[Congressional Record Volume 146, Number 94 (Wednesday, July 19, 2000)]
[Senate]
[Pages S7193-S7216]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




   AGRICULTURE, RURAL DEVELOPMENT, FOOD AND DRUG ADMINISTRATION, AND 
          RELATED AGENCIES APPROPRIATIONS ACT, 2001--Continued


                           Amendment No. 3925

  The PRESIDING OFFICER. The Senator from Vermont.
  Mr. JEFFORDS. I thank Senators for their eloquent words about the 
passing of Paul Coverdell. I see no one else seeking recognition for 
that purpose, so at this time I move back to the bill. If there is 
anything Paul Coverdell disliked, it was quorum calls and delaying the 
process. We worked together on the education bill, and I know he was 
proud when it moved expeditiously and the debate was lively.
  In that spirit, I think we must return to the business before the 
Senate.
  Therefore, I call up amendment 3925.
  The PRESIDING OFFICER. The clerk will report.
  The legislative clerk read as follows:

       The Senator from Vermont [Mr. Jeffords], for himself, Mr. 
     Wellstone, Mr. Dorgan, Ms. Snowe, Mr. Gorton, Mr. Johnson, 
     Mr. Levin, and Mr. Bryan, proposes an amendment numbered 
     3925.

  Mr. JEFFORDS. Mr. President, I ask unanimous consent reading of the 
amendment be dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The amendment is as follows:

 (Purpose: To amend the Federal Food, Drug, and Cosmetic Act to allow 
                    importation of covered products)

       At the end of title VII, add the following:

     SEC. ____. AMENDMENT TO FEDERAL FOOD, DRUG, AND COSMETIC ACT.

       (a) Short Title.--This section may be cited as the 
     ``Medicine Equity and Drug Safety Act of 2000''.
       (b) Findings.--Congress makes the following findings:
       (1) The cost of prescription drugs for Americans continues 
     to rise at an alarming rate.
       (2) Millions of Americans, including medicare beneficiaries 
     on fixed incomes, face a daily choice between purchasing 
     life-sustaining prescription drugs, or paying for other 
     necessities, such as food and housing.
       (3) Many life-saving prescription drugs are available in 
     countries other than the United States at substantially lower 
     prices, even though such drugs were developed and are 
     approved for use by patients in the United States.
       (4) Many Americans travel to other countries to purchase 
     prescription drugs because the medicines that they need are 
     unaffordable in the United States.
       (5) Americans should be able to purchase medicines at 
     prices that are comparable to prices for such medicines in 
     other countries, but efforts to enable such purchases should 
     not endanger the gold standard for safety and effectiveness 
     that has been established and maintained in the United 
     States.
       (c) Amendment.--Chapter VIII of the Federal Food, Drug, and 
     Cosmetic Act (21 U.S.C. 381 et seq.) is amended--
       (1) in section 801(d)(1), by inserting ``and section 804'' 
     after ``paragraph (2)''; and
       (2) by adding at the end the following:

     ``SEC. 804. IMPORTATION OF COVERED PRODUCTS.

       ``(a) Regulations.--
       ``(1) In general.--Notwithstanding sections 301(d), 301(t), 
     and 801(a), the Secretary, after consultation with the United 
     States Trade Representative and the Commissioner of Customs, 
     shall promulgate regulations permitting importation into the 
     United States of covered products.
       ``(2) Limitation.--Regulations promulgated under paragraph 
     (1) shall--
       ``(A) require that safeguards are in place that provide a 
     reasonable assurance to the Secretary that each covered 
     product that is imported is safe and effective for its 
     intended use;
       ``(B) require that the pharmacist or wholesaler importing a 
     covered product complies with the provisions of subsection 
     (b); and
       ``(C) contain such additional safeguards as the Secretary 
     may specify in order to ensure the protection of the public 
     health of patients in the United States.
       ``(3) Records.--Regulations promulgated under paragraph (1) 
     shall require that records regarding such importation 
     described in subsection (b) be provided to and maintained by 
     the Secretary for a period of time determined to be necessary 
     by the Secretary.
       ``(b) Importation.--
       ``(1) In general.--The Secretary shall promulgate 
     regulations permitting a pharmacist or wholesaler to import 
     into the United States a covered product.
       ``(2) Regulations.--Regulations promulgated under paragraph 
     (1) shall require such pharmacist or wholesaler to provide 
     information and records to the Secretary, including--
       ``(A) the name and amount of the active ingredient of the 
     product and description of the dosage form;
       ``(B) the date that such product is shipped and the 
     quantity of such product that is shipped, points of origin 
     and destination for such product, the price paid for such 
     product, and the resale price for such product;
       ``(C) documentation from the foreign seller specifying the 
     original source of the product and the amount of each lot of 
     the product originally received;
       ``(D) the manufacturer's lot or control number of the 
     product imported;
       ``(E) the name, address, and telephone number of the 
     importer, including the professional license number of the 
     importer, if the importer is a pharmacist or pharmaceutical 
     wholesaler;
       ``(F) for a product that is--
       ``(i) coming from the first foreign recipient of the 
     product who received such product from the manufacturer--

       ``(I) documentation demonstrating that such product came 
     from such recipient and was received by such recipient from 
     such manufacturer;
       ``(II) documentation of the amount of each lot of the 
     product received by such recipient to demonstrate that the 
     amount being imported into the United States is not more than 
     the amount that was received by such recipient;
       ``(III) documentation that each lot of the initial imported 
     shipment was statistically sampled and tested for 
     authenticity and degradation by the importer or manufacturer 
     of such product;
       ``(IV) documentation demonstrating that a statistically 
     valid sample of all subsequent shipments from such recipient 
     was tested at an appropriate United States laboratory for 
     authenticity and degradation by the importer or manufacturer 
     of such product; and

[[Page S7194]]

       ``(V) certification from the importer or manufacturer of 
     such product that the product is approved for marketing in 
     the United States and meets all labeling requirements under 
     this Act; and

       ``(ii) not coming from the first foreign recipient of the 
     product, documentation that each lot in all shipments offered 
     for importation into the United States was statistically 
     sampled and tested for authenticity and degradation by the 
     importer or manufacturer of such product, and meets all 
     labeling requirements under this Act;
       ``(G) laboratory records, including complete data derived 
     from all tests necessary to assure that the product is in 
     compliance with established specifications and standards; and
       ``(H) any other information that the Secretary determines 
     is necessary to ensure the protection of the public health of 
     patients in the United States.
       ``(c) Testing.--Testing referred to in subparagraphs (F) 
     and (G) of subsection (b)(2) shall be done by the pharmacist 
     or wholesaler importing such product, or the manufacturer of 
     the product. If such tests are conducted by the pharmacist or 
     wholesaler, information needed to authenticate the product 
     being tested and confirm that the labeling of such product 
     complies with labeling requirements under this Act shall be 
     supplied by the manufacturer of such product to the 
     pharmacist or wholesaler, and as a condition of maintaining 
     approval by the Food and Drug Administration of the product, 
     such information shall be kept in strict confidence and used 
     only for purposes of testing under this Act.
       ``(d) Study and Report.--
       ``(1) Study.--The Secretary shall conduct, or contract with 
     an entity to conduct, a study on the imports permitted under 
     this section, taking into consideration the information 
     received under subsections (a) and (b). In conducting such 
     study, the Secretary or entity shall--
       ``(A) evaluate importers' compliance with regulations, and 
     the number of shipments, if any, permitted under this section 
     that have been determined to be counterfeit, misbranded, or 
     adulterated; and
       ``(B) consult with the United States Trade Representative 
     and United States Patent and Trademark Office to evaluate the 
     effect of importations permitted under this Act on trade and 
     patent rights under Federal law.
       ``(2) Report.--Not later than 5 years after the effective 
     date of final regulations issued pursuant to this section, 
     the Secretary shall prepare and submit to Congress a report 
     containing the study described in paragraph (1).
       ``(e) Construction.--Nothing in this section shall be 
     construed to limit the statutory, regulatory, or enforcement 
     authority of the Secretary relating to importation of covered 
     products, other than the importation described in subsections 
     (a) and (b).
       ``(f) Definitions.--In this section:
       ``(1) Covered product.--The term `covered product' means a 
     prescription drug under section 503(b)(1) that meets the 
     applicable requirements of section 505, and is approved by 
     the Food and Drug Administration and manufactured in a 
     facility identified in the approved application and is not 
     adulterated under section 501 or misbranded under section 
     502.
       ``(2) Pharmacist.--The term `pharmacist' means a person 
     licensed by a State to practice pharmacy in the United 
     States, including the dispensing and selling of prescription 
     drugs.
       ``(3) Wholesaler.--The term `wholesaler' means a person 
     licensed as a wholesaler or distributor of prescription drugs 
     in the United States.''.

  Mr. JEFFORDS. Mr. President, I also ask unanimous consent that 
Senator Bryan be added as a cosponsor to the amendment.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. JEFFORDS. Mr. President, I will now discuss a problem we have 
relative to the cost of prescription drugs.
  I am joining several of my colleagues from both sides of the aisle in 
offering an amendment that will take a giant step toward providing 
access to affordable prescription drugs for Vermonters, and all 
Americans.
  Our amendment will allow pharmacists and wholesalers to import safe, 
U.S.-made, FDA-approved lower-cost prescription drugs from other 
countries. We maintain the gold standard of safety in this country, but 
hope to rein in the platinum standard we have for prices.
  Prescription drugs have revolutionized the treatment of certain 
diseases, but they are only effective if patients have access to the 
medicines that their doctors prescribe. The best medicines in the world 
will not help a person who can not afford them.
  Americans pay by far the highest prices in the world for prescription 
drugs, and for many the price is just too high.
  What's worse is that those Americans who can least afford it are the 
ones paying the highest prices. Americans who don't have health 
insurance that covers drugs are forced to pay the ``sticker price'' off 
the pharmacist's shelf.
  In short, the practice of price discrimination hits the uninsured and 
low-income Medicare beneficiaries the hardest.
  It is sad that during a time when the United States is experiencing 
unprecedented economic growth, it is not uncommon to hear of patients, 
like we heard in my committee's hearing yesterday, who cut pills in 
half, or skip dosages in order to make prescriptions last longer, 
because they can't afford the refill.
  The question that we must ask is, can we put politics aside and work 
in a bipartisan manner to deal with this national crisis? I say we 
must. And I am hopeful that today we can.
  This bipartisan amendment I am offering is based on legislation I 
introduced, S. 2520, the Medicine Equity and Drug Safety Act, or the 
MEDS Act. Joining me in introducing that legislation were Senators 
Wellstone, Snowe, and Collins and joining as cosponsors are Senators 
Dorgan and Gorton. The hearing I held yesterday allowed all of the 
parties to fully examine and articulate their views on this 
legislation.

  Our bill, which we have revised and are offering as an amendment, 
gives pharmacists and wholesalers the ability to negotiate more 
favorable prices with manufacturers. They can do so because they will 
have the ability to purchase in other countries--this is important--
where exactly the same drugs are sold for far less. These are areas 
that have been approved by the FDA. There is no question about that 
aspect.
  The drug industry has argued that this amendment compromises safety. 
As chairman of the Committee on Health, Education, Labor, and Pensions, 
safety is my first concern. That is why these imports will be limited 
to FDA-approved drugs that are made in the United States or FDA 
inspected facilities. And that is why this amendment reflects weeks of 
discussions with the people who enforce our drug safety laws.
  The amendment before us is a revision of the MEDS Act based on input 
from government experts who raised issues of public health and safety. 
Specifically, I asked FDA for technical assistance on this bill, and 
addressed each safety concern that the agency raised.
  I also point out to my colleagues that this amendment specifically 
authorizes FDA to incorporate any other safeguard that it believes is 
necessary to ensure the protection of the public health of patients in 
the United States.
  This amendment is about free trade. Why should Americans pay the 
highest prices in the world for prescription drugs? All this amendment 
does is allow international competition to bring rational pricing 
practices to the prescription drug industry. It introduces competition 
which is the hallmark of our success in this Nation.
  I point out this bipartisan amendment also drops a provision in our 
original bill that would have allowed personal imports, which I would 
have liked to retain because I think it is important.
  We dropped the personal use provision in order to answer concerns 
that some raised about safety. I was willing to compromise on that 
point at this time in order to get a bill that raises no safety 
concerns at all.
  I want the record to clearly reflect that I still feel strongly that 
Vermonters should not be in violation of federal law if they go a few 
miles across the border into Canada to get deep discounts on 
prescriptions. We do nothing in here to indicate they should not be 
allowed to do so.
  This amendment will provide equitable treatment of Americans, 
particularly those who do not have insurance, or access to big 
discounts for large purchases like HMOs. As I said before, this is not 
the only solution. I strongly believe we need a prescription drug 
benefit in the Medicare system for those people who are eligible for 
Medicare. But it is a commonsense measure that we can enact now to ease 
the burden of expensive prescription drugs on our people, for those on 
the borders, and all Americans. I ask for the support of my colleagues.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Mississippi.

[[Page S7195]]

                Amendment No. 3927 to Amendment No. 3925

  Mr. COCHRAN. Mr. President, I send a second-degree amendment to the 
desk.
  The PRESIDING OFFICER. The clerk will report.
  The legislative clerk read as follows:

       The Senator from Mississippi [Mr. Cochran], for himself and 
     Mr. Kohl, proposes an amendment numbered 3927.
       At the end of the amendment insert the following:
       ``(g) This section shall become effective only if the 
     Secretary of the Department of Health and Human Services 
     certifies to the Congress that the implementation of this 
     section will: (1) pose no risk to the public's health and 
     safety; and (2) result in a significant reduction in the cost 
     of covered products to the American consumer.''

