharmacy (in contrast to those that are due to the drug 
     manufacturer). The AWP represents the price that 
     manufacturers suggest that wholesalers charge retail 
     pharmacies; the WAC represents the actual average price that 
     wholesalers charge pharmacies. Both AWP and WAC were obtained 
     from the Medispan database and were updated in June 1999 to 
     reflect current pricing.
     E. Determination of Drug Dosages
       When comparing prices, the study used the same criteria 
     (dosage, form, and package size) used by the GAO in its 1992 
     report, Prescription Drugs: Companies Typically Charge More 
     in the United States Than In Canada. For drugs that were not 
     included in the GAO report, the study used the dosage, form, 
     and package size common in the years 1994 through 1997, as 
     indicated in the Drug Topics Red Book. The dosages, forms, 
     and package sizes used in the study are shown in Appendix B.
     F. Comparison of Price Differentials for Other Retail Items
       In order to determine whether the differential between the 
     most favored customer prices and retail prices for drugs 
     commonly used by older Americans is usually large, the study 
     compared the prescription drug price differentials to price 
     differentials on other consumer products. To make this 
     comparison, a list of consumer items other than drugs 
     available through the FSS was assembled. FSS prices were then 
     compared with the retail prices at which the items could be 
     bought at a large national chain.

    IV. Drug Companies Charge Older Americans Discriminatory Prices

     A. Discrimination in Drug Pricing
       In the case of the five drugs with the highest sales to 
     seniors, the average price differential between the price 
     that would be paid by a senior citizen in Mr. Gonzalez's 
     congressional district and the price that would be paid by 
     the drug companies' most favored customers was 154% (Table 
     1). The study thus showed that the average price that older 
     Americans and other individual consumers in Mr. Gonzalez's 
     district pay for these drugs is more than double the price 
     paid by the drug companies' favored customers, such as large 
     insurance companies and HMOs.
       For individual drugs, the price differential was even 
     higher. Among the five best selling drugs, the highest price 
     differential was 322% for Zocor, a cholesterol treatment 
     manufactured by Merck. For other popular drugs, the study 
     found even greater price differentials. The drug with the 
     highest price differential was Synthroid, a commonly used 
     hormone treatment manufactured by Knoll Pharmaceuticals. For 
     this drug, the price differential for senior citizens in Mr. 
     Gonzalez' district was more than 1,700%. An equivalent 
     quantity of this drug would cost the most favored customers 
     only $1.75, but would cost the average senior citizen in Mr. 
     Gonzalez' congressional district $31.54. For Micronase, a 
     diabetes treatment manufactured by Upjohn, the price 
     differential as 445%. Every drug looked at in this study had 
     a large price differential. Among the five highest selling 
     drugs, three (Zocor, Prilosec, and Norvasc) had price 
     differentials that exceeded 110%. The lowest price difference 
     was still high--106%, for Zoloft.
       In dollar terms, Zoloft, an antidepressant, had the highest 
     price differential. Senior citizens in Mr. Gonzalez' district 
     must pay over $120.00 more for 100 tablets of Zoloft than a 
     favored customer. The difference between seniors' prices and 
     prices for favored customers was more than $80.00 for 60 
     tablets of Zocor and over $60.00 per prescription for each of 
     the remaining three best selling drugs (Procardia XL, 
     Norvasc, and Prilosec).
     B. Comparison with Other Consumer Goods
       The study also analyzed whether the large differentials in 
     prescription drug pricing could be attributed to a volume 
     effect. The drug companies' most favored customers, such as 
     large insurance companies and HMOs, typically buy large 
     volumes of drugs. Thus, it could be expected that there would 
     be differences between the prices charged the most favored 
     customers and retail prices. The study found, however, that 
     the differential in prescription drug prices were much 
     greater than the differentials in prices for other consumer 
     goods. The study found that, in the case of other consumer 
     goods, the average difference between retail prices and the 
     prices charged most favored customers, such as large 
     corporations and institutions, was only 22%. The average 
     price differential in the case of prescription drugs was 
     seven times larger than the average price differential for 
     other consumer goods. This indicates that a volume effect is 
     unlikely to explain the large differential in prescription 
     drug pricing.
     C. Drug Company Versus Pharmacy Responsibility
       The study also sought to determine whether drug companies 
     or retail pharmacies are responsible for the high prices 
     being paid by older Americans. To do this, the study compared 
     the average wholesale prices that pharmacies pay for drugs to 
     the prices at which the drugs are sold to consumers. This 
     comparison revealed that pharmacies appear to have relatively 
     small markups between the prices at which they buy 
     prescription drugs and the prices at which they sell them. 
     The study found that the average retail price for the five 
     best-selling prescription drugs was just 6% more than the 
     published Average Wholesale Price, and only 31% above the 
     pharmacies' Wholesale Acquisition Cost. This finding 
     indicates that it is drug company pricing policies, not 
     retail markup, that account for the inflated prices charged 
     to older Americans and other individual customers. These 
     findings are consistent with other experts who have concluded 
     that because of the competitive nature of the pharmacy 
     business at the retail level, there is a relatively small 
     profit margin for retail pharmacists.
       The study found few significant differences in retail 
     prices between pharmacies in different parts of Mr. 
     Gonzalez's district. Moreover, although there were variations 
     in prices between chain and independent pharmacies, these 
     differences were in general not systematic.

                   V. Drug Manufacturer Profitability

       Drug industry pricing strategies have boosted the 
     industry's profitability to extraordinary levels. The annual 
     profits of the top ten drug companies are over $25 billion. 
     Moreover, the drug companies make unusually high profits 
     compared to other companies. The average manufacturer of 
     branded consumer goods, such as Proctor & Gamble or Colgate-
     Palmolive, has an operating profit margin of 10.5%. Drug 
     manufacturers, however, have an operating profit margin of 
     28.7%--nearly three times greater.
       These high profits appear to be directly linked to the 
     pricing strategies observed in this study. For instance, 
     Merck, the country's largest pharmaceutical manufacturer, had 
     a 24% increase in sales and a 12% increase in profits in the 
     first quarter 1999. According to industry analysts, Merck's 
     increased profits were due in large part to sales of Zocor, 
     which is sold in Mr. Gozalez'

[[Page H8863]]

     district at a price differential of 322%. Zocur itself 
     accounts for 13% Merck's revenues.
       Pharmaceutical companies have been rapidly increasing their 
     prices. These price hikes make it even more difficult for 
     uninsured senior citizens to afford prescription drugs. In 
     1998, pharmaceutical prices increased by 5.1%, more than 
     three times higher than the overall inflation rate. The price 
     of Synthroid, which is sold in Mr. Gonzalez' district at a 
     price differential of more than 1,700%, increased 20.4% in 
     1998.
       Overall, profits for the major drug manufacturers grew by 
     over 21% in 1998, compared to 5% to 10% for other companies 
     on the Standard & Poors index. The drug manufacturers' 
     profits are expected to grow by up to an additional 25% in 
     1999. According to one analyst, ``the prospects for the 
     Pharmaceutical industry are as bright as they've ever been.

