[Congressional Record Volume 146, Number 61 (Wednesday, May 17, 2000)]
[House]
[Pages H3297-H3300]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




              HIGH COSTS OF PRESCRIPTION DRUGS FOR SENIORS

  The SPEAKER pro tempore. Under the Speaker's announced policy of 
January 6, 1999, the gentleman from Maine (Mr. Allen) is recognized for 
60 minutes as the designee of the minority leader.
  Mr. ALLEN. Mr. Speaker, many of my Democratic colleagues tonight are 
headed to Michigan to be with our colleague, the gentleman from 
Michigan (Mr. Stupak) and his family in a moment of great trial for 
them. The Stupaks have suffered the tragedy most feared by all parents. 
They have lost one of their sons, and our thoughts and our prayers are 
with them tonight.
  Mr. Speaker, I am here tonight to talk about the problem that many of 
our seniors are facing with the high costs of prescription drugs. This 
is a problem that is becoming more and more apparent to a majority of 
Americans.
  Seniors in my home district in Maine and across the country are 
finding it increasingly difficult to pay for the drugs that their 
doctors tell them they have to take. And over the last 2 years, as I 
have listened to people in my district, as I have conducted studies in 
my district that show that seniors pay on average twice as much for 
their medications as the best customers, the pharmaceutical companies, 
that is, the big hospitals, the HMOs and the Federal Government itself 
through Medicaid or the VA, as those studies have rolled out first in 
Maine and then around the country, we have had more and more 
correspondence, more and more phone calls from people who say they 
simply cannot do it any more.
  They cannot take their medication because they cannot afford their 
medication. I have had letters from women who tell me I do not want my 
husband to know, but I am not taking my prescription medication, 
because he is sicker than I am, and we both cannot afford to take the 
medicines that our doctors say we must.
  I have had letters from people who describe how much they are paying, 
in many cases hundreds of dollars a month, when their only income is a 
Social Security check for $650 a month. The math does not work. They 
cannot make it. And I regret to say that the response in this Congress 
has not been fast enough. It has not been quick enough to deal with 
this particular problem.
  Part of the answer lies in the tremendous power of the pharmaceutical 
industry, this industry which has done so much good in this country, 
developed new medicines that prolong lives, that enhance the quality of 
life for so many people in this country, if, and only if, they can 
afford to take the medication that the industry has developed.
  Here in Washington, this is the industry that spends the most in 
campaign contributions, that spends the most in lobbying, and anyone 
who watches television knows this is an industry that spares no expense 
when it comes to advertising its products on TV or trying to influence 
public opinion through TV. When we watch those ads, $1.9 billion last 
year in direct-to-consumer advertising, all of that costs gets wrapped 
into the costs of the pills that our seniors and that others need to 
maintain their quality of life and simply to stay out of the hospital.
  We need to take some action, and there are two ways to go at this 
problem fundamentally, two sensible ways to go at this problem. One is 
to update Medicare and to provide a prescription drug benefit under 
Medicare. When Medicare was created in 1965, over 50 percent of our 
seniors had absolutely

[[Page H3298]]

no coverage at all for their hospital coverage. They had no health 
insurance at all.
  So if they got sick and had to go to the hospital, they either had to 
pay out of their own pocket or they could not get the care that they 
needed. That is why Medicare was enacted. And today in the year 2000, 
no one in his right mind would create a system like Medicare and not 
provide prescription drug coverage.
  Many employees across this country have coverage for their 
prescription drugs, but then they get to 65, they retire, they fall 
under Medicare, and they do not have coverage for their prescription 
drugs. Some get Medigap policies, about 8 percent get Medigap policies, 
but they have limits on the amount of the benefit that they provide and 
they are often very expensive.
  Mr. Speaker, 37 percent of seniors in this country have no coverage 
at all for prescription drugs and when we add those who do not have any 
coverage to those who have Medigap insurance, to those who have some 
coverage of prescription drugs through an HMO plan, that group is again 
50 to 60 percent of the country which really does not have adequate 
coverage.
  Why do I say that those who are covered by Medicare Plus, Choice or 
other managed care plans do not have adequate coverage? Well, look at 
what happens with these private sector plans. What happens is that the 
benefits change every year. And lately the benefits have been going 
down. The cap on prescription drug coverage has been going down each 
year. And today 62 percent of all Medicare managed care plans have an 
annual benefit of a $1,000 or less.