  Mr. COCHRAN. Mr. President, the purpose of this second-degree 
amendment is to try to help ensure the result of the change in this 
law, in the authority for importing drugs into the country or selling 
drugs to American consumers from Canada, which I think this amendment 
the Senator has offered is targeted to address, will not result in any 
new dangers to the consuming public, and would require the Secretary to 
certify that that would be the case for any new regulatory regime 
implementing the amendment if it is adopted.
  One problem we need to bring to the attention of the Senate in 
connection with this amendment is the added cost that is going to 
result from this, in terms of added appropriations for the Food and 
Drug Administration. It is estimated by that agency that $92 million 
would have to be appropriated to provide the funding necessary to 
implement and carry out the obligations of that agency in connection 
with supervising this amendment.
  The distinguished Senator is chairman, as Senators know, of the 
legislative committee that has jurisdiction over this overall subject 
area in the law. I regret this is an issue being brought to the Senate 
as an amendment to the Agriculture Department's appropriations bill. It 
would be more appropriate, in my view, for the legislative committee 
which the Senator chairs to deal with this, to report out legislation, 
and in the usual way of managing changes in the law, have the Senate 
address it on a freestanding bill. The body is put at a disadvantage to 
try to understand all the nuances, the implications of the legislation, 
what the practical results will be. It has become very controversial. I 
think the Senator from North Dakota, in opening remarks as we brought 
this legislation up yesterday or the day before, talked about the 
advertising that was being run in the newspapers by the pharmaceutical 
industry. I think that is on this subject. It is related to this 
subject.
  So there is a great deal of attention being focused on this highly 
controversial issue. All the States along the northern tier that border 
on Canada have a great interest in this. It has become a hot button 
political subject for debate in senatorial campaigns and, I guess, all 
the congressional elections and the Presidential campaign. So this is a 
big political item here we are called upon to understand, to sort 
through, and then to make sure we legislate in a fashion that serves 
the public interest--not somebody's private political interest, not 
somebody's private financial interest, but the broad public interests 
of the United States. That is our responsibility.
  So what I am seeking to do with this second-degree amendment is 
ensure that is the result; that we are not putting in jeopardy, by 
changing this law, if this survives the process here in the Senate and 
conference with the House--we are not putting in jeopardy the well-
being of American consumers and we also prepare to add to the funding 
requirements of the Food and Drug Administration to enable them to 
carry out their obligations under the law.
  With those words of explanation as to where I see this and how I see 
this playing out, I am not going to prolong the debate.
  Let me point out one other thing. Some might say this is legislation 
on an appropriations bill; Why don't you just raise the issue in that 
way? Make a point of order under rule XVI.
  The point is the House has included language in its Agriculture 
appropriations bill and this amendment, as it is drafted--as I am 
advised by the Parliamentarian--is not subject to a rule XVI point of 
order but, rather, it is germane and would not fall if a point of order 
is made. That may be tested by somebody if they want to argue with the 
Parliamentarian about it, but that is what my staff advises me.

  With that information about this situation I am prepared to let 
others talk about it. Let me say, before I yield the floor, just as a 
matter of general information now that we are on the bill, Senator Kohl 
is the cosponsor of this second-degree amendment. I have offered the 
amendment with him.
  Also, as we began consideration of the appropriations bill, he did 
not have an opportunity to make his opening remarks. At some point this 
afternoon, we will give him that opportunity or he can take that 
opportunity when he gains recognition from the Chair.
  I hope this will not be a long, drawn-out debate. It is not 
necessary. We have heard a lot of speeches about this. We have had a 
lot of information sent to our offices on this issue of reimportation 
and selling drugs and pharmaceutical products across the borders, 
importing from manufacturers, the rights of pharmacists--all the other 
related issues. It is a serious matter. But we do not need to have a 
long, drawn-out filibuster of it in my view. We need to vote on it. If 
the votes are here to adopt this amendment, so be it. We will take it 
to conference and try to resolve the issue in the way we always do, 
give and take, trying to understand what is best for the country.
  Also in connection with the broader picture of the bill itself, we do 
not have a lot of troublesome issues in this bill, in my view. I have 
not heard from Senators. We have asked Senators to let us know if they 
have amendments, to bring them to the floor and offer them, and let's 
dispose of them and complete action on this bill. I was heartened today 
by conversation, as we were getting started, from the Senator from 
Nevada, the assistant Democratic leader, Mr. Reid, who suggested we 
could finish this bill today. He saw no reason why we could not. I see 
no reason why we could not finish it today.
  I hope as we proceed we will keep that goal in mind. Let's finish 
this bill today. I hope we can have third reading at about 6 o'clock. I 
do not see any reason why we cannot.
  There are some Senators who want to offer amendments. We want to hear 
them. We want to consider them and consider them fully and fairly, but 
it should not take an unnecessarily long amount of time to do that. So 
I encourage the Senate to act with dispatch, deliberation, but all 
deliberate speed. That is a Supreme Court phrase that has been used 
from time to time.
  The PRESIDING OFFICER. The Senator from Vermont.
  Mr. JEFFORDS. Mr. President, I respectfully disagree with my 
distinguished chairman and also the ranking member on the amendment 
they have proposed. This amendment is worded in such a way as to 
prevent the proposal from ever taking effect because they know it will 
be impossible, certainly so difficult as to be unworkable, to prove 
prospectively that all savings will be passed on to the patients. There 
is no way that can happen. This is just in there to clean this bill up. 
I strongly oppose this amendment.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from North Dakota.
  Mr. DORGAN. Mr. President, I rise to support the legislation offered 
by the Senator from Vermont. But before I speak on that let me just 
mention to the Senator from Mississippi and the Senator from Wisconsin 
who have brought this bill to the floor, I am a member of their 
subcommittee on appropriations. I certainly respect the work they have 
done. They do an outstanding job, they and their staffs, putting 
together the Agriculture appropriations bill. It is not an easy bill to 
construct and to bring to the floor.
  One amendment that I will offer at a later time will deal with the 
disaster now facing farmers who have flooded lands and especially those 
farmers whose crops are burning up day after day in the deep South.
  Last Friday morning, as we were taking a series of votes, I talked 
with Senator Coverdell. He and I were prepared to offer an amendment to 
assist farmers dealing with flooded lands in my part of the country and 
drought-stricken lands in Georgia. Georgia is the hardest hit State 
with drought

[[Page S7196]]

problems, and family farmers there are suffering substantially. Senator 
Coverdell intended to join me in offering an amendment offering them 
some emergency assistance. I will want to address this issue on this 
legislation. I will certainly talk with the chairman and the ranking 
member to do so in a way that relates to the needs of the Senate, but 
especially in a way that meets the needs of those family farmers who, 
through no fault of theirs but through natural disasters, have seen 
their crops disappear and are suffering some very significant problems.
  I will save further discussion of this problem for a later time in 
this debate.
  With regard to the amendment offered by the Senator from Vermont, I 
strongly support this amendment. Several bills have been introduced in 
Congress on this subject. I introduced a piece of similar legislation 
along with Senator Wellstone and Senator Snowe. I am also pleased to 
join as a cosponsor of the legislation authored by the Senator from 
Vermont.
  All of these bills relate to the same issue. That issue is very 
important and one we should address. The reason it is being addressed 
here and now is that the House of Representatives has already addressed 
it on its Agriculture appropriations bill, and it is important that the 
Senate also weigh in on this issue. The Senator from Vermont certainly 
has a right, and is protected with respect to germaneness, to offer 
this amendment to this bill.
  Let me describe the issue before us in terms that people can better 
understand, using a couple of different medicines as examples.
  I ask unanimous consent that I be allowed to use these medicine 
bottles in my presentation.
  The PRESIDING OFFICER (Mr. Crapo). Without objection, it is so 
ordered.
  Mr. DORGAN. I have here bottles of 3 different prescription drugs 
that are ranked among the top 20 in the United States in the number of 
prescriptions filled and sales volume. All of these drugs, 
incidentally, are approved by the U.S. Food and Drug Administration.
  I have here the actual bottles for these medicines. This one happens 
to be Zoloft, which is used to treat depression. The company that 
produces these pills and puts them in different size bottles then sells 
them all around the world. It is exactly the same medicine produced by 
the same company, sold in different places. Buy it, for example, in 
Emerson, Canada, and you will pay $1.28 for a pill. Buy it 5 miles 
south of there in Pembina, ND, and you will not pay $1.28 for the same 
pill. Instead you will pay $2.34. It is the same pill in the same 
bottle, made by the same company in the same manufacturing plant. The 
only thing different is the price. The pill costs $1.28 in Canada, and 
$2.34 for an American consumer.
  Or what about Zocor? Zocor is a very popular prescription drug. Pick 
up any Newsweek or Time magazine and see the multipage ads for this 
drug. I have here two bottles of Zocor made by the same company, with 
the identical manufacturing process. One bottle is sent to Canada where 
it costs $1.82 per tablet; the other is sent to a U.S. consumer who is 
charged $3.82: $1.82 for someone living in Winnipeg, $3.82 for someone 
living in Montpelier.
  Norvasc is a prescription drug that is used to lower blood pressure. 
The bottles are almost identical--again, both bottles are by the same 
manufacturer, and contain the same pill. Norvasc costs the Canadian 
consumer 90 cents. It costs the U.S. consumer $1.25 per pill.

  Or to look at this price disparity another way, the cost of a 1-month 
supply of Zocor--the same pill, by the same company, in the same 
bottle--is $54 when it is sent to a Canadian. When it is sent to an 
American, it costs $114.
  Or Zoloft--again the same pill, by the same company, made in the same 
manufacturing plant--costs the Canadian $38 for a 1-month supply; the 
American pays $70.
  Norvasc costs Canadians $27 for a one month supply and the same 
quantity costs Americans $37. I can show you medicine where the price 
inequity is 10 to 1.
  The question our constituents in the States of Vermont, North Dakota, 
Minnesota, and Washington ask is: How can this be justified? This is 
the same product. If this is a global economy, why must I go to Canada 
to try to buy a prescription drug that was manufactured in the United 
States in the first place in order to buy it for half the price? That 
is what Americans all across this country are asking.
  The companies that produce these medicines are able to access all of 
the ingredients they need to produce prescription drugs from all around 
the world in order to get the lowest prices. If the pharmaceutical 
manufacturers are able to benefit from the global economy, why then can 
the consumer not also access that same drug made in a plant approved by 
the FDA when it is being sold in Winnipeg for half the price?
  What is the answer to that? Many of us believe American consumers 
should be able to also benefit from the global economy. My colleague 
from the State of Washington, Mr. Gorton, has sponsored his own 
legislation to address this issue and he is also a cosponsor of this 
amendment. All of us have to respond to our constituents.
  This is not just a Canada-United States issue. Americans pay higher 
prices than anywhere else in the world. How much more do we pay? If 
Americans pay an average of $1 for a pharmaceutical product, that same 
product has a much lower average cost in every other industrialized 
nation. We pay $1; the Canadians pay 64 cents. We pay $1; the English 
pay 65 cents. We pay $1; the Swedes pay 68 cents. We pay $1; the 
Italians pay 51 cents. We are charged the highest prices for 
prescription drugs of any country in the world. The American people ask 
the question: Why?
  Senior citizens are 12 percent of our population, but they consume 
one-third of the prescription drugs in America. I come from a State 
with a lot of senior citizens. They have reached the years of their 
lives where, in most cases, they are no longer working and are living 
on a fixed income. Last year, they saw, as all Americans did, 
prescription drug spending in this country go up 16 percent in 1 year. 
Part of that is price inflation, part is driven by increased 
utilization. Nonetheless, older Americans saw a 16-percent increase in 
prescription drug spending in this country in 1 year.
  Those of us who have held hearings on this issue and who have heard 
from senior citizens know what they say. They tell us they are forced 
to go to the back of the grocery store first, where the pharmacy is, to 
buy their prescription medicines because only then will they know how 
much money they have left to pay for food. Only then will they know 
whether they are going to get to eat after they have purchased their 
prescription drugs.
  This is an issue for all Americans, not just senior citizens, but it 
is an especially acute problem for senior citizens.
  In January on one cold, snowy day, I traveled with a group of North 
Dakota senior citizens to Emerson, Canada.
  First we visited the doctor's office--because it is required in 
Canada--where the North Dakotans who wanted to buy prescription drugs 
in the Canadian pharmacy showed the doctor their prescription from a 
U.S. doctor, and the Canadian doctor wrote a prescription for them. 
Then we went to a very small, one-room pharmacy just off the main 
street of Emerson, Canada, a tiny little town of not more than 300 or 
400 people. Emerson is 5 miles north of the North Dakota border.
  I stood in that pharmacy and I watched the North Dakota senior 
citizens purchase their prescription drugs, and I saw how much money 
they were saving on the prescription drugs they were buying.
  As is often the case, senior citizens will take 2, 3, 4, or 8 
different prescription drugs. It is not at all unusual to see that.
  I watched these North Dakotans compare what they were paying in the 
United States to what they were paying at this little one-room pharmacy 
in Emerson, Canada. It was staggering.
  They asked me the question: Why do we have to come to Canada to do 
this? Why can't our pharmacists come up here and access this same 
supply of drugs and pass the savings along to us?
  The answer is that there is a Federal law in this country that says 
that only the manufacturer can import prescription drugs into the 
United States.
  The amendment we are considering, offered by the Senator from 
Vermont,

[[Page S7197]]

proposes to change that. He does not propose to do so in any way that 
would jeopardize the safety of medicines that are available in this 
country. He does not propose to in any way suggest that we should not 
maintain the chain of custody needed to assure a safe supply of 
prescription drugs.
  But he does propose that we amend that law and replace it with a 
system that assures the safety of the medicine supply, while allowing 
pharmacists and drug wholesalers to go to Canada and go to other 
countries and access that same prescription drug, provided that it was 
produced in a plant that was approved by the FDA. This amendment 
assures not only the safety of the manufacturing process but also the 
chain of custody of the supply. In this way we will allow U.S. 
consumers the full flow and benefit of the global economy.
  Why can't American pharmacists and drug wholesalers shop globally for 
prescription drugs, provided it is the same pill, put in the same 
bottle, manufactured by the same company in a plant that is approved by 
the FDA?
  The answer is that they ought to be able to do that. There is no 
excuse any longer for preventing them from doing that.
  Zocor, Prilosec, Zoloft, Vasotec, Norvasc, Cardizem--you can go right 
on down the list of the medicines most frequently used by senior 
citizens and compare what they cost here with what they cost in Canada 
and Mexico. Then ask the question: Why? Why are we in America charged 
so much more for the identical prescription drug?
  The answer is simple: It is because the big drug companies can do it 
here. The pharmaceutical industry charges what the market will bear in 
the United States. The U.S. consumers are prevented from being a global 
consumer.
  Let me say this about the pharmaceutical industry. I want them to do 
well. I support them on a range of things. I want them to be 
profitable, and I want them to be able to do substantial research. I do 
not wish them ill. I applaud them and thank them for the research they 
do to create lifesaving, miracle drugs. They only do part of the 
research, of course. A substantial part is also done through the 
National Institutes of Health, through publicly funded research. And we 
are dramatically increasing our investment in NIH.
  But some will say to the Senator from Vermont: What you are doing 
will dramatically reduce research and development by the drug 
companies. These prices are what support research and development.
  Hogwash. Nonsense. The fact is, a larger percentage of the research 
and development is done by the drug companies in Europe than is done in 
the United States. Let me say that again. More research and development 
is done in Europe than in the United States. And that comes from the 
pharmaceutical industry's own figures.