APPENDIX A.--THE FIVE TOP SELLING PATENTED, NONGENERIC DRUGS FOR SENIORS
                    RANKED BY 1997 TOTAL DOLLAR SALES
------------------------------------------------------------------------
          Rank and drug              Manufacturer         Indication
------------------------------------------------------------------------
1. Prilosec.....................  Astra/Merck.......  Ulcer.
2. Norvasc......................  Pfizer, Inc.......  High blood
                                                       pressure.
3. Zocor........................  Merck.............  Cholesterol
                                                       reduction.
4. Zoloft.......................  Pfizer, Inc.......  Depression.
5. Procardia XT.................  Pfizer, Inc.......  Heart problems.
------------------------------------------------------------------------
Source: Pharmaceutical Assistance Contract for the Elderly (``PACE''),
  Pennsylvania Department of Aging Annual Report to the Pennsylvania
  General Assembly: January 1-December 31, 1997 (Apr. 1998).


                                          APPENDIX B.--INFORMATION ON PRESCRIPTION DRUGS ANALYZED IN THIS STUDY
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                     Prices (dollars)
                                                                                                 -------------------------------------------------------
                                         Brand name drug         Dosage and form      Indication    Favored     Wholesale     Average
                                                                                                    customer   acquisition   wholesale        Price
                                                                                                     price         cost        price     differential\1\
--------------------------------------------------------------------------------------------------------------------------------------------------------
Zocor..............................  5 mg, 60 tablets......  Cholesterol reducer...       $27.00       $86.07      $106.84      $113.94           322%
Prilosec...........................  20 mg, 30 cap.........  Ulcer.................        59.10       100.34       119.57       129.49           119%
Norvasc............................  5 mg, 90 tablets......  High Blood Pressure...        59.71        96.00       119.17       127.77           114%
Procardia XL.......................  30 mg, 100 tab........  Heart Problems........        68.35       111.46       138.37       142.17           108%
Zoloft.............................  50 mg, 100 tab........  Depression............       115.70       182.98       227.13       238.69           106%
                                                                                    --------------------------------------------------------------------
    Average price differential.........................................................................................................           154%
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Average retail price vs. favored customer price.


     APPENDIX C.--PRICE COMPARISONS FOR NON-PRESCRIPTION DRUG ITEMS
------------------------------------------------------------------------
                                                   Retail
                Item                  FSS price    price    Differential
------------------------------------------------------------------------
Binder Clip, small, 1 box...........      $0.49      $0.49           0%
Rubber Bands, 1 lb..................       2.57       2.67           4%
Toilet Paper, 96 Rolls..............      44.74      47.98           7%
Rolodex, 500 Card...................      13.24      14.29           8%
Tape Dispenser......................       1.44       1.69          17%
Wastebasket, Plastic, 13 qt.........       2.95       3.49          18%
Scissors............................      10.88      12.99          19%
Pencils, #2, 20-pack................       1.03       1.26          22%
Paper Towels, 30 Rolls..............      22.94      29.98          31%
Post-It Notes.......................       2.08       2.89          39%
Envelopes, 500, White, 20 lb. weight       6.45       9.49          47%
Correction Fluid, 18 ml., dozen.....       6.66       9.99          50%
                                     -----------------------------------
    Average price differential......  .........  .........          22%
------------------------------------------------------------------------

  Mr. OWENS. Mr. Speaker, I would like to begin by thanking the Chair 
and the staff for extending me the courtesy of holding open the floor 
for a while.
  I would like to talk today about two important events that have taken 
place in the last 20 days. Both of those events, I think, have bearing 
on the subject of school construction and education improvement. The 
first event took place on September 10. It was a memorial service for 
James Farmer. James Farmer was a founder of the Congress of Racial 
Equality. He died on July 9 of this year. Last year he had been awarded 
the Presidential Medal of Freedom by President Clinton.
  James Farmer was a very special person for me, because I began my 
career in public service as a member of the Brooklyn Congress of Racial 
Equality. CORE, as it was known nationally, was a very different 
organization at that time from the CORE we know today. There is no 
resemblance whatsoever between the CORE of today and the CORE of the 
civil rights movement time in the 1960s. James Farmer was an individual 
that I think deserves to be singled out for his special contribution in 
terms of the techniques of direct action, sit-ins, demonstrations and 
picket lines. A number of things that became commonplace during the 
civil rights struggles of the 1960s were attributed to many 
individuals, but James Farmer was the person who initially started it. 
By providing a way for individuals to take immediate, direct action, he 
also inspired the young people of that time to get very much involved. 
CORE was very much a young people's movement and it spread to the 
entire civil rights movement. The entire civil rights movement was 
bolstered by the techniques which were pioneered by James Farmer.
  James Farmer, of course, lived for a long time after the 1960s and 
his career took many turns. People tend to forget because of the fact 
that, in my opinion, he was burned out and left the movement. Knowing 
what the 1960s were like and being a part of it, I am sure his family 
suffered a great deal. By the time he left, he had a lot of problems 
that he had to take care of. He left the movement and went into 
government, but he must be remembered for the time he was there during 
the movement and for the pioneering that he did as early as 1942.
  To sort of sum up what I feel we should remember about James Farmer, 
I will read the statement that I made at the memorial service that was 
held on September 10 at the Kennedy center. There were many speakers 
there who looked at James Farmer's life from many different approaches, 
but I was most interested in trying to pinpoint what it is that James 
Farmer did that is relevant now, how is it relevant to the situation 
faced now in the African-American community, how is it relevant to the 
situation faced now by African-American parents who are dependent upon 
the public school system and they are watching a crumbling system, a 
system that is being abandoned, and they appear to be helpless in the 
face of what is going on.

  I contend that we are slowly, by the kinds of decisions we are making 
or not making, we are abandoning the public school system, and the 
primary victims of that are the people in the inner cities who happen 
to be African American and Hispanics. But certainly a large part of the 
population is African American. The African-American parents have been 
targeted by people who want to accelerate this process of destroying 
the public school system. They want to hold up the specter of vouchers 
as a solution to the public school problem and they are using the 
discontent and the vulnerabilities of the African-American parent as a 
weapon. They are taking polls, encouraging African-American partners to 
speak out in favor of vouchers, and unwittingly many African-American 
parents and African-American leaders are contributing to the process of 
eroding support for the public schools.
  I want to link these two and at the same time link it to the 
Congressional Black Caucus legislative weekend that just took place on 
September 16, 17, 18 and 19. The thing that struck me most about the 
Congressional Black Caucus legislative weekend was the absence of a 
sense of urgency about education. Education is something that African-
American leaders always applaud any kind of education reform and if you 
make a proposal for improvements, they will applaud that. They 
generally will go along and endorse any efforts to improve schools, but 
my problem is that the energy and the effort that is necessary to make 
this happen is not there behind the endorsements.
  I saw in the Congressional Black Caucus weekend a situation where 
only the Congressional Black Caucus education brain trust and two or 
three other forums, issue forums and brain trusts, focused in on 
education. In none of the dialogue, in the bigger dialogue at the 
Congressional Black Caucus prayer breakfast or at the dinner, was there 
a focus on the emergency nature of the educational situation faced by 
the African-American community.
  So what I am doing now is saying to African-American parents and 
leaders out there in the inner city communities, there is something 
wrong, I am not certain I know what it is, about the way your 
leadership behaves on the issue of education. On the issue of 
education, we do not seem to be able to get any intensity going. We do 
not seem to be able to get any focused attention