                              {time}  1845

  Now, people need help. We have got a couple of different approaches 
here that I will talk about a little later: One, an approach to create 
a benefit under Medicare; secondly, a bill that I have sponsored and 
has 153 cosponsors in the House, to provide a discount to everyone who 
is a Medicare beneficiary who buys prescription drugs and pays for it 
out of his or her own pocket, a discount for everyone. That is one 
approach; the benefits another.
  What I wanted to start with tonight are some of the new developments 
that are occurring. Today, on the floor of the House we have the 
defense authorization bill, and this is a very important piece of 
legislation, $310 billion to provide for our national security. It 
covers a wide range of different topics. And what I want to do is to 
reflect on one of the provisions in that legislation. It is a provision 
to extend pharmaceutical benefits to military retirees over the age of 
65.
  Now, as I have said, prescription drug coverage is a vital issue for 
all seniors, and I am pleased that the Committee on Armed Services, on 
which I sit, has made a small but important contribution to provide 
affordable and meaningful coverage to a segment of the Medicare 
eligible population. What we need to do is go beyond providing this 
benefit to military retirees, which I support, to make sure that 
everyone on Medicare has this kind of benefit.
  Now, to describe the military retiree program, the TRICARE Senior 
Pharmacy Program in the bill would allow all military retirees to 
participate in the Department of Defense pharmacy program. And under 
that government-run prescription drug benefit, the Defense Supply 
Center in Philadelphia negotiates prices for its beneficiaries that are 
as low or lower than those obtained by other Federal agencies.
  Now, the Defense Supply Center receives some drugs off the Federal 
supply schedule and negotiates pricing agreements with more than 200 
pharmaceutical manufacturers around the country and uses as a starting 
point the 24 percent mandated discount that is specified in the 
Veterans Administration statute. The Department of Defense estimates 
that these negotiated prices are 24 to 70 percent lower than the 
average private sector price.
  Now, the bill I have does much the same, gives the same kind of 
discount to all Medicare beneficiaries, not just military retirees. 
What it does is it allows pharmacies to buy drugs for Medicare 
beneficiaries at the best price given to the Federal Government, and 
that best price is usually a price obtained through the Veterans 
Administration or a price obtained by Medicaid.
  Now, what we have done in this defense authorization bill is very 
much like the Democratic Medicare prescription drug plan. The TRICARE 
Senior Pharmacy Program is administered by a Federal agency and 
basically makes good on a part of the government's promise to provide 
health care for life for military retirees, only, unfortunately, part 
of the promise, and the promise to provide health care for the over 65 
population at large.
  Now, the TRICARE Senior Pharmacy Program uses the government's volume 
purchasing power to negotiate and achieve the same drug price discounts 
that favored large purchasers obtain. This is very different from the 
Republican plan which is emerging from this Congress. This program, 
unlike the Republican plan, does not throw military retirees to the 
whims of the private insurance market, leaving them guessing about 
whether they can get prescription drug insurance from an industry that 
says it cannot offer such insurance anyway.
  Let me make that point clear. What we believe will be the Republican 
prescription drug plan, after 2 years of talking about this issue on 
our side of the aisle, the Republicans are believed to be coming up 
with a plan that involves a government subsidy to seniors to buy 
private prescription drug insurance. There are a couple of problems 
with this approach.
  Number one, there is no cost containment, no way to hold down prices, 
and no leverage over price, which means that probably drug prices will 
go up.
  But there is a second problem. As the head of the Health Insurance 
Association of America has said, insuring seniors against prescription 
drugs is like covering people for haircuts. There are too many 
claimants. Everyone is a claimant. The industry is basically saying, we 
are not going to provide stand-alone prescription drug insurance, and 
yet that is what the Republican prescription drug plan is based on, 
both in the Senate and here in the House. And you cannot get there from 
here, as we say in Maine.
  So I am arguing that military retirees deserve the kind of coverage 
that is set forth in this defense authorization bill that we discussed 
today and will vote on tomorrow, but I do ask all people in this 
Congress and across the country this question: If Congress can provide 
a government administered prescription drug benefit with the Defense 
Supply Center in Philadelphia negotiating lower prices, why can we not 
do the same thing for all of the Medicare population across the 
country? If Congress can give 1.4 million Medicare eligible military 
retirees access to the best prices that the government can negotiate, 
why can Congress not give the other 38 million American seniors the 
same access to the best prices that the government can negotiate?
  I mean, this is very, very simple. Here we have a plan, a discount 
plan, reflected in my bill, which is H.R. 664, the Prescription Drug 
Fairness for Seniors Act, which involves no significant Federal 
expense, involves no new bureaucracy, but would provide seniors with up 
to a 40 percent discount on their prescription drug prices simply by 
organizing seniors into a block to negotiate lower prices. This is 
exactly what happens in the private sector. Aetna, Cigna, United, the 
Blue Cross plans, all of the private sector health care plans negotiate 
lower prices for their beneficiaries. Why should Medicare not do the 
same?
  Well, I can tell my colleagues what is happening here. What is 
happening here is the pharmaceutical industry is saying this is price 
controls. This is price controls. And my argument is nonsense. It is 
not true. Because what we are talking about is a price that is 
negotiated and that reflects a price that is a percentage below what is 
called the average manufacturer's price, which is a market price. The 
pharmaceutical industry controls that. All we are saying is there is no 
reason, there is no reason why seniors in this country should pay the 
highest prices in the world.