  Take a look at the billions and billions of dollars the drug industry 
spends on promotion and compare that to what they spend on research and 
development.
  In fact, if you pick up a weekly magazine, such as Newsweek, you will 
see the multipage ads for prescription medicine. They are spending 
billions of dollars on direct-to-consumer advertising. They are going 
directly to the consumer and saying: We want you to go to your doctor 
to demand that he or she write a prescription for this medication for 
you.
  That just started a few years ago. It is now rampant. Doctors will 
tell you that patients come to their offices, saying: I read about this 
medicine in an ad in Newsweek. I want you to prescribe that. That is 
what is happening.
  Billions of dollars are spent to try to induce consumers to demand 
medicine that can only be given to them by a doctor who believes it is 
necessary.
  While all of this is going on, the Senator from Vermont offers a 
piece of legislation that I fully support. If I were writing the 
legislation offered by the Senator from Vermont, I would prefer that it 
not leave out the provision that allows personal use importation. I 
hope at some point we can allow for that.
  But I just say this. I know that literally $60 or $70 million has 
been spent by the pharmaceutical industry because it is scared stiff 
that we are going to pass this legislation.
  In fact, in the Washington Post the pharmaceutical industry has been 
running a full-page ad for the last several days. I do not know what a 
full-page ad costs in the Washington Post, but I know it is not cheap. 
How many citizens, who support our bill, have the ability to go to the 
Washington Post and buy a full-page ad?
  This full-page ad is just totally bogus. It says: One of these pills 
is a counterfeit. Can you guess which one? Congress is about to permit 
wholesale importation of drugs from Mexico and Canada. The personal 
health of American consumers is unquestionably at risk. Counterfeit 
prescription drugs will inevitably make their way across our borders 
and into our medicine cabinets. Counterfeit prescription drugs can 
kill. Counterfeit prescription drugs have killed.
  This is from the pharmaceutical industry, which wants to scare people 
into believing the legislation that we are now debating is somehow bad 
for our country's consumers. That is totally bogus. We are proposing an 
amendment that assures the safety of the drug supply but finally 
assures the American consumer that they can access drugs that are 
priced reasonably.
  If someone in another country is paying half the price or a third or 
a tenth of the price being charged the American consumer for the same 
drug that is produced in a manufacturing plant approved by the FDA, why 
can't the American consumer have access to those drugs in a global 
economy?
  The answer is: They ought to be able to do it.
  Mr. JOHNSON. Will the Senator yield for a question?
  Mr. DORGAN. I am happy to yield for a question.
  Mr. JOHNSON. I commend the Senator for his work and commend Senator 
Jeffords for his work on this issue. In relation to the advertisement 
in the Washington Post, I wonder if the Senator from North Dakota would 
share with us the sponsor of that advertisement as it appears on the 
ad?
  Mr. DORGAN. Yes. The sponsor is Pharmaceutical Research and 
Manufacturers of America. The drug industry obviously wants to keep 
things as they are.
  Let me just make one additional point. It is not my intention to have 
the American people go to another country for their prescription drugs. 
It is my intention to force the pharmaceutical industry to reprice 
their drugs here in the United States. If our pharmacists and our drug 
wholesalers are able to access the same drugs at a much lesser price in 
Canada or England or elsewhere, and bring them back and sell them at a 
savings to our consumers, it will force the industry to reprice their 
drugs in this country.
  That is my goal. It is not my goal to put people in minivans and send 
them outside this country to access prescription drugs. I want 
pressures brought through the global economy to equalize prescription 
drug prices in this country vis-a-vis what they are being sold at in 
other countries.
  Mr. President, I yield the floor.
  The PRESIDING OFFICER. The Senator from Washington.
  Mr. GORTON. Mr. President, let's paint a picture, or set the stage, 
for this debate.
  Most of the research and development and manufacture of prescription 
drugs goes on here in the United States, in a highly constructive 
fashion. Drug companies, and their research and development staffs, 
here in this country experiment and work, literally for years, to 
develop new and effective prescription drugs.
  They are magnificently successful in that quest. And at least one of 
the reasons we are debating this issue today is that they are so 
successful that every year the share of our health care dollar that 
goes to prescription drugs increases because we now have conditions 
that can be treated by prescriptions that previously required 
hospitalization, if indeed they could be treated at all.
  The process of taking an idea through its basic and applied research, 
its testing and its development to licensing by the Food and Drug 
Administration is long and arduous and is aimed both at safety and 
effectiveness. During that period of time, these companies spend a 
great deal of money with no return. It is clear, both to the proponents 
and opponents of both the first- and second-degree amendments,

[[Page S7198]]

that these companies are entitled to recoup those long and large costs 
of research and development. They are not only allowed, properly, to 
recoup the costs of those drugs that are actually brought to market, 
but the cost of all of the dead-end streets they run into with some of 
this research and development. To that point, there is agreement.
  We are also dealing with a business, as any other in the United 
States, that spends a good deal of its time and effort in developing 
new products. Even at the early stage, there are some factors that 
favor the pharmaceutical industry because of its importance to the 
United States. It, as other companies, is entitled to a research and 
development tax credit, but it, unlike most other industries, also 
benefits hugely from research conducted by the National Institutes of 
Health, as the primary sponsor of this amendment well knows. So 
approximately half of all of these research and development costs are 
already underwritten by the taxpayers of the United States, either 
through tax credits or through our direct appropriations to the 
National Institutes of Health.

  It is at this point that the wonderful line from ``Alice in 
Wonderland'' comes to mind, and the situation becomes ``curiouser and 
curiouser.'' At the point at which these pharmaceutical products have 
been licensed, the actual manufacturing cost for that pill is, 
generally speaking, not very high. And so much of the price structure 
is to cover the research and development, the very large advertising 
costs to which the Senator from North Dakota referred, other marketing 
costs, the lobbying those companies do in the Congress, and a 
reasonable and, I may say, in most cases generous profit. But these 
U.S.-based, often U.S.-owned, pharmaceutical manufacturing companies 
consistently charge their American customers--not the individual 
patient in this case but the huge regional drugstore chains as well as 
individual pharmacies--far higher prices than they charge for the 
identical product overseas or across our northern and southern borders.
  One would think in a normal market that prices would be 
nondiscriminatory or, if anything, the manufacturers would be grateful 
enough for the tremendous aid and assistance they receive from the 
taxpayers of the United States perhaps to give at least a small price 
break to American purchasers. But, no, as has been pointed out, they 
charge Americans pretty close to twice as much as they charge anyone 
else. These wholesale prices, obviously, are reflected in retail prices 
for the drugs.
  My experience in the State of Washington is very much similar to that 
outlined both by the Senator from Vermont and the Senator from North 
Dakota. We ran a little test; we went up to Canada, priced identical 
drugs in the State of Washington and in British Columbia, and found a 
62-percent difference. In other words, it was way less expensive to buy 
them in Canada. So busloads of Americans go from Seattle and other 
parts of the State of Washington across the border to buy drugs and 
bring them back.
  Why, one asks oneself, would American companies do this? Why would 
they discriminate against Americans?
  They say: There is a simple answer to that. The Canadian Government, 
the Mexican Government, the Government of the United Kingdom, fix the 
prices of drugs. They want their citizens to get these pharmaceutical 
products less expensively than Americans do. So they, by government 
fiat, set the prices. And so we sell them, the drugs, for a lower price 
for a simple reason: We have already manufactured and sold lots of them 
in the United States. And when you go from the ten-millionth pill to 
the twenty-millionth pill, it doesn't cost you very much to manufacture 
those new pills, so we can still make a profit, even though we are 
selling them at half price in other countries.
  Gee, isn't that unfair? Yes, I guess so, but that is the way the 
world is.
  Now, that particular argument that price-fixing countries do much 
better for their consumers than a free market does in the United States 
is really a two-edged sword. It is one heck of an argument for price 
fixing in the United States. The junior Senator from Minnesota, a 
couple weeks ago, put up a proposal that would do exactly that, fix the 
price of drugs in the United States. This is a point at which I agree 
with the drug companies. They say: You fix prices and you will dry up 
research and development. I am not sure how far down we look for the 
validity of that argument, given the great excess of advertising costs 
over research and development costs, but let us assume that it is 
totally and completely valid as an argument. Then under those 
circumstances, we shouldn't be fixing prices here in the United States. 
But that doesn't mean we should continue to allow Americans to suffer 
the immense discrimination that goes on consistently year after year, 
product after product in this country.

  When I discovered the extent of this problem, basically out of a 
cover story in Time magazine--I believe it was last November--it seemed 
to me, as a former State attorney general who for an extended period of 
time was in charge of consumer protection, fine, you just tell them by 
law to stop discriminating. Don't charge Americans any more than you 
are willing to charge Canadians or Italians or citizens of the United 
Kingdom.
  That is price fixing, the companies say. That is a terrible thing.
  Well, it is not price fixing to say you don't discriminate. If you 
can't make a profit at a given price, you don't have to sell the drug 
in Canada or in any other place.
  But they have a lot of money to spend trying to sell that bill of 
goods to people. So we discovered--again, I think this was as a result 
of my history as a State attorney general--that we have a statute in 
the United States that prevents price discrimination. It is called the 
Robinson-Patman Act. It was passed in 1936. It was a sweeping 
antidiscrimination bill. It prevents price discrimination in the sale 
of any commodity in interstate commerce, with certain exceptions for 
actual cost savings from quantity sales and the like. So we said, fine, 
and the bill we introduced just said interstate and foreign commerce, 
with respect to prescription drugs.
  It is interesting; the drug companies paid no attention to that 
distinction at all, and they still use these millions of dollars to say 
it is price fixing. Well, if so, then we have fixed the price of every 
commodity in the United States for 64 years, which I think surprises 
most people who believe in and have benefited from the truly free 
economy in the United States.
  The argument that this is price fixing is fraudulent--purely and 
totally fraudulent. But I am not wedded or married to one solution to 
this problem of excessive prices imposed on American consumers for 
their prescription drugs because while we ban importation by law--by 
custom at least--we have permitted for an extended period of time 
American citizens to cross our borders--northern or southern or, for 
that matter, across the ocean to Europe--and to return to the United 
States with a 3-month supply of any prescription drug they are using, 
without being bothered by any of the governmental agencies of the 
United States. Both of my other Senate colleagues in this regard have 
pointed out that that happens in their State, and I have already 
pointed out that it happens in mine.
  So the Senator from Vermont and the Senator from North Dakota came up 
with the idea that if an individual can do it for himself or herself, 
why not let our pharmacists do it and bring these prescription drugs 
back to the United States, which are often manufactured in the United 
States and then shipped north or south of the border--bring them back 
and offer them for sale, presumably at a lower price.

  I am sure the Senator from Vermont doesn't mind my saying, in a 
sense, this solution is truly bizarre--that somehow or another it 
should be less expensive for a pharmacist to buy from a middleman than 
it should be from a manufacturer in the first place, and then have to 
ship the product across a national border twice in order to get the 
lower price. But the bizarre nature of the proposal is a simple and 
direct result of the outrageous discrimination that is practiced in the 
first place, and nothing else.
  So the Senator from Vermont has written a bill and proposed an 
amendment to allow the retail seller, or the wholesaler, to engage in 
this reimportation. But concerned as he and the FDA are about making 
sure you

[[Page S7199]]

get the real thing, most of the words in his amendment have to do with 
the safety of the product, of making certain you are getting what it is 
that you thought you purchased. In fact, it doesn't allow this 
reimportation unless the Secretary of Health and Human Services 
promulgates regulations permitting that reimportation that meet 
necessary safeguards.
  OK, that is where we are at this point. And then, instead of simply 
opposing the proposal, my good friend from Mississippi puts up a 
second-degree amendment that says the Secretary has to certify to 
Congress that it would pose no risk to public health and safety and 
will result in a significant reduction in the cost. It is either 
absolutely unnecessary, because we are talking about something the 
Secretary has already done, and the price part of it is unnecessary 
because if there isn't a significant savings in the price, nobody is 
going to go up and buy them in the first place or it is an attempt--and 
I regret to say this--to kill the amendment of the Senator from Vermont 
in its entirety and see to it that it doesn't happen. The drug 
companies and their sponsors are not really wanting to justify the 
situation that exists in the United States today because it can't be 
justified, so they use an argument for safety that is already far more 
adequately covered by the amendment proposed by the Senator from 
Vermont in any event.
  Now we are able to deal with this issue as part of this 
appropriations bill, of course, because the House of Representatives 
did. So it is properly before us. But the other matter that I find 
extraordinarily odd with respect to the second-degree amendment is just 
this: The distinguished chairman of the subcommittee, the manager of 
the bill, knows perfectly well that individuals can go across our 
borders and come back with a 3-month supply of prescription drugs. If 
he and the Senator from Wisconsin are so concerned about safety that 
they have to pile on with a second-degree amendment, why aren't they 
banning totally and completely personal reimportation? The Senator from 
Vermont isn't even touching that subject in his amendment. I wish he 
did. The House of Representatives did. He is setting up a way for 
reimportation to take place at the wholesale level, where safety is far 
more protected than it is with respect to these individual purchases.
  But the individual purchases have not created a great problem. If 
they had, people would stop engaging in those policies. Whatever else 
we may say about Canadians, they are not in the business of poisoning 
their own citizens.
  This reimportation can take place with perfect safety under the 
amendment as proposed by the Senator from Vermont, and anything added 
to it is simply an attempt to kill it and to maintain the status quo.