[[Page H8864]]

over a long period of time. In order to combat that, I am saying to the 
parents out there and the ordinary people in the communities and the 
ministers and everybody else, you better not wait for the leadership, 
the top leadership in the African-American community to stop the 
process of abandoning the public schools. You better not wait for the 
top leadership in the African-American community to really take steps 
to push for the necessary public funding for school construction. The 
energy is not there. We need to generate the energy from below.
  Where does James Farmer come in? He is the guy who showed us how 
little people all across the country can do their own thing, can become 
their own advocates and do not have to wait until the master planners 
and the folks who are at the top decide to get around to dealing with 
an issue. During the civil rights movement, during the 1960s, there was 
a great deal of activity by parents pushing to improve the schools and 
people have asked, why is that not happening now, why have parents in 
the inner city communities gone to sleep? Why are they so chaotic? Why 
are they so devastated that they cannot respond to what is happening? 
The atrocities continue in the school systems in the big cities every 
day and parents do not seem to be able to respond.
  My first answer to that question is that during the 1960's, the civil 
rights movement provided leadership for parents, also. The activists in 
the civil rights movement helped to organize parents. Parents were 
organized but they were also stimulated to do for themselves and they 
were handed the tool by people like James Farmer:

       If you don't like what's happening in the schools, you 
     better go out there and get a picket, line up, you better sit 
     in at the school, you better raise hell about what's going on 
     in order to get the attention of the people who make the 
     decisions.

  That formula is not obsolete. It is still a formula which is 
relevant. I hope that as we look at James Farmer's life and pay tribute 
to him over the next month or so, there things do not last long, people 
die, we have memorial services, and then they are forgotten. I do not 
want him to be forgotten.
  There is a book that has been reissued. His autobiography has been 
reissued. I would like to commend to people who want to really know 
what James Farmer is all about to read the book, ``Lay Bare the 
Heart,'' the autobiography of the civil rights movement by James 
Farmer, and listen carefully to the basic message he had to offer, that 
everybody in America has the right and has the opportunity to fight for 
themselves.
  Direct action, direct action which is nonviolent. I cannot stress too 
much that James Farmer came out of the nonviolent direct action 
movement. Gandhi and the Fellowship of Reconciliation and all the 
people who have insisted that you can be revolutionary without picking 
up a gun, you can be revolutionary without resorting to violence, you 
can be revolutionary by letting yourself become the object of the 
hatred of the enemy by taking a lot of abuse and by absorbing a lot of 
the energy of those who hate, James Farmer was a major proponent of 
that. We know Martin Luther King as a proponent of nonviolence more so 
because, of course, Martin Luther King mobilized great masses of people 
and made a mark definitely in terms of the media and history. There are 
elements of all of James Farmer and the direct action in everything 
Martin Luther King did. They had the same mentors. Gandhi was a mentor, 
spiritual and philosophical person that Martin Luther King looked up to 
as much as James Farmer.
  As early as 1942, James Farmer pioneered the techniques of nonviolent 
action against racial discrimination. As the civil rights movement 
reached its climax in the 1960s, he became its major spark plug and a 
gyroscope for the struggle. Because of Jim Farmer, the civil rights 
battle, which was being pursued successfully but slowly in the courts, 
marched into the streets where the crusade made a greater leap forward.

                              {time}  2015

  He was the role model for the youth and for the masses who found that 
through nonviolent direct action every individual had the opportunity 
to bear witness in the fight for freedom.
  My last contact with Jim Farmer was at the White House when President 
Clinton conferred on him the Presidential Medal of Freedom. He greeted 
me then as he has always over the years. He had the same deep voice and 
hearty manner of a self-confident and reassuring fatherly counselor. 
Despite the fact that the ravages of disease had rendered him blind and 
his limbs were amputated, Jim Farmer's great indomitable spirit was 
still in no way disabled.
  Jim Farmer was probably the most potent role model of the civil 
rights movement. The young of the 1960s, the youth of the 1960s, were 
inspired repeatedly by the Farmer steadfast dedication, by his shining 
integrity and his overwhelming personal courage. Jim Farmer's 
willingness to constantly place himself in danger on the front lines 
made his young troops stand up and cheer. From the segregated swimming 
pools in northern cities to the burning buses in Alabama, Jim Farmer 
never retreated from the billy clubs and the tortures of racist terror. 
He was our super hero in the best sense of the concept of heroism.
  Jim Farmer inspired ordinary people to take on extraordinary 
challenges. Unfortunately, the names of thousands who made a difference 
will never appear in the history books, but the memory of my formative 
years is electrified by the portraits of Brooklyn CORE members like 
Oliver and Marge Leeds, Mary Phifer, Elaine and Jerry Bibuld, and 
Arnold Goldwag. These CORE warriors still stand out in my mind as the 
bravest and most unselfish people that I have ever known.
  I served as chairman of the Brooklyn Congress of Racial Equality for 
2 years. My first experience in politics was a run for the city council 
in Brooklyn, under the Brooklyn CORE sponsorship, the Brooklyn Free and 
Democratic Party we called it, after the Mississippi Freedom Democratic 
Party. That was my first foray into politics. We lost badly, Mr. 
Speaker, but I learned enough to be able to win later on in my second 
bid for public office.
  As a confused and anemic present-day movement for economic and human 
rights struggles to establish some kind of momentum, and we are 
confused and anemic these days as we attempt to try to begin to address 
the many problems that are facing the people on the bottom, it is 
vitally necessary that we properly interpret at this point and that we 
assimilate the great and unique legacy of Jim Farmer.
  To achieve and sustain peace with justice, the alloy of political 
leverage and legal maneuvering must also include the steady pressure of 
individuals bearing witness through nonviolent direct action. It is 
still relevant; it is not old fashioned. It is for us, the living, to 
absorb the James Farmer legacy. The challenge is for us, the living, to 
utilize that legacy to move humanity forward. In the great complex 
fabric of our American democracy, the strategies, the tactics, and the 
instruments for gaining and preserving the fullest measure of our 
freedom must also be complex, intricate, and dynamically diverse. The 
power of nonviolent direct action must again be accorded its rightful 
place in the arsenal for the advancement of human rights.
  Of the struggle, in the advancement of the struggle, the elements 
that were there before are still necessary. The courtrooms are very 
appropriate, the appropriate beachheads in the fight of justice. We 
still need legal actions in the courts. The halls of city councils and 
State legislatures and certainly the United States Congress will always 
be vital battle grounds in our fight for freedom and for human rights, 
but the picket lines and the sit-ins and the marches, the nonviolent 
personal confrontations with injustice, wherever it may be, are the 
initiatives that have been too long neglected.
  The movement for universal justice and for the opportunity for all to 
pursue happiness has become bogged down. It is mired in trivia and 
ineptness. Those who suffer most have retreated into suicidal apathy. 
They will not even exercise their right to vote. We fought for so long. 
So many people died, and so many people were injured and humiliated. 
James Farmer spent many weeks in jail in the South pushing for voter 
registration. James Farmer was the organizer of the Mississippi