  This problem, in summary, is very simple. The most profitable 
industry in the country is charging the highest prices in the world to 
people who can least afford it, people without coverage for their 
prescription drugs. And in this country seniors are 12 percent of the 
population, but they buy 33 percent of all prescription medications. 
That is

[[Page H3299]]

why we have a national crisis, that is why this is a national scandal, 
and that is why it needs to stop.
  One of the recent developments besides the defense authorization bill 
is what has happened, I am proud to say, in my home State of Maine. The 
State legislature and the Governor have agreed on a bill which breaks 
new ground. It is very much like the bill that I have introduced here 
and which has 153 cosponsors, unfortunately no Republicans yet, but in 
Maine what the State legislature has done is basically to provide that 
the State of Maine will, in effect, be what is called a pharmacy 
benefit manager. The State will negotiate lower prices for 350,000 
people in Maine who today have no prescription drug coverage.
  It is very simple. Buy in bulk and save money. Very simple concept. 
Since these people have no insurance plan to negotiate for them, they 
will get something called the Maine RX card, and the State Department 
of Health and Human Services will negotiate lower prices with the 
pharmaceutical industry for those people in Maine. We are confident 
that we can get lower prices because the State will be representing so 
many different people.
  Now, once again the pharmaceutical industry is saying this is a 
terrible step to take, but people are fed up. People are fed up in 
Maine and they are fed up around the country. They know that price is 
the problem. They know that this industry charges the highest prices in 
the world to people here.
  Let me elaborate on that for a moment. The study that I did first in 
Maine and now has been replicated in probably 140 districts around the 
country showed that seniors, on average, pay twice as much for their 
medications as the drug companies' best customers. And the best 
customers, as I said, are the big hospitals, the HMOs, and the Federal 
Government itself. That study was done first in July of 1998.
  In October of 1998, I released a second study, and it was the first 
to do these international comparisons. What it showed is that Mainers 
pay 72 percent more than Canadians and 102 percent more than Mexicans 
for the same drugs in the same quantity from the same manufacturer. 
There is no justification for that. None.
  The fact is that the industry charges whatever the market will bear. 
And because seniors, and more generally people who do not have 
prescription drug insurance, are not organized, do not have anyone to 
negotiate for them, they pay the highest prices in the world. It needs 
to stop, and Maine is doing something about that.
  What is going on here in Congress is also worth noting. What the 
Democrats have done is come up with a plan, it was announced last week, 
a plan in which the Senate Democrats, the Clinton-Gore administration, 
and the House Democrats can agree. That plan is simple. It provides a 
universal but voluntary prescription drug benefit under Medicare. 
Enrollment is voluntary but anyone can sign up when they are ready to 
enroll in Medicare. The coverage basically works this way. There are 
two parts to the coverage. First, the basic benefit and, secondly, a 
catastrophic benefit.
  The basic benefit works like this: At the beginning, for a small 
monthly fee, an individual will get a reimbursement for up to $1,000 on 
a 50 percent copay basis for their prescription drugs. In other words, 
if an individual spends $2,000 on prescription drugs in the course of a 
year, and many seniors do, they will be reimbursed $1,000 from the 
Federal Government. Not reimbursed, but the Federal Government will 
pick up 50 percent of the cost as they go along. If at some point they 
hit $3,000 in out-of-pocket expenses, at that point our plan will pick 
up all of the subsequent costs. Medicare will pick up all of the 
subsequent costs.
  What we are trying to do is make sure that those who are hurt the 
most get the most help, but that everyone benefits. And everyone 
benefits in another way as well, because the discount concept, which is 
reflected in my legislation, has been incorporated into this Democratic 
Medicare Prescription Drug Act of the Year 2000.