  Let me go back to the stage I have set and simply say this: The 
status quo is American manufacturers using American taxpayers' money to 
produce products in the United States of America, which they then sell 
at prices that discriminate outrageously against American purchasers. 
That is really all there is on the stage today--discrimination by 
American companies against American purchasers, in spite of the support 
of American taxpayers.
  The first-degree amendment takes at least a modest step toward curing 
that situation. The second-degree amendment is designed to keep it in 
place forever.
  I have one final point, Mr. President. I agree with each of the 
Senators who have previously spoken on the desirability and the 
importance of a Medicare drug benefit. There is some debate over to 
whom it should apply, how much it should cost. But Medicare covers 
about 40 million Americans. We have 250 million Americans altogether. 
None of the rest of them will be helped at all by even the most 
generous Medicare drug benefit. All of them will be helped by this 
amendment, to the extent that it is actually effective, because it will 
in fact end up lowering the price of prescription drugs in the United 
States of America. That is why the first-degree amendment should be 
adopted and the second-degree amendment that attempts to gut it should 
be rejected.
  Mr. COCHRAN. Mr. President, I am pleased to announce to the Senate 
that we have been able to secure an agreement on a unanimous consent 
request to limit debate on the pending Cochran amendment and the 
underlying Jeffords amendment. I understand it has been cleared.
  I ask unanimous consent that the Senate proceed to vote in relation 
to the pending Cochran amendment, No. 3927, at 5 o'clock p.m., and the 
time between now and then be equally divided in the usual form. I 
further ask unanimous consent that following that vote, the Senate 
proceed to vote immediately in relation to amendment No. 3925, as 
amended, if amended, the Jeffords amendment.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. COCHRAN. I thank the Chair. I remind Senators that this doesn't 
mean we have to use all the time between now and 5. I encourage Members 
to make brief statements. We can vote before 5 and then move on to 
another subject.
  The PRESIDING OFFICER. The Senator from Vermont.
  Mr. JEFFORDS. Mr. President, I ask unanimous consent that Senator 
Gregg be added as cosponsor to amendment No. 3925.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Who yields time?
  Mr. KENNEDY. Mr. President, will the Senator from Vermont be good 
enough to yield 12 minutes?
  Mr. JEFFORDS. Mr. President, I yield 12 minutes to the Senator from 
Massachusetts.
  The PRESIDING OFFICER. The Senator from Massachusetts is recognized 
for 12 minutes.
  Mr. KENNEDY. Mr. President, I support this amendment and I commend 
the sponsors for their efforts to address the high cost of prescription 
drugs.
  I support this amendment, and I commend its sponsors for their 
efforts to address the high cost of prescription drugs. The American 
public wants affordable medicines, and I believe we should do all we 
can to reduce the financial burden imposed on our citizens by high drug 
costs.
  It is worth emphasizing that imports of prescription drugs from other 
countries must be accompanied by strict precautions to protect the 
public. Federal standards require that all prescriptions sold in the 
United States must be safe and effective. The public health protections 
guaranteed by the Food, Drug, and Cosmetic Act do not end at the gates 
of the manufacturer's plant but extend all the way to the doorstep of 
the consumer. Congress has promised the American people that the 
medications they use will be effective and be free of contaminants.
  In 1988, President Reagan signed into law the Prescription Drug 
Marketing Act to protect Americans from counterfeit, contaminated, and 
other unsafe medications. Today counterfeit drugs continue to plague 
the citizens of many countries, including our own. In 2000, at least 30 
people in Cambodia died from fake malaria medications. 60,000 people in 
Niger were vaccinated against a deadly epidemic of meningitis with 
counterfeit vaccines, and received water injections instead of real 
medicines. This past year the United Kingdom broke up a smuggling ring 
to import counterfeit drugs into the U.K. from India. According to a 
DEA official, 25% of the prescription drugs brought by consumers into 
the U.S. from Mexico are fake. From 1989 to 1994 a counterfeit 
antibiotic from China was sold in the U.S. through legal distribution 
channels resulting in almost 2,000 adverse events, including 49 deaths. 
In spite of an Import Alert issued by the FDA in September 1999, the 
fake medication may still be entering the U.S.
  I raise these problems to emphasize that without adequate 
protections, legalizing importation by pharmacists and wholesalers will 
increase the risks already posed by fake and contaminated drugs. This 
amendment deals with these safety concerns primarily by placing the 
responsibility for assuring the quality of imported products on the 
importer, subject to FDA oversight--and it gives FDA broad authority to 
impose additional requirements necessary to protect public health.
  The FDA needs adequate tools to combat counterfeit or adulterated 
drugs. Adequate funding for the FDA is essential to ensure the safety 
of imported prescription drugs. FDA currently inspects less than 1% of 
all drug shipments from other countries. Clearly, additional resources 
will be necessary to implement this amendment.

[[Page S7200]]

  As we all know, the real issue is providing an effective and 
affordable prescription drug benefit to senior citizens and the 
disabled under Medicare.
  That is the basic and fundamental issue. We wouldn't be having this 
debate if we were providing an effective prescription drug program to 
the seniors under the Medicare program. It wouldn't be necessary. We 
wouldn't have to be taking these additional risks. This is not a 
substitute for the Senate taking action on that important measure.
  The President has reiterated the fact that he would be glad in 
working with our Republican friends to sign their marriage penalty 
legislation if it included a prescription drug program. It is 
absolutely essential. This legislation is no substitute for it.
  The cost of the drugs these patients needed far exceeded their 
ability to pay, even if the cost was deeply discounted. A patient with 
high blood pressure, irregular heartbeat, and an enlarged prostate 
would pay $3,100 annually for drugs.
  This particular chart indicates the general patient profile for some 
of the most common kinds of concerns, particularly for the elderly. 
They are the ones who have the highest utilization of the prescription 
drugs. They are the ones who need the protections under Medicare. They 
are the ones who, hopefully, we are going to take action on in this 
Congress to protect.
  We are talking about osteoporosis, or heart trouble with a typical 
cost of $2,412--that is 20 percent of the pretax income; high blood 
pressure, irregular heartbeat, enlarged prostate, $3,100, 26 percent of 
pretax income; severe arthritis, ulcers, gastric reflux, depression, 
$3,696, 31 percent; ulcers, high blood pressure, heart disease, asthma, 
$4,800, 40 percent.
  This basically shows not only the access but the enormous costs of 
the prescription drugs to address these particular items.
  A patient with heart disease and severe anemia, $26,500, and 22 
percent.
  If we look at this chart, most senior citizens have very moderate 
incomes. Look at this. Fifty-seven percent are under $15,000; 21 
percent are under $24,000. We have virtually 80 percent below $24,000.
  We are talking about a handful of senior citizens in the upper areas. 
Eighty percent of our seniors are people of extremely modest means. The 
cost of these drugs are going absolutely out of sight.
  That is why we have to have a program that is going to provide 
coverage, and that is going to be universally affordable for our 
seniors and for the Federal Government as well.
  This is a drug crisis for our seniors. The coverage is  going down, 
and the costs are going up.

  I will take just a moment of the Senate's time to point out what is 
happening to our senior citizens.
  Twelve million--effectively a third--of our seniors have no coverage 
whatsoever. Eleven million of them have employer-sponsored coverage. We 
are going to show a chart in just a moment that shows employer-
sponsored drug coverage is collapsing.
  Some three million have Medicare-HMO, and we will find what is 
happening in the HMOs where they are putting limitations of what they 
are going to be prepared to reimburse under prescription drugs.
  The next is Medigap costs which are going right up through the 
ceiling and becoming less and less affordable.
  The only group of Americans who have dependable, reliable, affordable 
prescription drugs are the 4 million Americans under Medicaid.
  It is a national disgrace when we know the commitment that was made 
here in the Congress in 1964 and in 1956 that said to our senior 
citizens, work hard, we will pass Medicare, and you will not have to 
worry about your health care needs in your golden years. We didn't 
include a prescription drug program because the private sector didn't 
have it then. Only 3 cents out of every dollar was expended on 
prescription drugs. Now it is up 20 cents, and in some places even 30 
cents, in terms of the costs of the health care dollars. Health 
benefits have dropped by 25 percent. That is between 1994 and 1997. 
This arrow is continuing to go right down.
  The other chart showed where you have 11 million seniors getting 
covered by employer-based programs. This chart indicates that they are 
rapidly losing coverage at the present time.
  We have 11 million who do not have any coverage, and 12 million who 
have employer-sponsored coverage. But that is going down.
  This shows what is happening if they get Medicare HMO drug coverage. 
We see 75 percent will limit coverage to less than $1,000. They are 
putting limitations on what they will pay for. The chart shows the five 
major illnesses affecting and impacting our senior citizens cost vastly 
higher than $1,000. Therefore, our seniors, even if they have coverage 
under an HMO, are still paying an unaffordable amount of money if 
$1,000 is the limitation. Mr. President, 32 percent have imposed caps 
of less than $500. We are seeing the collapse of coverage that is out 
there for our senior citizens.
  This chart shows what is happening in the medigap coverage--which is 
effectively becoming unaffordable--in the sample premium for a 75-year-
old person in various States. This is virtually unaffordable.
  This chart shows the costs of drugs compared to the Consumer Price 
Index over recent years, 1995, 1996, 1997, 1998, and 1999. In 1995, 2.5 
percent; in 1996, 3.3 percent; in 1997, 1.7 percent; in 1999, 2.7.
  The top of the chart shows the actual drug costs in terms of the 
expenditures being made by seniors to get the drugs they need. We see a 
very modest increase in the Consumer Price Index. Yet for senior 
citizens who use three times the amount of drugs as the rest of the 
population, we find out this is continuing to increase, placing 
extraordinary pressure on seniors. In many instances, they are 
completely unaffordable.
  As mentioned earlier in the debate, the Pharmaceutical Research 
Manufacturers say:

       Private drug insurance lowers the prices 30 percent to 39 
     percent.

  That says it all. It is saying you could go ahead and have a 
reduction in the costs of these prescription drugs anywhere from 30 
percent to 39 percent, and they can still make an adequate and generous 
profit. This is from the industry itself. The seniors are hearing this 
and living it, as pointed out by the Senator from North Dakota and my 
friend, the Senator from Vermont. They are seeing this. They know this 
has happened. They have to go abroad in order to try to get these vital 
prescription drugs.
  The unanswered question is, If we can go across and buy them, why 
can't we do this in a way that is going to be more accessible and 
available not only to those able to go over but also to our friends and 
neighbors and fellow senior citizens?
  It is out of that enormous frustration and these facts that this 
amendment comes to the floor. That is why I believe it should be 
supported. I think it is essential, but it is not going to address the 
fundamental issue, which is the Medicare program that will cover all of 
our senior citizens and effectively do it in a way that will see a 
significant reduction of costs.
  I thank the Senator from Vermont.
  Mr. COCHRAN. Mr. President, I yield 10 minutes to the distinguished 
Senator from Louisiana.
  The PRESIDING OFFICER (Mr. Sessions). The Senator from Louisiana is 
recognized for 10 minutes.
  Mr. BREAUX. Mr. President, I thank the Senator from Mississippi for 
yielding.
  I was thinking about the argument that we had on the Senate floor 
about importing medical supplies in terms of prescription drugs from 
foreign countries into the United States because they might be cheaper. 
I could get open-heart surgery in Mexico for a lot cheaper than at 
Oschners in New Orleans or at the Mayo Clinic or at Johns Hopkins or 
any other fine institution in the United States. It would be half as 
expensive. I doubt many Americans want to put their lives in the hands 
of people they know are not regulated.
  I could buy many items in countries around the world, and many Third 
World countries, which would be a lot cheaper. I remember one time 
going to Hong Kong. I saw some of the Lacoste shirts with the little 
alligator. My wife and I were shopping in Hong Kong and they had all 
these Lacoste shirts. They were $5. I said: That is incredible, a heck 
of a deal. I will buy a Lacoste alligator shirt for everyone I know for 
gifts for Christmas. We bought one