[[Page H8865]]

Freedom Summer where Chaney, Goodman and Schwerner, three civil rights 
workers, two white from the North, and one from the South were 
murdered. Those people were fighting for the right to vote and now have 
the right to vote, and more than 50 percent of the people do not bother 
to come out to vote in the African American community. As my colleagues 
know, these great masses are looking for somebody else to deliver them. 
They huddle and wait for someone else to fight for them.
  We need to activate them; we need to let them know that they must 
fight for themselves. If we return to nonviolent direct action around 
the grievances that they consider important, maybe we will get them to 
understand the connection, the vital connection between their vote and 
their overall welfare in this democratic society of ours.
  In tribute to the pioneering spirit of James Farmer, it is imperative 
that we re-examine our present strategy and our tactics and our styles. 
Especially the leadership of the African American community needs to 
re-examine our strategy, our tactics and our style. Our tactics have 
locked out a large number of people who should be allowed to fight for 
themselves. The fortresses of mega-greed, corporate totalitarianism, 
and systemic racism must be assaulted with new vigor and with the old 
diversity of weapons which includes nonviolent, direct action. Jim 
Farmer's approach guided the sit-ins and the voter registration 
marches. Few civil rights leaders were beaten, gassed, and arrested as 
many times or stayed in jail as many days as Jim Farmer.
  But this bold leader and fighter for civil rights was not a wild and 
reckless radical. Jim Farmer was not a wild and reckless radical. The 
freedom rides, the Mississippi Freedom Summer and all other court 
actions were planned with great concern for the lives of the 
participants and with a clear focus on a specific segregation or human 
rights violation target.

  As part of a five-point procedure Farmer mandated that every action 
must be preceded by a clear statement of the grievance and an 
opportunity to negotiate must be provided. Jim Farmer also reflected 
deeply on the fate of the African American community that was to come. 
After you broke down the walls of segregation, what would it be like? 
He was constantly preoccupied with that.
  Under Farmer's tutelage and inspiration, CORE chapters all over the 
Nation launched initiatives against slum landlords and inadequate 
government services. The CORE strategy and tactics extended under 
Farmer's leadership into community action, into economic develop 
projects; and finally Farmer also encouraged youthful CORE members to 
enter the political arena where more than a few of his proteges have 
carried the action into city councils, State legislatures and the halls 
of Congress.
  I consider myself one of Jim Farmer's proteges. The first time I ran 
for city council and lost, CORE was in dire economic straits, and the 
national CORE office was broke. They were struggling to meet day-to-day 
expenses, and because Jim Farmer had encouraged me to run for office, 
when I went to the office and asked for contributions and some help, I 
remember he took one of the badly needed $300 away from the planning 
process to meet the payroll and other expenses, and he gave me a check 
for $300 from my city council campaign. We lost and lost badly; but as 
I said before, what I learned in that campaign allowed me to survive 
and persevere in later runs for public office in the State Senate and 
in the Congress.
  So he encouraged youthful CORE members way back then, the late 1960s, 
to enter the political arena, and more than a few of us. There are many 
city council persons and members of State legislatures as well as 
several Members of Congress who are proteges of Jim Farmer. His 
restless spirit led him into the Federal Government to promote a 
massive literacy and adult education program. Beyond his monumental 
courage and overwhelming dedication, James Farmer had an extraordinary 
vision which decades ago allowed him to see the great challenges of 
economic development and education which still command our attention 
today.
  He was a man of action and a man of thought, a man with a booming 
voice and a penetrating vision, a man of great humility who was bold 
and audacious with his courage. He sounded the trumpet that inspired 
the downtrodden, and it inspired the youth to rise up and march for 
themselves. He was a rare world-class leader and a great American 
spirit, James L. Farmer.
  Mr. Speaker, I enter this portion of my speech in its entirety in the 
Record:

                 James Farmer--A Great American Spirit

       As early as 1942, James Farmer pioneered the techniques of 
     non-violent action against racial discrimination. As the 
     civil rights movement reached its climax in the sixties, he 
     became its major sparkplug and a gyroscope for the struggle. 
     Because of Jim Farmer, the civil rights battle, which was 
     being pursued successfully but slowly in the courts marched 
     into the streets where the crusade made a great leap forward. 
     He was the role model for the youth and for the masses who 
     found that through direct action every individual had the 
     opportunity to bear witness in the fight for freedom.
       My last contact with Jim Farmer was at the White House when 
     President Clinton conferred on him the Presidential Medal of 
     Freedom. He greeted me then as he always has over the years. 
     He had the same deep voice and hearty manner of a self-
     confident and reassuring fatherly counselor. Despite the fact 
     that the ravages of disease had rendered him blind and limbs 
     were amputated, Jim Farmer's great indomitable spirit was 
     still in no way disabled.
       Jim Farmer was probably the most potent role model of the 
     civil rights movement. The youth of the sixties were inspired 
     repeatedly by Farmer's-steadfast dedication, shining 
     integrity and overwhelming personal courage. His willingness 
     to constantly place himself in danger on the front lines made 
     his young troops stand up and cheer. From the segregated 
     swimming pools in northern cities to the burning buses in 
     Alabama, Jim Farmer never retreated from the billy clubs and 
     torches of racist terror. He was our super-hero in the best 
     sense of the concept of heroism.
       Jim Farmer inspired ordinary people to take on 
     extraordinary challenges. Unfortunately, the names of 
     thousands who made a difference will never appear in the 
     history books. But the memory of my formative years is 
     electrified by the portraits of Brooklyn CORE members like 
     Oliver and Marge Leeds, Mary Phifer, Elaine and Jerry Bibuld, 
     and Arnold Goldwag. These CORE warriors still stand out as 
     the bravest and most unselfish people that I have ever known.
       As the confused and anemic present day movement for 
     economic and human rights struggles to re-establish 
     momentium, it is vitally necessary that we properly interpret 
     and assimilate the great and unique legacy of Jim Farmer. To 
     achieve and sustain peace with justice, the alloy of 
     political leverage and legal maneuvering must also include 
     the steady pressure of individuals bearing witness throughout 
     direct action.
       It is for us the living to absorb the James Farmer legacy; 
     the challenge is for us the living to utilize that legacy to 
     move humanity forward. In the great complex fabric of our 
     American democracy, the strategies, tactics and instruments 
     for gaining and preserving the fullest measure of our freedom 
     must also be complex, intricate, and dynamically diverse. The 
     power of non-violent direct action must again be accorded its 
     rightful place in the arsenal for the advancement of the 
     struggle. The court rooms are appropriate beachheads in the 
     fight for justice. The halls of city councils, State 
     legislatures, and the United States Congress will always be 
     vital battlegrounds. But the picket lines and the sit-ins and 
     the marches; the non-violent personal confrontations with 
     injustice are the initiatives that have been too long 
     neglected. The movement for universal justice and for the 
     opportunity for all to pursue happiness has become bogged 
     down, mired in trivia and ineptness. Those who suffer most 
     have retreated into suicidal apathy. They won't even 
     exercise their right to vote. Great masses huddle and wait 
     for someone else to deliver them.
       In tribute to the pioneering spirit of James Farmer, it is 
     imperative that we reexamine our present strategy, tactics 
     and styles. The fortresses of mega-greed, corporate 
     totalitarianism, and systemic racism must be assaulted with 
     new vigor and with the old diversity of weapons, which 
     includes non-violent direct action.
       Farmer's approach guided the sit-ins and the voter 
     registration marches. Few civil rights leaders were beaten, 
     gassed, and arrested as many times, or stayed in jail as many 
     days as Jim Farmer. But this bold fighter was not a wild and 
     reckless radical. The freedom rides, the Mississippi freedom 
     summer, and all other CORE actions were planned with great 
     concern for the lives of the participants, and with a clear 
     focus on a specific segregation or human rights violation 
     target. As part of the five point procedure, Farmer mandated 
     that every action must be preceded by a clear statement of 
     the grievance and an opportunity to negotiate must be 
     provided. Jim Farmer also reflected deeply on the fate of the 
     African American community after the walls of segregation had 
     been torn down. Under Farmer's tutelage and inspiration, CORE 
     chapters all over the Nation launched initiatives against 
     slum landlords and inadequate government services.