                              {time}  1900

  Because for those people, when they are not entitled to a benefit, 
when they run over the price a bit, then they still get a discount, 
they still get the buying power of Medicare behind the price. So there 
will be a negotiated reduction in price.
  Now, the important thing is the goal, and the goal is very simple. We 
would use private-sector pharmacy benefit managers to administer this 
particular plan. And that is what they do for Aetnas, the Cignas, the 
United HealthCares of the world right now. But they would be charged, 
very clearly, with getting the same deal for Medicare beneficiaries as 
they do for their own.
  In other words, the goal is simple. We are going to get the best 
price for Medicare beneficiaries. And within 2 years, there would be a 
review by the GAO to see whether or not the Health and Human Services 
is meeting that goal. It is very important that we meet that goal. And 
if we do not, then we will have to go back and try another approach.
  There are benefits here for employers. Because employers who are now 
providing drug coverage to their employees would get an incentive 
payment to keep continuing that coverage. And there is low-income 
protection, as well. Some people simply cannot afford their 
prescription medication at all.
  So for those below 135 percent of the poverty line, what the 
Democratic plan does is provide all the co-pays and all of the 
premiums, so that at that level people would get the full coverage for 
their prescription drugs. Between 135 percent of the poverty level and 
150 percent of the poverty level there would be a subsidy-based on a 
sliding scale.
  But the important point is this: Everyone would get the benefit of a 
discount and everyone would get covered under Medicare. That is very 
different from the Republican plan, because the Republican plan really 
relies on private-sector insurance companies. And if we know one thing 
about private health care insurance, it is that the premiums change 
every year. In fact, they almost always go up every year.
  Talk to any small businessman or woman, talk to any of the self-
employed around the country today and what they will say is, my 
premiums went up 15 percent, 20 percent, 25 percent, 30 percent this 
year and about the same amount the year before. They cannot afford it.
  The small business community is having a terrible time affording 
health care and largely because of the rapid increase in the prices of 
prescription drugs. We have to get some control over this system, some 
level over the system, some ability to hold down prices so that small 
businessmen and women can afford their health care premiums, and 
seniors in this country can afford to buy the drugs that their doctors 
tell them they have to take.
  Now, this is, as I have found, a very long struggle, a very long 
struggle. What is going to happen, I suspect, over the next few months, 
is we will have a lot of battles back and forth over whose plan is 
best. But it is clear now that there is a growing consensus that we 
have got a problem, we have got a major problem, not a small problem, 
but a major problem for millions of Americans all across this country.
  And their problem does not vary with their income. This is not a case 
where we can say, well, let us help those who are low income, because 
there are lots of Americans, middle-income seniors, who cannot afford 
their prescription drugs because their prescription drug costs are so 
high.
  The size of their problem depends less on their income and more on 
the amount of prescription drugs that their doctor tells them they need 
to take. That is the problem. So we have to deal with price. We have to 
deal with price.
  To contrast for a moment what appears to be the Republican plan with 
the Democratic plan, the Democratic plan is designed to cover everyone 
both with a benefit and with a discount.
  The Republican plan is aimed primarily at low-income beneficiaries. 
The Democratic plan has a way to contain costs, to use pharmacy benefit 
managers contracting with Medicare as a way to negotiate lower prices 
with the pharmaceutical industry. The Republican plan relies on private 
insurance companies, which have not been successful at holding down 
costs. There is no real cost containment in that plan.

[[Page H3300]]

  Thirdly, the Democratic plan is an improvement in updating of 
Medicare, the foundation of health care for seniors, one of the most 
successful programs that we have that the Federal Government has ever 
adopted, a plan that needs to be strengthened and reformed but not 
weakened. The Republican plan relies on private insurance companies.
  What we need in this country for our seniors is stability and 
continuity and predictability. We do not want plans where every year 
the co-pay changes, the benefit level changes. And in many cases, as we 
are finding with Medicare managed care, whole areas in this country are 
simply dropped by the insurance industry.

  That is not what we want in Medicare. We want stability and 
continuity and predictability and equity in this system. That is what 
we need and that is what we can get with the Democratic prescription 
drug plan.
  I urge everyone who cares about this issue to make their voices 
known.
  One of the things I found in my 4 years in this place is that what we 
do here depends on the amount of public energy, public concern outside 
these halls. This is a case where those who care about this issue need 
to speak up.
  In the weeks and months ahead, what we will find in this debate, I 
believe, fundamentally is that we can find common ground, if not this 
year, next year. But we need to reach across the aisle and come to a 
conclusion about how best to approach this particular problem.
  People who cannot afford their prescription drugs are Democrats, 
Independents, Republicans. They are people from all walks of life, all 
parts of the country. And this is a case where although we have 
partisan differences over proposed solutions, we do not have partisan 
differences over the problem. The problem is the same for everyone.
  If we can find a way to work across the aisle to pull these two 
different approaches together, then I think we can find success, as 
others have done in this House on a Patients' Bill of Rights and in 
other areas. We can do it with prescription drugs, as well.

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