[[Page S7201]]

after another. I bought one or two myself. We came home and the first 
time I washed the shirt, the alligator fell off. The alligator fell off 
because it was a counterfeit shirt. The shirt nearly dissolved after 
the first washing and the alligator drowned in the washer. The product 
was totally worthless. It was a counterfeit product.
  It is one thing when you are buying a knit shirt. When someone is 
sending me drugs that have been either manufactured in a foreign 
country or even manufactured here and sent to a Third World country and 
stored in a warehouse, God knows where, under conditions that may be 
totally contrary to the safety of that drug, who knows who deals with 
those products in that country in the privacy of that warehouse. Who 
knows how many times somebody might go into that warehouse and take the 
product, and instead of saying we will have 100 pills, if I cut it in 
half, I could have 200 pills. If I could cut it into fourths and end up 
not with 100 pills but 400 pills, look how much money I can make if I 
do it that way.
  If I can take that type of quality control, which is nonexistent in a 
foreign country, and say that is how I will make my money, what kind of 
products will we be giving to the American consumer? This is not a 
Lacoste shirt that an alligator might fall off of. This is medicine 
that is important to the safety and the life of our constituents.
  Why do we have a ban on the importation of foreign drugs passed by 
Congress in 1987? In order to protect U.S. consumers, to make sure that 
the drugs were not improperly stored, or improperly handled, or 
improperly shipped, or perhaps made to be like my Lacoste shirt, 
totally, absolutely counterfeit.
  How many Federal bureaucrats are we going to put in 150 countries 
around the world to ensure those products in those countries are safely 
stored, safely handled, and not diluted? And how many more 
bureaucracies are we going to create to make sure those problems don't 
develop?
  We can get a lot of things cheaper in a lot of other countries. How 
about buying cheaper wheat from China? They have a controlled economy 
where the Government runs everything and sets the prices. Could we not 
buy a lot of wheat from China and give it to our constituents a lot 
cheaper? We don't do that because it is not a level playing field. In 
that sense, we are competing with a micromanaged economy overseas that 
the Government participates in and helps their farmers. Our people 
can't compete against that. It is not a good idea.
  This is the bottom line--actually two things. No. 1, there is no 
guarantee we are not going to create a boondoggle with this for all the 
wholesalers. There is no guarantee, without the Cochran amendment, that 
anybody who is a consumer is going to have any of the benefit of any of 
what we are trying to do by importing cheap Third World drugs into this 
country. Nobody has a guarantee the savings would be passed on to the 
consumer. I can see a wholesaler who wants to get the drug for $20 
selling it for $40 over here and making one heck of a profit. There is 
no guarantee without the Cochran amendment.
  The final point is that this is not the answer to the problem. The 
answer to the problem is to find a way to guarantee to Medicare 
beneficiaries that they get the best deal, that we have some ability to 
provide them with the coverage they need at the price they can afford. 
That is the real answer.
  People say we do not want price controls in this country; that is 
anti-American. But we are going to buy the price controls from other 
countries around the world. We will let them impose price controls, and 
then we will buy from them. Why don't we just put on price controls in 
this country and call it what it is? We are saying essentially we don't 
like price controls but we like other countries' price controls and so 
we will buy it from them with absolutely no ability to guarantee the 
product coming over here is the product that left this country.
  Here is the problem. If a Medicare beneficiary walks into the 
drugstore and has no insurance because Medicare doesn't cover him, the 
pharmacist tells him: It is $100 for your prescription. That Medicare 
beneficiary has to take it out of his pocket or gets his children to 
pay for it, or, if they are very destitute and poor, Medicare pays for 
it and they pay $100. If you don't have any coverage, you pay $100 for 
the prescription.
  If, however, you work for the Federal Government, if you are a 
Senator or one of the staff people here who happens to have the Federal 
Employees Health Benefits Plan, and you go into the drugstore and buy 
the same prescription, you don't pay $100, No. 1, because there is 
volume purchasing because they are purchasing for all the FEHBP people 
who are covered by FEHBP. The discount by volume purchasers for the 
insurers gets it down to about $70, a 25-plus-percent discount. That is 
the average by volume purchasing. But none of us or our staff even pays 
the $70. We will probably pay a coinsurance of about $35, for some 
plans even a copayment which could be $15 or $20.
  So that is the answer to the problem. The answer is not to import 
Third World countries' price controls. Talking about Canada is one 
thing. I guarantee if this passes, we are not going to be importing a 
lot from Canada. We are going to be buying from countries whose 
handling of these drugs we have no ability to control. If it were 
coming from Canada, it would not be a bad deal. We know how they 
operate. But this amendment is not limited to Canada. Any Third World 
country will be able to handle the drugs, dilute them, do anything they 
want, store them where they want, and we will not be able to guarantee 
the validity of that drug.
  This is the answer to the problem: Not importing from other 
countries, but to try to ensure that all Medicare beneficiaries have 
some type of coverage that allows them to get the benefits of volume 
purchasing and also to have some type of insurance where the Federal 
Government assumes part of the responsibility, part of the risk, and 
the providers compete and also assume some of the risk to get the price 
to the Medicare beneficiary down to half or less. That is what we 
should be working on.
  This is a Band-Aid type approach. Really, it is worse than a Band-Aid 
approach because Band-Aids help; this doesn't help. It puts the 
American consumer at risk. We passed this law to prevent all the things 
that are likely to happen if this amendment passes. We should not go 
back to our constituents and say: We are letting you get cheap drugs 
from foreign countries because they have price controls. It is the 
wrong approach, and we should recognize it as such.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Mississippi.
  Mr. COCHRAN. Mr. President, I yield 15 minutes to the distinguished 
Senator from Tennessee, Mr. Frist.
  The PRESIDING OFFICER. The Senator from Tennessee.
  Mr. FRIST. Mr. President, I rise in opposition to the underlying 
amendment to allow reimportation of prescription drugs. I have been 
following the debate for the last couple of hours. I want to bring up a 
new issue, an issue which I believe is a fundamental issue but which 
has not been discussed, to the best of my knowledge, at all over the 
last 2 hours--and that is safety.
  The problem has been very clearly identified; and that is, cost. The 
situation of prescription drugs costing too much in this country, 
causing people to drive to Mexico and Canada, is a real problem. It has 
been vividly described. It has been described accurately by almost 
everybody who has talked today, holding up the bottles and the 
descriptions on the charts. Today a senior who goes into a drugstore 
must pay full retail price for a drug because Medicare does not include 
prescription drug coverage, versus traveling on a bus to Canada, and 
buying it there for much less.
  The answer--and this is absolutely critical--is not reimportation. 
The answer is not, to my mind, price controls. Price controls get 
cloaked in all sorts of ways in policy and in various proposals. But 
the answer is, I believe, not in the amendment we are talking about 
today but through improved access by offering coverage and utilizing 
the large purchasing power to provide affordable prescription drugs.
  The issue that most bothers me is that fundamentally I believe the 
underlying amendment puts at risk the safety of these drugs. I say 
``puts at risk'' because clearly the authors of this bill

[[Page S7202]]

have tried to construct a bill that has safety first and foremost. But 
let me just say, having read the bill and having a pretty good 
understanding of the capability of the Food and Drug Administration 
today, they simply cannot police the world in making absolutely sure 
these are not counterfeit drugs coming back in and because of this, I 
find it very hard to support the underlying bill.
  If you take a look at the history of reimportation, from 1985 to 1987 
in the U.S. Congress, there were a series of nine hearings and three 
investigative reports regarding this whole concept of reimportation of 
pharmaceuticals. It is interesting, if you go back and look at what 
happened and also at what the findings were. As a result of these 
hearings and investigations, in 1987 the Prescription Drug Marketing 
Act passed. It was designed to specifically protect Americans' health 
and safety against the risk of adulterated or counterfeit drugs from 
being imported into the U.S. Let me quote one of the conclusions from 
the committee report:

       Reimported pharmaceuticals threaten the American public 
     health in two ways. First, foreign counterfeits, falsely 
     described as reimported U.S.-produced drugs, have entered the 
     distribution system.
       Second, proper storage and handling of legitimate 
     pharmaceuticals cannot be guaranteed by U.S. law once the 
     drugs have left the boundaries of the United States.

  I believe, we are obligated to go back and address these two critical 
concerns, because we are talking about the potential for counterfeit or 
adulterated drugs. We are talking about life-or-death issues. We are 
talking about the ability to thin one's blood to prevent a heart attack 
or a stroke, and if that drug has been altered, if it is counterfeit, 
it means life or death to the people who are listening to me today.
  What they have tried to fashion in this bill is to have the Food and 
Drug Administration oversee and be responsible for these laboratories 
which are not in the United States of America. Remember, this is a Food 
and Drug Administration that, right now, admits they are unable to even 
inspect the food coming into this country. I argue, whether it is 
tomatoes or lettuce coming in, the inspection of drugs coming in is 
much more important to the health of Americans. It is partly because I 
am a physician, so I deal with patients and I know for the most part 
patients believe it is much more important as well.

  Is the Food and Drug Administration equipped? If you ask the people 
who have run the FDA you will find the following. Dr. David Kessler, 
former head of the Food and Drug Administration, in a letter to 
Representative Dingell this past year, stated the following when we 
talk about reimportation. I quote Dr. David Kessler:

       In my view, the dangers of allowing re-importation of 
     prescription drugs may be even greater today than they were 
     in 1986. For example, with the rise of Internet pharmacies, 
     the opportunities of illicit distribution of adulterated and 
     counterfeit products have grown well beyond those available 
     in prior years. Repealing the prohibition on re-importation 
     of drugs would remove one of the principal statutory tools 
     for dealing with this growing issue.

  We know the cost of prescription drugs is a problem. But ultimately 
you don't want to do anything that jeopardizes the safety of these 
drugs and ultimately the health and welfare of patients.
  Let's turn to Dr. Jane Henney, who is the current Commissioner of the 
Food and Drug Administration. In front of the Senate appropriations 
committee March 7 of this year, she said, in expressing severe 
reservations regarding the importation of drugs:

       The trackability of a drug is more than in question. Where 
     did the bulk product come from? How is it manufactured? 
     You're just putting yourself at increased risk when you don't 
     know all of these things.
  Her words--``increased risk.''
  It is the risk of this legislation that bothers me in terms of safety 
for our seniors. The question is whether the FDA is equipped to 
implement the safety precautions necessary? Right now we are hearing 
from the leaders they cannot be responsible for the safety and efficacy 
of reimported pharmaceuticals. Let me point out what is going on today 
in terms of how effective their inspections are.
  Of the 6,030 foreign manufacturers shipping bulk drugs to the United 
States since 1988, approximately 4,600 were never inspected. When we 
see people holding up these two bottles and one bottle was reimported 
from overseas and you are depending on the FDA--which clearly does not 
have the capability to guarantee the safety of these pills--and then 
you put that pill in your mouth, I believe, based on at least the 
leaders at the Food and Drug Administration today and in the past, that 
pill could very well be unsafe and not only cause severe illness, but 
even death.
  I mentioned the food issue, but as you recall, the Food and Drug 
Administration is responsible for overseeing the safety of food in this 
country. In our hearing at the Health, Education, Labor and Pensions 
Committee last month, some said: We can safely import lettuce from 
other countries, so why can't we do the same for medicines?
  The analogy of lettuce versus medicine is, as a physician, very hard 
for me. Last year, I joined Senator Collins in introducing the Imported 
Food Safety Improvement Act because of all of the outbreaks of illness 
associated with imported food products.
  We introduced the food safety bill predominantly because of the FDA's 
own admission--just like I believe the FDA is admitting today in terms 
of reimportation of drugs--that they cannot insure the complete safety 
of food coming into this country. If we cannot insure the safety of 
food coming into this country, as a physician, as someone who has that 
doctor-patient relationship, who has taken an oath of doing no harm--I 
cannot promise my patients that the prescription medicines they may be 
taking are guaranteed to be safe and effective, especially when I have 
the leadership of the FDA telling me they are ill-equipped and cannot 
guarantee the drugs have not been altered.
  Again, the authors of this legislation basically said it is going to 
be safe because the FDA can do it. I will take it one step forward and 
say based on current evidence, I do not believe the FDA can do it.
  Former Carter FDA Commissioner Dr. Jere Goyan said it best:

       I respect the motivation of the members of Congress who 
     support this legislation. They are reading, as am I, stories 
     about the high prescription drug prices and people which are 
     unable to pay for the drugs they need. But the solution to 
     this problem lies in better insurance coverage for people who 
     need prescription drugs, not in threatening the quality of 
     medicines for us all.

  The underlying amendment, although well-intended, is inadequate in 
assuring the safety of potential recipients, beneficiaries, and 
patients who receive pharmaceuticals that have been reimported. 
Therefore, I will not vote to repeal the important consumer safety 
legislation that we put in place over 10 years ago without much further 
investigation to answer that critical question of safety.
  Medicines today are affordable when there is coverage for them. I 
believe we have to do something to help those unfortunate seniors 
across the country who do not have good prescription drug coverage 
today.
  Senator Breaux and I have worked aggressively to develop a bipartisan 
prescription drug coverage plan and have introduced such a plan.
  This plan is above politics and it is above partisanship. It is time 
to take the very best minds, the very best doctors, the very best 
health care experts, and elected representatives and bring them 
together to deal with these challenges facing Medicare in offering 
affordable prescription drug coverage.

  The Breaux-Frist 2000 plan, known as the Medicare Prescription Drug 
and Modernization Act of 2000, takes the necessary first steps to 
provide universal outpatient prescription drug coverage and strengthen 
and improve the Medicare program overall. First, it restructures the 
1965 model of Medicare by establishing a competitive Medicare agency to 
oversee competition under Medicare+Choice and the addition of a new 
drug benefit.
  It establishes voluntary universal outpatient prescription drug 
coverage which I believe is the answer to the cost issue.
  It provides comprehensive prescription drug benefits.
  It guarantees catastrophic protections so a senior is protected from 
paying high drug costs out of their own pocket beyond $6,000.