[[Page H8866]]

       The CORE strategy and tactics extended into community 
     action and economic development projects. And finally, Farmer 
     also encouraged youthful CORE members to enter the political 
     arena where more than a few of his proteges have carried the 
     action into city councils, State legislatures, and the Halls 
     of Congress. His restless spirit led him into the Federal 
     Government to promote a massive literacy and adult education 
     program. Beyond his monumental courage and overwhelming 
     dedication, James Farmers had an extraordinary vision which 
     decades ago allowed him to see the great challenges of 
     economic development and education which still command our 
     attention today. He was a man of action and a man of thought; 
     a man with a booming voice and a penetrating vision; a man of 
     great humility who was bold and audacious with his courage. 
     He sounded the trumpet that inspired the downtrodden and the 
     youth to rise up and march for themselves. He was a rare 
     world class leader and a great American spirit--James L. 
     Farmer.

  There were other Members of Congress who were at the tribute for Jim 
Farmer. The gentleman from Georgia (Mr. Lewis) considers Jim Farmer to 
be a great mentor of his, and the gentleman from Georgia was with Jim 
Farmer on the ride, the well-known bus ride through the South to end 
segregation in interstate transportation. The gentleman from Georgia 
(Mr. Lewis) was there when the bus was burned. The gentleman from 
Georgia (Mr. Lewis) was beaten badly on several occasions. The 
gentleman from Georgia (Mr. Lewis) was in jail in Mississippi with Jim 
Farmer.
  The gentleman from South Carolina (Mr. Clyburn), the chairman of the 
Congressional Black Caucus, was another person who considers Jim Farmer 
as his mentor, and I think that it is very interesting that, and there 
are other people who are Members of Congress who were touched, whose 
lives were touched by Jim Farmer. I hope that those disciples and the 
people who joined with me on September 10 in the tribute to Jim Farmer 
at the John F. Kennedy Center will understand my plea tonight, and that 
plea is that we must change our tactics and our strategy and our style 
in order to deal with the problems confronting us in education.
  Mr. Speaker, to bring these pieces together, let me just quickly 
repeat what I am trying to do tonight is to make a linkage between the 
memorial service for James Farmer which highlighted his contribution to 
our great American civilization and the relevance of Jim Farmer's 
legacy to current problems that we face; and no problem is more 
important in the African American community than the problem of 
education.
  As my colleagues know, I cannot repeat too often the fact that 
survival of the African American community is dependent on a number of 
factors, but if we do not have a great improvement in the systems which 
educate our children all over the country, we are not going to survive; 
we are not going to be able to deal with the complexities of a modern 
cyber-civilization. We cannot keep falling behind at the rate that we 
are falling behind, and I can document that we are falling behind at a 
rapid rate.
  It may not be as bad in some of the schools and smaller cities across 
the Nation. In fact, I am a native of Memphis, Tennessee, and I often 
tell people that when I went to school in Memphis, Tennessee, in the 
1950s and the 1940s, we had a school system at that time which was 
segregated, but the segregated school system that I went to was 
superior to the New York City school system right now, and that is not 
an exaggeration.
  The New York City school system is steadily declining, steadily 
getting worse; and you can document this easily. The reading scores, 
the math scores, they document it in one respect, but you can look at 
the fabric of the system where every year more and more children enter 
the system which has 1.2 million children, 1.2 million children in the 
system.