[[Page S7203]]

  It guarantees price discounts off prescription drugs so seniors never 
pay retail prices for prescription medicines again.
  It guarantees affordable drug coverage by offering all beneficiaries 
a 25-percent subsidy off their premiums.
  It protects low-income beneficiaries by providing beneficiaries with 
incomes below 150 percent of poverty subsidies for premiums and 
copayments for prescription drug benefits.
  Finally, it improves benefits and health care delivery under Medicare 
by stabilizing the Medicare+Choice program and introducing much needed 
reforms.
  The Breaux-Frist 2000 bill addresses the cost issue. Reimportation of 
drugs does not. I urge my colleagues, for the safety of health care and 
health care delivery today, to defeat the underlying amendment on 
reimportation of drugs.
  I reserve the remainder of my time.
  The PRESIDING OFFICER. The Senator from Mississippi.
  Mr. COCHRAN. How much time is remaining on this side of the issue?
  The PRESIDING OFFICER. The Senator has 11 minutes remaining.
  Mr. COCHRAN. I yield 10 minutes to the distinguished Senator from 
Utah, Mr. Hatch.
  The PRESIDING OFFICER. The Senator from Utah.
  Mr. HATCH. Mr. President, this is a very important amendment. There 
is a lot of sincerity behind it.
  I rise today to offer some concerns about the Jeffords-Dorgan 
Amendment to the Agriculture Appropriations bill and to support the 
Cochran amendment.
  I have many questions about the Jeffords-Dorgan amendment.
  Let me make something perfectly clear from the start--I do not 
question the good intentions of this amendment. I know that my 
colleague, Senator Jeffords, is sincerely seeking to address this 
difficult matter of high prices for pharmaceuticals in the United 
States.
  As I traveled across my state and around our country this election 
year, I found that many Utahns and many Americans, particularly our 
senior citizens, are having difficulty in affording prescription 
medicines. Some are going across the borders to Canada and Mexico. We 
have all seen the news broadcasts of those cross-border bus trips to 
buy the cheaper foreign drugs. And, it may seem obvious, particularly 
to two Senators who represent States on the Canadian border, that the 
solution is simply to allow the importation of prescription drugs into 
our country.
  There is something of a cruel dilemma at play here: right at the 
moment when scientists seem poised to invent an unbelievable new array 
of diagnostics, therapeutics, and vaccines, many Americans are 
encountering difficulties in affording these new and sometimes costly 
medications.
  There are many issues at play in this debate.
  One issue that policymakers face is to see whether a balance can be 
constructed whereby we retain the necessary investment to produce the 
promised wonder cures while at the same time maintain our ability to 
deliver these new products to the patients at affordable prices.
  This is part of what is shaping the debate over the fashioning of a 
prescription drug benefit for the Medicare program.
  This balance between new drugs and affordable drugs is what shaped 
the debate 16 years ago when the Congress passed the Drug Price 
Competition and Patent Term Restoration Act of 1984. I am proud to have 
played a leadership role in this law that helps, according to CBO, 
consumers save $8 billion to $10 billion annually through the purchase 
of generic drugs.
  But, in our understandable and highly populist zeal to make drugs 
more accessible, we must not kill the goose that lays the golden eggs. 
That is to say, we must be able to continue to attract the private 
sector investment into the biomedical research establishment that has 
made the American drug development pipeline so promising.
  While it is true enough that, at this time, the drug industry is the 
most profitable sector of the economy, I do not think that success 
should be a license for us to over-regulate this industry. Sometimes 
well-intentioned, but ill-advised, governmental policies have hastened 
the decline of American business to the detriment of American workers 
and consumers alike.
  But, another consideration with respect to the advisability of this 
amendment is the premium that we place on our citizens receiving safe 
and effective products, free from adulteration and misbranding.
  Dating from the 1906 Pure Food and Drugs Act, through the 1938 
Federal Food, Drug and Cosmetic Act, the 1962 efficacy amendments, and 
the 1988 Prescription Drug Marketing Act, our Nation has devised a more 
or less closed regulatory system that ensures that drug products will 
be carefully controlled from the manufacturer to the patient's bedside.
  If we are to open up our borders to a new plethora of drug 
reimports--I am talking about reimports--we need to be absolutely 
certain that we have not undermined the integrity of this regulatory 
system by admitting products improperly manufactured, transported, or 
stored. A pill may look like the real item but not contain the active 
ingredient in the right concentration, or it may simply not contain the 
medication at all.
  Similarly, we must not allow the American public to fall prey to 
counterfeit so-called ``gray market'' products. These are products 
which could be made to look exactly like the real thing and may comply 
with, or attempt to comply with, the requirements of the actual 
approved product, but do not comply with the legal requirement of a 
license from the patent holder--in short, a pirated product.
  While there is a clear and obvious health danger in an adulterated, 
non-conforming pirated product, there is also great detriment to the 
American public if the unscrupulous are allowed to reimport America's 
inventions back into America without compensating the inventor. Few 
will be willing to invest the upfront capital--hundreds of millions of 
dollars--to develop a drug if another party can make and sell the drug 
while it is under patent protection.
  It takes an average of 15 years and a half a billion dollars to 
create one of the blockbuster drugs. So we have to be careful. Keep in 
mind, too, as chairman of the Senate Judiciary Committee, I have a 
special obligation with respect to our intellectual property laws that 
we not go down any path that can be seen as inviting the development of 
a gray market for prescription drugs.
  After all, a fake Rolex may be right twice a day, but a bad copy of a 
good drug can kill you. This is something we have to be more concerned 
about around here. We can't just do what appears to be good but, in 
essence, could kill people.
  As we move further into the information age, protection of American 
intellectual property becomes more and more vital to our national 
interest. For example, if the latest computer software can be taken 
without proper licensing arrangements, our national leadership in high 
technology will be threatened.
  Where is the pharmaceutical industry in Canada? They have price 
controls, and nobody is going to invest the money into developing these 
lifesaving and cost-saving drugs over the long run in those countries 
with price controls.
  We have had many debates over price controls. I remember those days 
when Senator Pryor and I were on this floor arguing back and forth 
about price controls. Fortunately, the Senate, in its wisdom, decided 
not to go for price controls. This is another step toward price 
controls that will stultify one of the most important industries in 
America at a time when we just mapped the human genome, and we are at 
the point where we can actually create more lifesaving drugs--perhaps 
at even a greater cost but nevertheless at a greater health care cost 
savings than ever before.
  So that is why intellectual property protections are so necessary.
  In fact, one of the great accomplishments of the 1995 GATT Treaty was 
to put intellectual property protection front and center in our trade 
relationships with the developing world. Many countries are notorious 
for the lax policing of patent and copyright violations by their 
citizens.
  When the value of American inventions is expropriated, it is American 
inventors and American consumers who suffer. The United States cannot 
and

[[Page S7204]]

should not allow free riders around the world essentially to force the 
American public to underwrite a disproportionate amount of the research 
and development that results in a next generation breakthrough product.
  One has only to read a collection of the section 301 reports the 
Office of the United States Trade Representative to get a feel of just 
how prevalent such intellectual property theft is worldwide.
  I took the time to present this background because I think the 
Jeffords-Dorgan amendment requires such analysis.
  And I will be the first one to admit that the amendment, at first 
blush, seems quite simple and appealing. What could be the matter with 
a rule that essentially says drugs obtained from outside the United 
States at prices lower than U.S. prices can be resold in the U.S., 
presumably in a manner that places pressure to lower prevailing U.S. 
prices? Yet, I recall H.L. Mencken's sage observation, ``There is 
always an easy solution to every human problem neat--plausible, and 
wrong.''
  I, too, join many of my constituents in Utah and others across the 
country, in questioning why our citizens are paying higher drug prices 
than those who live in other countries.
  And while I recognize that there are complex economic, political, and 
social factors at play that partially explain why a drug company would 
charge less for a drug in a destitute region in sub-Saharan Africa, it 
is more difficult to understand why drug costs less in Tijuana, Mexico, 
or Alberta, Canada than in San Diego, California. This is a policy I 
cannot totally defend. And I do think the pharmaceutical companies need 
to address this more.
  But I can say that where nations impose price controls, a flawed 
economic theory which we have proven does not work in the U.S., there 
are negative consequences which among other hazards could imperil the 
flourishing research and development we count on to bring us miracle 
cures.
  I am very apprehensive about government price controls, particularly 
on our most cutting-edge technologies like pharmaceuticals. Price 
controls function in an economic environment the way a lid works on a 
boiling pot. Price controls may temporarily keep prices down, but they 
are certainly no long term solution to the problem. As soon as the lid 
comes off, the pot boils over.
  And, why not just keep the lid on indefinitely? Because price 
controls also have a stifling effect on the incentives to conduct 
research. Without the prospect of recouping a substantial, multi-
million dollar investment, there is little reason for pharmaceutical 
companies to undertake such research on the next breakthrough drugs. It 
would not take long for our nation's pharmaceutical industry to 
atrophy.
  How can we guarantee that foreign government price controllers will 
not set an artificially low price on some new Alzheimer's drug? And can 
we be sure that this won't have the unintended, but real, ripple effect 
of convincing company officials to forgo research on this new class of 
drugs for fear that, in conjunction with the new liberal re-import 
policy, they will not be able to recoup their investment?
  I support those who wish to instruct the United States Trade 
Representative to be even more aggressive in promoting and protecting 
intellectual property rights in all of our bilateral and multilateral 
trade negotiations.
  It seems to me that rather than importing the effects of foreign 
price controls back into the U.S., a strong case can be made that we 
should be using our Trade Representative to attack the foreign price 
controls that many countries have enacted so that a better balance 
between U.S. research costs and foreign borne research costs might be 
achieved. Let's stop the free riders and cheap riders overseas while 
American citizens are paying the full freight of R&D.
  I have to confess that one part of me likes the feature of this 
amendment that creates the challenge to the entrepreneur of bringing 
goods sold cheaper abroad back to the United States at presumable 
savings to U.S. citizens. Yet, the amendment provides no guarantee that 
those wholesalers and pharmacists importing the products would pass 
their savings on to the consumer. And so, we could be trading public 
safety for middleman profits, an outcome not contemplated by proponents 
of the amendment.
  Mr. HATCH. I have debated the issue, as I say, of price controls many 
times, so I will not spend any more time on the issue of price 
controls. But it does not make sense. That is what we are headed 
towards.
  The greatest industry in our country, that has the greatest potential 
to do the greatest amount of good to bring health care costs down in 
the end--even though it is tremendously expensive to develop these 
drugs--is going to be flattened by this type of legislation which is 
well meaning, well intentioned, and absolutely destructive to our 
innovative industries in this particular country.
  We have to find a way around this drug price problem in this country 
without creating a gray market in these particular goods and services. 
There has not been 1 day of hearings on this particular language. How 
can we guarantee that foreign government price controllers will not set 
an artificially low price on some new Alzheimer's drug? And can we be 
sure this will not have the unintended but real, ripple effect of 
convincing company officials to forgo research----
  The PRESIDING OFFICER. The Senator's time has expired.
  Mr. HATCH. Mr. President, I ask unanimous consent to take 1 
additional minute, with an additional minute given to the other side.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. HATCH. Can we be sure this will not have the unintended, but 
real, ripple effect of convincing company officials to forego research 
on this new class of drugs for fear that, in conjunction with the new 
liberal reimport policy, they will not be able to recoup their 
investment?
  Let us hope that the future does not come down to a choice between 
two lousy alternatives, what economists call a Hobson's Choice: great 
drugs that are not widely affordable or potentially great drugs 
abandoned due to minimal projected revenues.
  And I can tell you given my work in the area of the AIDS epidemic, as 
between expensive drugs and no drugs, expensive drugs is a better 
problem to have.

  My conservative instincts are always against government price 
controls, and I don't think that this principle should be limited to 
U.S. government price controls if a by-product of this well-intentioned 
re-import bill is to import some other government's price controls into 
U.S. market dynamics.
  Frankly, this does not seem the type of far reaching legislation that 
we should rush into without pausing to try to think through all of its 
ramifications.
  It just seems to me that if there are areas where governments world-
wide must tread carefully in enacting legislation, if indeed they must 
tread at all, it is in areas like biotechnology.
  It is clear from absolutely stunning developments like the early 
completion of the mapping of the human genome that there is an 
incredible synergy taking place between information technology and 
biotechnology. The high-speed sequencing machines that mapped the 
genetic code and almost instantaneously made this information available 
on the Internet represent this confluence of technology.
  In our valid and justified quest to help make drugs more affordable 
to the American public, we should be mindful not to unwittingly retard 
the development of the next generation of innovation.
  Having described the general angst I feel in relation to the possible 
effect that this legislation may have on the pace of and investment in 
pharmaceutical research and development as well as challenges it will 
create in terms of respect for intellectual property rights, I want to 
focus next on the important concerns that I have about the public 
safety aspects of the amendment.
  I want to commend Senators Jeffords and Dorgan for perfecting some of 
the gaps and shortcomings related to drug safety contained in the 
House-passed legislation.
  But let me say that, as Chairman of the Committee with jurisdiction 
over the Controlled Substances Act, I am not convinced that the 
American public is adequately protected by this amendment.