                              {time}  2030

  We have 1,200 schools. We have more than 60,000 teachers. It is a 
huge system and in that system the majority of those schools are 
overcrowded. At least a fourth of those schools have twice as many 
students as the school was built for.
  Large numbers of those schools are forcing children to eat lunch at 
10:00 in the morning because they have to have a cycle. They have to 
cycle the kids through the cafeteria. There are so many youngsters, in 
order to cycle them through the cafeteria some of them have to eat as 
early as 10:00 in the morning. Some have to eat lunch as late at 1:30. 
It is ridiculous and it is child abuse but it is systematic. It is 
going on in so many schools that they do not think of it as child abuse 
anymore.
  The New York City school system, in order to save money, 10 years ago 
they started forcing out the most experienced people, the most 
experienced supervisors and principals, superintendents, not so much 
superintendents but principals and assistant principals and teachers. 
They were given buy-out incentives. They were encouraged to leave the 
system. They could get more money and they would doctor it so they 
would get an upfront amount. It was so lucrative until thousands of 
teachers left the system; supervisors, principals left the system.
  An operation cannot be run with inexperienced people. I do not care 
how brilliant they are. It may be that our schools of education, our 
business management schools, wherever we get principals and assistant 
principals from, they are doing a great job. I do not see that from my 
individual experiences with these principals and assistant principals, 
but maybe. No matter how well educated they are, anybody who has ever 
been in an administrative position knows that there are some things we 
learn from experience that we can only learn from experience. If a 
system is robbed of the experienced people, the damages can be 
calculated that are going to be done.
  So 10 years ago, we started this raiding of the system. Even now it 
goes on because of some notion that the mayor of the city and the 
chancellor of the school system, we have a chancellor who is over all 
this, and then we have superintendents of 32 districts, it is a big 
bureaucracy, the chancellor and the mayor have decided they want to 
beat the principals into submission.
  They want to take away tenure. I think that is a good idea, that 
principals should not have lifetime tenure, that as managers and 
executives they ought to measure up and be able to deal with their 
performance and if their performance is not up to par, they lose their 
jobs like anybody else. So tenure ought to be taken away.
  The way the system works, the legislature would have to act to force 
the principals to do this. The legislature refuses to do this. The 
principals in the bargaining process will not give up their tenure. So 
we have been in a stalemate for almost 2 years. For 2 years we have had 
a situation where the principals are frozen into a situation where they 
cannot get raises. The contract is such that they cannot get raises for 
the principals. The people under them, the people under them who are 
teachers, have gotten raises. There are some experienced teachers in 
schools who now earn more than the principal because of the fact that 
they have been frozen.
  With all of these principals frozen in place, many of them have 
decided to retire. The process of taking away the experienced people is 
accelerated.
  The New York Times had an editorial last week which said it is time 
for the chancellor and the mayor to accept a compromise. There ought to 
be some kind of compromise because if the principals are frozen, and 
they are more and more disgruntled and see that their position is being 
eroded not only in terms of their pay relevant to the pay of the 
teachers under them but also their authority, they are resigning and 
moving to the suburbs where there is a great demand for experienced 
educators. They are not losing. We are losing.
  There are schools all around New York City. There are schools across 
the river in New Jersey. There is a demand for experienced educators, 
good or bad. Maybe they are not so good. Maybe they are holding on to 
tenure because they believe that a performance review system would 
jeopardize them in some way, but they are not having problems getting 
jobs. So we are further eroding the leadership, the management of the 
system, by holding on to this negotiation position that the city, 
through the mayor and the chancellor, have.
  The New York Times is right. It is time to compromise. We compromise 
everywhere. In Detroit, the automobile companies would not hold out 
forever.

[[Page H8867]]

If they are missing sales of cars and if the competition is getting 
ahead of them for various reasons, strikes and collective bargaining 
procedures are always subject to some kinds of compromise. So we need 
to compromise on that issue.
  The parents who sit and watch this chaos are getting more and more 
disheartened. When a survey is taken, they say we would like vouchers. 
If a parent is asked do they think the public school system has any 
future, is it really going to be able to improve, does their child have 
a chance of really learning enough to qualify to go to college, the 
parents have decided with all of this chaos going on, 52 percent of 
them right across the country in the urban centers say we would prefer 
vouchers to the public school system.
  I do not doubt that survey. I do not doubt the fact that that is an 
honest survey. The people who say that is happening, I know why. They 
have given up. The parents have given up. They have been sold a bill of 
goods about what the solution is because if we were to try to transfer 
large numbers of children into the private school system if vouchers 
were available, if there were publicly financed vouchers, the private 
system is not able in any way to take the public school students.
  We have 53 million children in America who go to public schools. The 
private school system has been steadily about 10 percent of that for 
years. There is no way we can solve the problems of education for the 
parents in the inner city communities or anywhere in America by just 
shifting the children from the public school system to the private 
school system. So they are being sold a bill of goods. They are being 
told that they can raise part of the money themselves. Scholarships and 
vouchers, private scholarships, have been made available to a large 
number, but people who are in gross poverty cannot take $1,500 as a 
scholarship, and given the fact that they are struggling to put food on 
the table be able to pay the rest of the tuition on an ongoing basis.
  I know. I have met many of the parents who already are saying, I 
struggle. I raised the first tuition payment, but we are falling 
further and further behind. We are going to have to take our kid out of 
the private school and put him back in public school. Large numbers are 
shifting back to public schools because of the fact that they cannot go 
the extra mile.
  Poverty is not understood by the leadership. I was born poor, and I 
know what it is all about. The extra money is not available for $1,500 
in tuition a year; and anybody who has ever had a child in a private 
school knows it is far greater than that. My children were in private 
schools in pre-school. They were in public schools all their elementary 
and secondary school life, but as pre-schoolers they went to a private 
school.
  We had to pay the tuition and raise money all year long. There are 
various ways in which the private schools are asking parents to 
contribute more money and to help raise money and usually the 
contribution, a large part of the contribution, is not raised in 
selling tickets and stuff. It comes out of your pocket, and the 
pressure to put more and more in is there.
  So the private schools, with all due respect to the people who want 
to advocate vouchers, it would take 30 or 40 years to replace the 
present system with a private school system, even if there was full 
support from the government and full support from the private sector.
  The experiments that are going on now are totally inadequate in terms 
of the amount of money that the private sector is willing to make 
available to parents and we are going to see a collapse of most of 
those efforts because the poverty is too great to help the people who 
need the help the most.
  Why am I dwelling on this? The message has to go to the African-
American leaders. The people who were at the Congressional Black Caucus 
weekend are the leaders. People come from all over the country. I do 
not know how many thousands we had there. I think we had 5,000 people 
at one dinner. So these are teachers and these are lawyers and these 
are doctors. These are the people who provide leadership in our 
communities, and ministers, and they were not focused on this problem. 
They have not gotten the message that underneath them our communities 
are crumbling because of the poor education system. New opportunities 
are being created at the level of higher education.
  I welcome and I congratulate Bill Gates who announced less than 10 
days ago that he is going to provide a billion dollars for scholarships 
not to poor but minorities, African-Americans, Hispanic-Americans, 
Native Americans, a billion dollars over a 20-year period. They 
estimate they will be able to supply 1,000 scholarships per year for 20 
years. These are extraordinary scholarships that they are offering. 
They are going to pay for the whole 4 years all expenses of the student 
for 4 years, minus any scholarships that the student was able to get 
otherwise.
  Basically, there cannot be a better deal than that; all expenses paid 
for 4 years and a thousand students are going to be able to benefit 
from that each year.
  In my district, the first question that came to my mind, how many of 
the youngsters here will be able to qualify for those scholarships? 
There is a simple process for selecting. Part of it is the 
recommendation of the principal of a high school. Part of it is a grade 
average and part of it is the score on the test. When it comes to the 
scores on the test, there is going to be a real problem because the 
kids in my district are consistently scoring low in reading and low on 
math. When they get to high schools and the SATs they also score very 
low.
  Why do they score low? Because the system is crumbling. A survey was 
done 2 years ago which shows that most of the junior high schools in my 
district and districts like mine, where the bulk of the African-
Americans and Hispanic children go to school, that is two-thirds of New 
York, in two-thirds of New York districts there are no teachers in 
junior high schools teaching math and science who majored in math and 
science in college. There are no teachers in junior high school. The 
high school teachers complain greatly about the lack of preparedness of 
students when they get to high school, and in high schools most of the 
high schools have trouble keeping physics teachers.
  In many of the high schools, there are some high schools who have not 
seen a physics teacher in a long time who majored in physics in 
college. That is the kind of emergency situation we are in. Physics 
teachers, science teachers are in shortage all over the country but we 
have a situation in New York where we have high schools that are the 
best in the world, there are three or four high schools that 
consistently score high on any national exams, they win the 
Westinghouse contest and all the national science contests, there are 
four or five schools that do that, high schools, but the majority of 
our students do not go to those schools. They do not have access to 
that kind of education with respect to science.

  So no matter what Bill Gates does or a number of other corporate 
benefactors do, and more and more they are entering the arena and 
trying to encourage more and better education by minorities, they see 
this pool of people who have to fill the gap and fill these vacancies 
in information technology, a number of other places where vacancies are 
more and more evident, probably no more so than information technology. 
The world of the computer and the world of cyber civilization we are 
going into will come to a halt if we do not have more people coming out 
of our higher education institutions that are competent to fill those 
jobs.
  What we have now is that large numbers of the white middle class 
youngsters have computers in the home. They are exposed to computer 
education in school but those are not the youngsters who are going to 
become the information technology experts. Those are the young people 
who are going to become doctors and lawyers, professionals. They are 
going to move on and the large gap is going to still be there for the 
information technology professionals who make less than doctors and 
lawyers but they will be able to make a good living.
  We have to have a pool, a vast pool, to draw from in order to fill 
the positions that are constantly being made available and will be more 
and more available as time goes on.
  In order to do that, the public schools are the only place we can 
turn

[[Page H8868]]

to, unless we seek temporary solutions that are very dangerous. We have 
voted in this Congress for one of those temporary solutions. We voted 
to lift the immigration quota for professionals. I think it is 90,000 
people now and they are coming back to ask for more legislation to 
increase the quota to bring in more information technology specialists 
from India, from other foreign countries, English-speaking countries in 
particular but others. There is going to be a vast number coming in 
from outside who will not stay to contribute to our economy for very 
long. They will not pay into Social Security and keep Social Security 
healthy in the future.
  It is a dangerous way to operate, to ignore the natural working 
population and not develop that population, that workforce, and call on 
foreign reserves and foreign resources. That is very dangerous. So I am 
very upset and would like to have African American leaders look to the 
spirit and the example of Jim Farmer. Let us get involved. Let us tell 
the people out there they have to get involved. The parent-teachers 
associations, the churches, they have to get involved specifically to 
deal with the problems of their own school.

                              {time}  2045

  If one is an inexperienced principal, there is probably chaos there 
that somebody needs to watch, somebody needs to highlight, in order for 
the people in charge, the superintendents, the mayors to step in and 
end the chaos. There are no books, no supplies, which is the case in 
many cases; we should deal with that.
  Most of all the problem of the physical decay of the schools poses a 
direct danger. Large numbers of schools that have coal burning furnaces 
in New York City pose a direct danger. We have a large asthma problem, 
an asthma epidemic. Part of that epidemic is contributed to by the 
schools that need to change the furnaces. We need money for that in the 
construction and modernization fund.
  At the Congressional Black Caucus, we did have some efforts to try to 
make a breakthrough on this. One of those events I held on September 
17, and it was designed to send a message to the parents out there in 
the various neighborhoods, all the parents in the inner city 
communities. The message is: Do not give up hope. Do not abandon the 
public school system or contribute to the abandonment of the public 
school system by seeking solutions that are not real solutions. 
Vouchers are not a solution. We would like for them to know that they 
have help.
  I had a press conference which I call a ground-breaking press 
conference. I was attempting to bring together and did bring together 
people from the labor movement and people from the private sector, 
corporate sector. We had contractors as well as unions who appeared at 
this ground-breaking press conference to proclaim their unity with us 
and let the vulnerable and discouraged black parents out there know 
that we have powerful allies in an attempt to get school construction 
on the agenda here.
  We have an announcement that the surplus is bigger this year than it 
was contemplated, which means that the projections for the surplus over 
the next 10 years are probably going to be pretty close to what has 
been stated.
  I have a bill which talks about a 5-year commitment of $110 billion 
for school construction. I am going to amend that bill to change it to 
make it a 10-year commitment of $110 billion because we are talking 
about 10-year scenarios. We have a tax bill which is a 10-year scenario 
for $792 billion. I think we ought to put on the table a 10-year 
scenario for school construction for $110 billion. This will be money 
that is directly appropriated to every State in accordance with the 
number of school-aged children in the State, a fair distribution 
formula to deal with the modernization, wiring. Sometimes schools are 
in pretty good shape, but they need security measures. Whatever the 
infrastructure, the physical infrastructure needs, this funding of $110 
billion over a 10-year period would provide.
  Many people say, well, that is too much. It is outrageous. Well, I 
think we have got a scenario where a trillion dollars is on the table 
for the next 10 years, and we are going to take $792 billion of that 
and propose that for taxes. The President agrees there should be some 
tax cuts. It will not be $792 billion. It may be $300 billion. There is 
going to be a tax cut of some magnitude. Let us have, at the same time, 
on the same table, in the same package a rational, reasonable, adequate 
package for school construction.
  So at this press conference, commitments were made by the labor 
community, by the contractors. We have the Nat LaCour of the American 
Federation of Teachers; Joel Parker of the National Educational 
Association; Vincent Panvini of the Sheet Metal Workers, Director of 
Governmental Affairs of Sheet Metal Workers; Paul Parker, the Executive 
Director of the Sheet Metal and Air Conditioning Contractors; Bill 
Bonaparte. Bill Bonaparte is the National Electrical Contractors 
Association. The private sector people who want to be involved are 
enormous: Starla Jewell, the Executive Director of the National 
Community Education Association; Michelle Kavatelle, the director of 
the America Online Foundation; David Keane, the Associate Director for 
Government and Labor Relations of the Mechanical Contractors 
Association of America; and Mary Filardo, the Executive Director of the 
21st Century School Fund.
  At this press conference, they all pledged to join me in sending this 
message to the African-American parents that they have friends, they 
have allies who are powerful. They are not alone. Do not give up. Do 
not abandon the public school system.
  At this press conference, we have pledges of help that will come from 
these people in various ways. We agreed to launch, on November 16, the 
date for the national education funding support date a campaign which 
will go for a year. Our motto is simple: ``Build schools.'' The motto 
of ``Build Schools'' will be the motto for a whole year, starting 
national education funding day; instead of funding support day, we want 
to make it a funding support year.
  So we are going to launch a campaign in November that will go right 
through to next November; and the motto is: ``Build schools.''
  The year 2000 is the year we want to make a breakthrough. Why the 
year 2000? Because it is apparent that in the next few weeks here we 
are not going to see a what I call an in-game negotiation. The 
President and the Congress will not negotiate that projected 10-year 
surplus. That will be negotiated as we approach the election of the 
year 2000.
  It is going to happen next year. We can plan and strategize, and we 
have the advantage. The message should go out that the parents, not 
only the parents in the African-American community, but the communities 
out there in general believe that the Federal Government should do more 
in aid to education. They believe that the Federal Government should 
provide help in the area of school construction.
  The polls are on our side. We need to remember that. We need to 
mobilize and crystallize the sentiment and focus it so that they will 
understand that it is not enough to appropriate pennies for school 
construction.
  Right now we have zero in Federal involvement. We need to move to a 
significant Federal involvement. There is time to do that starting now.
  The commitment was made to have a campaign that will go all the way 
to the spring of 2000. In the spring of 2000, we have pledged to have a 
``Build Schools'' conference where all of the same partners who came 
together on September 17 at the ground-breaking press conference, all 
those same partners will act in solidarity to promote and to sort of 
increase the momentum for school construction.
  We define victory as any breakthrough that gets Federal dollars into 
the school building pipeline. That means that H.R. 1660, the bill that 
comes out of the Committee on Ways and Means is certainly a 
breakthrough. It is a tax credit provision sponsored by the gentleman 
from New York (Mr. Rangel). It has received the endorsement of the full 
Democratic Caucus which launched the motion to discharge. I am a 
cosponsor on that bill.
  But it also means H.R. 1820, the bill that I have sponsored which 
calls for $110 billion over a 5-year period. We are going to change 
that now to a 10-year period.