[[Page S7205]]

  Now, I know that drafting and redrafting is an unglamourous part of 
the legislative process and that you and your staffs, and if the 
reports are correct many in the Administration, have been working hard 
to refine this amendment.
  But let's be fair, legislating on an appropriations bill is not the 
optimum way to change some central provisions of the Food, Drug and 
Cosmetic Act.
  I was involved in redrafting the Import and Export Chapter of the 
Food, Drug and Cosmetic Act both in 1986 and in 1996.
  While I recognize the HELP Committee had a hearing yesterday, I think 
that everyone would agree with me that it is helpful to have a 
legislative hearing on legislation when the ink is at least dry.
  I would like to see what the FDA, the DEA, General McCaffrey and the 
Patent and Trademark Office have to say about the bill when they have 
had time to give thoughtful consideration to a sufficiently finalized 
draft.
  While it is true that the bill is drafted generally to the FDC Act, 
it will be particularly important to see how this liberalized re-import 
may affect controlled substances. Can't we take the time to hear from 
the Drug Enforcement Administration?
  Also, I don't know if this is the case, but I have heard second hand 
reports that the White House has more or less limited FDA to a ``let's 
make the best of this'' role and is not encouraging the agency to look 
at this bill more globally.
  Also, I cannot help but note that in the latest draft that I have 
seen, the language covers only drug products and not biologics, which 
are in the vast majority of cases perceived and used by consumers as 
drugs in the non-legalistic definition.
  And since it is also the case that many times it is precisely these 
new generation biologics that are the most costly on the market, the 
question must be asked why Americans should not get the advantage of 
lower priced biologics as well as drugs?
  Frankly, it is evident that each successive draft attempts to address 
the many shortcomings with respect to assuring the American public that 
the imported drugs are the safe and effective and unadulterated.
  Clearly, this drafting would be better served if it were down in the 
public forum of a mark-up.
  I just don't think that we know enough about this language to be 
reasonably certain that we could be sowing the seeds of a future 
tragedy but I certainly don't want to take that chance. I worry that a 
day will come when either a under-potent or over-potent batch of 
imported drugs will leave a trail of avoidable carnage.
  Yes, we can have certifications and regulations and foreign 
inspections and every other thing you can think of, but the fact 
remains we are opening a door that Congress carefully closed in 1988 
when it enacted the Prescription Drug Marketing Act. The history of 
this bill is that it was enacted after a series of serious adverse 
events due to improperly stored, handled, and transported imported 
drugs. It also addressed the issue of the import of counterfeit and 
unapproved drugs such as the presence of counterfeit antibiotics and 
contraceptives.
  These were serious threats to public health and safety. These 
incidents were the subject of extensive hearings of the House Energy 
and Commerce Committee. These incidents were the impetus of the 1988 
legislation that this amendment would unravel.
  Look, I know that there is a certain attractiveness to accept this 
amendment and that some members may be inclined to vote for this 
measure with the expectation that the language, which is still in flux, 
will be cleaned up in Conference.
  But I am concerned that opening up this import loophole is either 
fixable or will do more good than harm.
  As interested parties study this measure, objections are beginning to 
be registered. And they are not only from the big drug companies who 
are the true, and, to some extent, justified target of this provision.
  I am mindful that a similar provision passed the House by a wide 
margin. But one vote that this legislation did not get was of that the 
Dean of the House, Representative John Dingell of Michigan.
  Now you would think that if ever there was a group that stood to 
benefit from legislation it would be the wholesale druggists because 
they are the natural middlemen in the new, liberalized import system. 
Instead they call the amendment ``unworkable'' because ``(w)wholesalers 
do not have the expertise, equipment or personnel to undertake such 
complicated tasks''.
  I will say in public right now that I fully expect that the DEA, FBI, 
and other components of DOJ will weigh in when this correspondence is 
answered.
  I am particularly interested in learning from the DEA and FBI to what 
extent importation of counterfeit and adulterated controlled substances 
is a current problem and to what extent, if any, this legislation, 
would likely affect the current state of affairs?
  But before my colleagues vote on this measure I would ask each of you 
to review the Dingell correspondence together with any response from 
the administration. Here are some of the questions that were included 
in Congressman Dingell's letter to FDA:

       1. Please provide a detailed analysis on how (H.R. 4461 and 
     H.R. 3240) would affect FDA's present operations regarding 
     efforts to prevent misbranded or potentially dangerous drugs 
     from entering the U.S. Specifically, please provide: (a) a 
     description of how the present system now used by FDA works; 
     (b) what the present system is intended to accomplish; and 
     (c) what changes would be required (and the potential effects 
     of those changes) if this legislation passes in its present 
     form.
       Please include a discussion of how these amendments would 
     affect the activities of other agencies, such as the U.S. 
     Customs Service, with responsibilities for assuring the 
     safety of imported prescription drugs.
       2. Please determine if either of these amendments would 
     have any effect on FDA's ability to enforce good 
     manufacturing practices (GMPs) in any foreign firms that ship 
     drugs to the U.S. If so, please explain any potential effect 
     on consumer health and safety.
       3. Please provide a full description regarding what a 
     ``warning letter'' is and how it is typically used by the 
     FDA. Please compare this with correspondence that is sent by 
     Customs.
       4. It appears that these amendments would directly affect 
     the ability of FDA to send warning letters to consumers that 
     purchase drugs over the Internet. As you know, some web sites 
     appear to be covertly linked to foreign drug suppliers. When 
     a consumer orders from such a site, it is not always obvious 
     that they are dealing with an offshore supplier, and thus a 
     potentially non-FDA approved facility. Often, warning letters 
     may be the only indication that the Internet-ordered drugs 
     originated from a foreign (and potentially dubious) source. 
     Please indicate how this legislation could affect FDA's 
     ability to protect consumers who purchased drugs in this way.
       5. Please detail any other potential effects this 
     legislation could have on FDA's ability to protect consumers 
     from potentially dangerous drugs that originate aboard.
       6. Finally, please provide technical assistance in the form 
     of specific suggestions for legislative or regulatory changes 
     that would be needed in order to facilitate the safe 
     importation of prescription drugs by individuals, 
     wholesalers, or retailers.

  Only if you are convinced that FDA has the resources and 
international presence to enforce the myriad of new regulations and 
procedures required by the amendment should you vote for this measure.
  Ask yourself how confident you are that more word-smithing during a 
closed conference committee meeting is likely to prevent one or more of 
your constituents from being seriously injured down the road by unsafe 
drug products brought into the U.S. as a result of this amendment?
  Do we really want to turn back the clock and essentially re-open a 
dangerous door that was closed by the Prescription Drug Marketing Act 
of 1988?
  Why the rush to open a potential Pandora's box of public health 
problems?
  I hope that this well-intentioned amendment, offered by two highly-
respected co-sponsors, does not place Congress and the public in the 
position of the old adage, those who do not understand the past are 
doomed to repeat it.
  I respect the men and good intentions behind this amendment.
  We all want to increase access to pharmaceuticals for all Americans. 
I do not think that the benefits of the Jeffords-Dorgan amendment 
outweigh its downsides, and that is why I am supportive of the 
alternative offered by the Senator from Mississippi.
  I have to say, when this debate happened in the House, my dear 
friend, Congressman John Dingell, who has

[[Page S7206]]

played a tremendous role in health care all these years I have been in 
the Congress, stood up and argued against this. He lost in the House, 
but he should have won.
  During the House debate, Congressman Dingell said the following, ``We 
now find ourselves in the regrettable position of confronting the 
possibility that the easing of the law with regard to food and drug and 
cosmetics, which is going to be done here under this legislation, will 
in fact reduce the safety of the American consuming public.''
  Mr. Dingell was Chairman of the House Energy and Commerce Committee 
when the PDMA passed in 1988. He was a key mover and shaker behind the 
bill. As the bill was being developed the Energy and Commerce Committee 
issued a report that concluded that ``the very existence of a market 
for reimported goods provides the perfect cover for foreign 
counterfeits.''
  Mr. President, I ask unanimous consent that his letter be printed in 
the Record, as well as the National Wholesale Druggists' Association 
letter, where they beg us not to pass this type of legislation because 
of the harm it could cause to the American public and to the American 
consumer.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                                    July 14, 2000.
     Hon. Jane E. Henney, M.D.,
     Commissioner, Food and Drug Administration,
     Rockville, MD.
       Dear Dr. Henney: Recently, the House of Representatives 
     adopted two amendments, one by Rep. Crowley (D-NY) and one by 
     Rep. Coburn (R-OK), to the Agricultural Appropriations bill 
     which could have a profound effect on how the Food and Drug 
     Administration (FDA) protects consumers from imported 
     prescription drugs of uncertain safety and effectiveness. I 
     am concerned that these amendments could seriously undermine 
     the Prescription Drug Marketing Act (PDMA), and thus 
     adversely affect public health.
       During the 1980's, the House Energy and Commerce Committee 
     conducted a lengthy investigation into the foreign drug 
     market that ultimately led to enactment of the PDMA. That 
     investigation discovered a potentially dangerous diversion 
     market that prevented effective control over the true sources 
     of merchandise in a significant number of cases. The 
     integrity of the distribution system was found to be 
     insufficient to prevent the introduction and eventual retail 
     sale of substandard, ineffective, or even counterfeit 
     pharmaceuticals. As the resulting Committee report stated, 
     ``pharmaceuticals which have been mislabeled, misbranded, 
     improperly stored or shipped, have exceeded their expiration 
     dates, or are bald counterfeits, are injected into the 
     national distribution system for ultimate sale to 
     consumers.''
       The PDMA was designed to restore the integrity and control 
     over the pharmaceutical market necessary to eliminate both 
     the actual and potential health and safety problems before 
     injury to the consumer could occur. Again, the Committee 
     report was clear on why the PDMA was needed: ``[R]eimported 
     pharmaceuticals threaten the public health in two ways. 
     First, foreign counterfeits, falsely described as reimported 
     U.S. produced drugs, have entered the distribution system. 
     Second, proper storage and handling of legitimate 
     pharmaceuticals cannot be guaranteed by U.S. law once the 
     drugs have left the boundaries of the United States.''
       Alarmingly, I find little now that suggests that the 
     problem with misbranded, adulterated, or even counterfeit 
     foreign drugs has been solved. I reiterated these concerns 
     with respect to the Crowley and Coburn amendments (see 
     enclosed remarks). In fact, the evidence suggests the problem 
     is getting worse. I am concerned that in our haste to find a 
     way to bring cheaper drugs to seniors and other needy 
     Americans--a clearly important and laudable goal--we risk 
     making changes to key health and safety laws we may later 
     regret. I am thus requesting that you quickly provide me with 
     the following information:
       (1) Please provide a detailed analysis on how (H.R. 4461 
     and H.R. 3240) would affect FDA's present operations 
     regarding efforts to prevent misbranded or potentially 
     dangerous drugs from entering the U.S. Specially, please 
     provide: (a) a description of how the present system now used 
     by FDA works; (b) what the present system is intended to 
     accomplish; and (c) what changes would be required (and the 
     potential effects of those changes) if this legislation 
     passes in its present form.
       Please include a discussion of how these amendments would 
     affects take activities of other agencies, such as the U.S. 
     Customs Service, with responsibilities for assuring the 
     safety of imported prescription drugs.
       (2) Please determine if either of these amendments would 
     have any effect on FDA's ability to enforce good 
     manufacturing practices (GMPs) in any foreign firms that ship 
     drugs to the U.S. If so, please explain any potential effect 
     on consumer health and safety.
       (3) Please provide a full description regarding what a 
     ``warning letter'' is and how it is typically used by the 
     FDA. Please compare this with correspondence that is sent by 
     Customs.
       (4) It appears that these amendments would directly affect 
     the ability of FDA to send warning letters to consumers that 
     purchase drugs over the Internet. As you know, some web sites 
     appear to be covertly linked to foreign drug suppliers. When 
     a consumer orders from such a site, it is not always obvious 
     that they are dealing with an offshore supplier, and thus a 
     potentially non-FDA approved facility. Often, warning letters 
     may be the only indication that the Internet-ordered drugs 
     originated from a foreign (and potentially dubious) source. 
     Please indicate how this legislation could affect FDA's 
     ability to protect consumers who purchased drugs in this way.
       (5) Please detail any other potential effects this 
     legislation could have on FDA's ability to protect consumers 
     from potentially dangerous drugs that originate abroad.
       (6) Finally, please provide technical assistance in the 
     form of specific suggestions for legislative or regulatory 
     changes that would be needed in order to facilitate the safe 
     importation of prescription drugs by individuals, 
     wholesalers, or retailers.
       I would appreciate a full response to this letter by 
     Friday, July 28, 2000. Please do not delay.
           Sincerely,
                                                  John D. Dingell,
     Ranking Member.
                                  ____

                                                National Wholesale


                                       Druggists' Association,

                                        Reston, VA, July 18, 2000.
       Dear Senator: I am writing on behalf of the National 
     Wholesale Druggists' Association (NWDA) to request that you 
     oppose the pharmaceutical importation amendment Senator 
     Jeffords is expected to offer to the Fiscal Year 2001 
     Agriculture, Rural Development, Food and Drug Administration, 
     and Related Agencies appropriations bill.
       NWDA is the national trade association representing 
     distributors of pharmaceuticals and health care products. 
     NWDA active members operate over 200 distribution centers 
     throughout the country, distributing over $77 billion in 
     these products to every state, the District of Columbia and 
     U.S. territories.
       From NWDA's perspective, the Jeffords' amendment is 
     unworkable. It would require wholesalers to statistically 
     sample the products, test them for authenticity, develop 
     extensive record keeping and documentation and relabel 
     products from the country of origin to U.S./FDA approved 
     labels. In their new role, wholesalers would also now likely 
     have to also prepare professional package inserts to 
     accompany each bottle or vial. These new requirements may 
     reclassify ``wholesalers'' as ``relabelers'' and/or 
     ``repackagers,'' which, under FDA regulations, would trigger 
     different and significant additional regulatory requirements. 
     I am not aware of any wholesalers who have these capabilities 
     and I strongly doubt that they would undertake them due to 
     the considerable expense.
       Wholesalers do not have the experience, equipment or 
     personnel to undertake such complicated tasks. Our expertise 
     is in distributing pharmaceuticals in an efficient, timely 
     and cost-effective manner on a daily basis. An ``average'' 
     NWDA-wholesaler purchases product from over 900 different 
     manufacturers, stores over 25,000 different health care items 
     at any one time and distributes them to its hundreds of 
     customers, including independent pharmacies, chain drug 
     stores, hospitals, HMO's, integrated health systems, clinics, 
     home health providers, physicians and government sites.
       The measure also imposes numerous new reporting 
     requirements on wholesalers. While it is questionable if 
     these reports actually will help to ensure the health and 
     safety of Americans, they will be very burdensome and costly 
     for the wholesalers who must compile and maintain them. 
     Furthermore, as a result of the testing and reporting 
     requirements, lability exposure for the wholesaler is 
     increased dramatically. All of these new requirements and 
     liabilities will, in our opinion, add significant costs to 
     imported products.
       NWDA-wholesaler members have a razor thin net profit margin 
     of just 0.62%. Operating in a highly competitive marketplace, 
     wholesale drug distributors have passed these savings from 
     lower operating costs through to our customers. All of these 
     additional responsibilities, regulatory burdens and liability 
     exposure will, in our opinion, ultimately be passed along to 
     consumers. Wholesalers simply do not have the margins to 
     absorb these types of added costs. Indeed, the financial 
     viability of some wholesalers could be jeopardized if the 
     Jeffords measure were to be enacted.
       In closing, NWDA, as indicated in previous communications, 
     is concerned about the potential threat to the public health 
     posed by the importation of products that have been produced, 
     stored and/or handled in a manner that is inconsistent with 
     U.S. quality standards. Notwithstanding the language in the 
     amendment relating to documentation, the Jeffords amendment 
     does not ensure the safety and integrity of imported 
     prescription drugs. However, NWDA stands ready to work with 
     Senator Jeffords and others to devise an approach that will 
     ensure the safety and integrity of pharmaceutical products as 
     well as provide access to them for all Americans.
       If you have any questions, please do not hesitate to 
     contact me or have your staff

[[Page S7207]]

     contract Robert Falb, NWDA Director of Congressional Affairs, 
     at 703-787-0020 or [email protected].
       Sincerely,
                                                 Ronald J. Streck,
                                                  President & CEO.