[[Page H8869]]

  Most of the initiatives that we are going to undertake relate to 
activities which are designed to mobilize the African-American 
community. I held this press conference. I called in these leaders of 
labor and the private sector at the beginning of the Congressional 
Black Caucus legislative weekend, because I wanted to send the message 
not only to the people out there in the communities, the parents and 
the community leaders, but I wanted to send a message to my fellow 
caucus members. We are not doing enough.
  In the spirit of James Farmer, we should seize the initiative and 
come to grips with the problem of school improvement, education 
improvement. At the heart of that is a physical facility. If one has a 
religion, and the temple, the church, the physical facility is allowed 
to crumble and decay and obviously be neglected, then it sends a 
message to all that the people who are advocates of that religion, the 
heritage of that religion are not serious.
  Ethnic cleansing in Yugoslavia became a bloody, burning, nasty set of 
atrocious activities that made the whole world want to vomit. Thousands 
have been confirmed as murdered and the estimates continue to climb. 
The Serbs attempted to drive out the Albanians in obvious and crude 
ways. African-America cleansing in America is moving forward to a far 
less alarming but more subtle and certain manner. It is moving forward 
in a far less alarming, but more subtle and certain manner.
  Listen. African-American cleansing. One can destroy the education for 
the children of a group, and one can destroy the group without firing a 
single shot. In a complex world today, people can be destroyed by the 
act of refusing to provide a relevant education for their children.
  The present movement toward the abandonment of the public school 
system greatly endangers the survival of the African-American 
community. We are going to be reauthorizing Title I of the Elementary 
Secondary Education Assistance act this week. This Wednesday it is 
scheduled for the calendar. It is one more series of attempts to 
abandon the public school system that has to be fought.
  Education is critical for survival. The oppressed South African 
blacks clearly understood this truth when they rebelled against Bantu 
Education. The famed uprising at Soweto was led by school children who 
understood that they were being systematically crippled in their 
classrooms. In America, there is no official conspiracy to 
intellectually deform African-American children. But benign neglect, 
bureaucratic bungling and the savage inequalities like the one 
described by Jonathan Kozol, accidentally accomplish the same 
devastating results.

  The current emphasis on privatization and vouchers, coupled with 
education budget cuts and the refusal of both Republicans and Democrats 
to support meaningful school modernization and construction 
appropriations by the Federal Government will produce a massive Soweto-
like impact in the large cities where the majority of African-American 
youth live.
  In too many local education agencies, the schooling process is 
already merely a ceremony. Routinely assumptions are made that black 
students cannot emerge from the standard 12-year education regiment 
with a level of accomplishment which enables them to cope with present-
day occupational and personal management challenges.
  School systems go through enough motions to justify the economic 
activity which finances teachers salaries, custodial personnel, 
supplies, equipment, and administrative bureaucracy. But in too many 
instances, they are content not to focus on the end product and what 
they are achieving there.
  The current acceleration of this minimal, of fraudulent education 
process as a result of less resources and highly visible decaying 
infrastructure has produced an unrecognized crisis for African-
Americans. In full view, the commitment to meaningful public education 
is steadily being withdrawn by elected officials.
  New York City had a $2 billion surplus, and not a penny was spent on 
trying to refurbish, renovate, or build any new schools. New York State 
had a $2 billion surplus, and they refused, and the Governor vetoed a 
$500 million proposal for school repair.
  So at the local level, we have a steady withdrawal of support for 
public schools. The clearest reflection of this danger is this brick 
and mortar disaster. Crumbling school buildings send a loud message 
stating that pedagogical and administrative infrastructure is also 
collapsing. If the buildings are collapsing, then do not expect much to 
be happening inside them. There is no commitment in there either.
  A total abandonment of public education in America is a possibility. 
While private alternatives are shuffled around, a generation of 
students could be lost. More than African-American children of course 
would be placed at risk by this public policy blunder. The education of 
all children of working families who cannot afford private schools is 
at stake.
  But I appeal, especially to the African-American leadership to get 
moving. In the spirit of James Farmer, come to grips with the problem, 
focus on it as being the number one survival problem in our 
municipalities.
  In the spirit of James Farmer, the leadership has to shun or 
understand that there are no headlines out there for people who work in 
the vineyard trying to improve schools and trying to get funds for 
school construction. They have to understand that right out from under 
them, while they think that they are leaders, right out from under 
them, the people who matter most, our constituents, are discouraged. 
They feel vulnerable. They feel abandoned.
  I want to end with a few quotes from Jim Farmer, and I do this in the 
spirit of urging that the leadership of the African-American community, 
starting with my colleagues in Congress, remember Jim Farmer as a man 
of action and a man who provided the opportunity to act for the people 
who were suffering.
  Jim Farmer, after the attacks on the Freedom Riders said, ``When dogs 
bite in Birmingham, we bleed everywhere.'' Evil societies always kill 
their consciences. The NAACP is the justice department, the Urban 
League is the state department, and Corps members are the nonviolent 
marines.

                              {time}  2100

  ``The time is not for jail-going and bleeding heads, but for long-
range planning and sophisticated strategizing. There will be fewer 
demonstrations and more celebration. Our Nation deceives itself with 
the fiction that the task is complete and racism is dead and all is 
well. The myth surrounds us that America has suddenly become color 
blind and that all that remains is our economic problem. No greater lie 
has ever been told, and the tellers of it, if they have eyes to see and 
minds to think, must know it.''
  That comes from the epilogue of the James Farmer book, which I 
mentioned before, Lay Bare The Heart. ``Our Nation deceives itself with 
the fiction that the task is complete and racism is dead and all is 
well. The myth surrounds us that America suddenly has become color 
blind and that all that remains is our economic problem. No greater lie 
has ever been told, and the tellers of it, if they have eyes to see and 
minds to think, must know it.''
  African-American leaders are the people who ought to know it, and we 
urge them very much to open their eyes.

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