  Mr. HATCH. Given the reported White House activity on this bill, I 
would not be surprised that FDA will quickly respond to and brush aside 
the questions this letter raises.
  Mr. President, in sum, we are in danger of losing a tremendously 
innovative and effective and productive industry that has made the 
American Nation the leader in health care throughout the world.
  I think this type of an amendment will undermine everything we have 
decided to do all these years, that has really benefited the whole 
world.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Vermont.
  Mr. JEFFORDS. Mr. President, I point out, we held a hearing on this 
yesterday. I wanted to correct my good chairman on that.
  I yield 5 minutes to the Senator from New York.
  The PRESIDING OFFICER. The Senator from New York.
  Mr. MOYNIHAN. Mr. President, I very much appreciate the courtesy of 
my friend from Vermont because I rise to support the views of my friend 
from Utah, who spoke so carefully about the matter of price controls.
  Sir, I do not expect to have any considerable influence on what we do 
today. But I would like, in a very short order, to try to put what we 
are doing in a perspective.
  This began, for me, during the period of the Finance Committee 
hearings on the health care legislation submitted to us by the 
administration in 1993.
  At one hearing, a professor, Charles Fahey, of Fordham University, 
speaking for the Catholic Health Association, said: What we are 
witnessing in the country is the commodification of medicine.
  And down the table, the head of the UCLA hospital said: Can I give 
you an example? In Southern California, we now have a spot market for 
bone marrow transplants.
  This thought stayed with me, that market forces were beginning to 
shape decisions in health matters as they had not done before.
  It was particularly poignant that the first institutions that would 
have trouble in this new situation would be the medical schools and the 
teaching hospitals, which, as economists say, are public goods. 
Everybody benefits from public goods so no one has an incentive to pay 
for it--and we are seeing this all over the country in a short 6 years.
  Now, today, we are seeing another phenomenon of a market that comes 
into being as railroads did, as oil refineries did, oil producers, as 
has been going on through the history of free markets and free 
enterprise, which is price controls. There is something about our 
political systems in the West that responds to the creation of new 
markets and the seeming rise in prices in those markets--when, in fact, 
quality rises--that says perhaps we could control this by controlling 
the price.
  It always fails, Mr. President. It is the one thing you can say with 
a large degree of confidence that in the 20th century this effort 
always fails. Sometimes it fails by producing black markets where the 
laws are not obeyed; others by simply depressing the quality of the 
products in the market. That is what we have to watch for here in the 
main.
  We are dealing with thoroughly responsible organizations. The Pfizer 
Corporation, from my city of New York, began work in Brooklyn in 1849, 
developed the first treatment for parasitic worms in the mid-19th 
century when that was a rampant endemic disease. It has since gone on 
to do other extraordinary things. It was the first major producer of 
penicillin in the United States, which was a drug of such enormous 
consequence in the Second World War, the first time we were able to 
destroy one cell in a body without destroying others.
  Today Pfizer has 12,000 researchers with a budget of $4.7 billion, 
larger than the budget of the National Science Foundation. I say, sir, 
impose price controls, which always seems like a good idea at the time, 
and in a short order there will be no such budget. A period of enormous 
innovation, very recent in the history of medicine, will come to a 
close.
  I see my time has come to a close. I ask unanimous consent to print 
in the Record the paper I gave at the 42nd annual Cartwright Lecture as 
reprinted in ``Academic Medicine,'' the journal of the Association of 
American Medical Colleges.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

[Reprinted from Academic Medicine, 1998 by the Association of American 
                           Medical Colleges]

                   On the Commodification of Medicine

                      (By Daniel Patrick Moynihan)


                                Abstract

       The author reviews key themes of medicine and medical 
     education in the 20th century, such as the revolution in 
     therapies and the consequent and continuing changes in the 
     economies of health care; workforce issues, including the 
     controversy over the optimum number of residency slots; and 
     the impact of managed care on teaching hospitals and medical 
     schools. This impact is part of ``the commodification of 
     health care,'' in which health care is beginning to be bought 
     and sold in a market, where prices determine outcomes, and 
     where the not-for-profit, service orientation of health care 
     providers is threatened.
       He discusses in detail the pressures this new health care 
     environment places on medical schools and teaching hospitals, 
     and recounts the first Senate Finance Committee hearing in 
     April 1994 on the subject of academic health centers under 
     health care reform. Soon after, the Committee approved 
     legislation to create the Graduate Medical Education and 
     Academic Health Center Trust Fund, to be financed by a 1.5% 
     tax on private health care premiums in addition to Medicare 
     Graduate Medical Education payments. The provision was later 
     dropped from a similar bill that came before the full Senate, 
     but has since been introduced as the Medical Education Trust 
     Fund Act of 1997.
       The author concludes by cautioning that matters will grow 
     more difficult in the near future, since the threats to 
     academic medicine's institutions have not yet become part of 
     the national political agenda.
       Acad. Med. 1998; 73:453--459.
       I must begin by expressing great gratitude to the Dean's 
     Advisory Committee on Honors and Awards for inviting me to be 
     the recipient of the 1997 Cartwright Prize. I will not, 
     however, dissemble my anxiety at being, evidently, the first 
     lay person to receive this prize in its 116-year history. I 
     take comfort in one respect only, which is that I propose to 
     address the same subject, the condition of our medical 
     schools, that Abraham Flexner addressed in 1910, and whilst a 
     historic figure of the first order, Flexner, too, was a 
     layman!
       He was, of course, concerned with quality. Yet the text of 
     his celebrated Report to the Carnegie Foundation for the 
     Advancement of Teaching is filled with financial details and 
     economic terms:
       ``In the entire United States there is already on the 
     average one doctor for every 568 persons . . . in our large 
     cities there is frequently one doctor for every 400 or less.
       ``Over-production is stamped on the face of these facts.
       ``A century of reckless over-production of cheap doctors 
     has resulted in general overcrowding.''
       Flexner's view was that there were then too many inadequate 
     medical schools producing too many inadequate doctors. He 
     would raise quality by reducing the number of institutions 
     and increasing the quality of the graduates. He had his way.
       In 1910, the year of his report, there were 155 medical 
     schools in the United States. By 1932, there were 76, with 
     but a single addition by 1950. In 1910, there were 4,400 
     medical graduates in a population of 92.2 million, or 4.8 
     graduates for every 100,000 people. In 1996, there were  
     15,907 medical graduates in a population of 268.6 million, 
     or 5.9 graduates for every 100,000 people.
       I risk speaking beyond my knowledge, but it appears to me 
     that we can see in all this a combination of disinterested 
     behavior not without a trace of self-protection. At the time, 
     all manner of folk were becoming ``professional.'' Lawyers 
     and accountants and engineers, and, heaven forbid, professors 
     of government. Gatekeepers were put in place and access was 
     restricted. The public got the benefits of quality; the 
     professions of, well oligopoly.
       It is striking how echoes of this early debate could be 
     heard in the course of the debate over President Clinton's 
     1993 health care proposal, an exchange which, of course, 
     continues.
       The new administration had announced its intention to send 
     Congress a bill that would establish universal health care. 
     The work of drafting the legislation was assigned to a group 
     of some 500 persons. By the time the first session of the 
     103rd Congress was coming to a close, we still had not 
     received a bill. On November 23, the day before we ``went 
     out,'' as our phrase has it, I finally was able as chairman 
     of the Senate Finance Committee to introduce, ``on request,'' 
     a 1,362 page bill. I suspected it was not quite complete--it 
     was not--but it saved the honor of the task force to have got 
     its work done in one year.
       Not incidentally, introducing the bill finally focused my 
     mind. It was time surely

[[Page S7208]]

     that I got some rudimentary education on this subject. 
     Accordingly, I asked Paul A. Marks of Memorial Sloan--
     Kettering if he would put on a seminar for me. Just basics. 
     We met in their lovely Laurance S. Rockefeller Board Room at 
     10 a.m. on the morning of Wednesday, January 19, 1994. At 
     about 10:20 a.m. my education commenced. One of my tutors--a 
     dean of great distinction--remarked that the University of 
     Minnesota might have to close its medical school.
       Hold it! Minnesota is where all the Scandinavians went. 
     They don't close medical schools in Minnesota; they open 
     medical schools in Minnesota. This is true, surely, of our 
     whole northern tier of states. It happens I take some pride 
     in having demonstrated in 1992 that while the correlation 
     between per-pupil expenditure on education and average score 
     on the national eighth-grade math exam was a derisory .203, 
     the strongest correlation, a negative .522, was the distance 
     of a state capital from the Canadian border. In the place of 
     all the nostrums being bandied about concerning national 
     education policy, I proposed a simple one-step program: move 
     states closer to Canada. I would tend to assume that some 
     similar relationship obtains as regards health care, and so 
     was the more shocked at the idea of a medical school being 
     closed in Minnesota.
       On further enquiry, one learned that, being progressive 
     folk, Minnesotans had been joining health maintenance 
     organizations. HMOs, as we would learn to call them. Paul 
     Ellwood had been trying to tell us this. Being cost-
     conscious, HMOs do not readily send patients to teaching 
     hospitals; lacking patients, teaching hospitals falter; 
     lacking teaching hospitals, medical schools close.
       Clearly, we were in a new age of medicine that had come 
     upon us suddenly. In a wonderful brief essay written in 1984, 
     Lewis Thomas described ``medicine's second revolution.'' The 
     first revolution began with 2nd century A.D. Galen, a Greek 
     physician practicing in Rome who introduced bleeding and 
     blistering, mercury and the like. Also anatomy.
       This first revolution persisted--witness the passing of our 
     first president--into the early 19th century, when ``serious 
     questions were raised about this kind of therapy.'' Slowly, 
     but successfully, doctors learned Hippocrates' injunction, 
     primum non nocere. Thomas described a celebrated Victorian 
     painting, The Doctor:
       ``The picture . . . illustrates what used to be the popular 
     conception of medicine and is, to this day, a romantic 
     version of the way the profession likes to view itself. The 
     scene is a Victorian living room where a young child, 
     stricken by an unspecified mortal illness, lies in a 
     makeshift bed; at her side sits the elderly doctor in an 
     attitude combining, all at once, concern, compassion, 
     intelligence, understanding, and command. He is the 
     painting's centerpiece. The child's parents are in the 
     background, the father looking at the doctor with an 
     expression of total trust.
       ``The doctor in the painting is engaged in what was, for 
     that period in medicine, the only course available at this 
     stage of serious illness: He is monitoring the patient. He 
     has already, presumably, arrived at the diagnosis. He knows 
     the name of the child's illness, he has a solid working 
     knowledge of the pathology, and from his lifetime of 
     professional experience he is able to predict how the disease 
     will run its course and what will happen at the end. He has 
     explained all this to the parents in language that they can 
     understand, and now, at the moment of the picture, he is 
     engaged in the ancient art of medicine. This means, at its 
     essence, that he is there contributing his presence, 
     providing whatever he can in the way of hope and 
     understanding.
       ``The illusion of the scene is that he is in control of the 
     situation. He is not, of course. Beyond taking the pulse, 
     examining the tongue, listening to the chest, palpating the 
     abdomen, and making sure that what was then regarded as good 
     nursing care is available, there is nothing whatever that he 
     can do to alter the course of the illness or affect its 
     outcome.''
       Thomas records that ``this was the kind of medicine I was 
     taught in Boston 50 years ago, which would have been 1934. 
     (When, come to think, we were treating our president for 
     poliomyelitis by seating him in what Gibbon called 
     ``medicinal waters,'' writing of the therapies of Rome in 
     the Age of Caracalla.) He recalls that the terms medical 
     science and medical research were not much used and the 
     term bio-medical, implying that ``medicine and biology 
     were all of a piece,'' was not yet invented. Then this: 
     ``As I recall, 50 years ago we believed that medicine had 
     just about come its full distance.
       Before that decade of the 1930s wound out, antibiotics made 
     their appearance in medical practice and everything changed. 
     Changed utterly. To cite Thomas a last time, ``The news that 
     infectious bacteria could be killed off without harm to the 
     cells of the host came as an astonishment to physicians 
     everywhere. American medicine took off.
       The transformation of medical science brought profound 
     changes in the economics of medicine. We would associate this 
     with Say's law, the work of the early-19th-century French 
     economist who reached ``a conclusion that may at first sight 
     seem paradoxical, namely, that it is production which opens a 
     demand for products.'' Supply creates its own demand. Say's 
     law began to take hold in medicine. As the supply of 
     efficacious treatments grew, demand grew. In 1929, real per-
     capita national health expenditures (1996 dollars) were below 
     $300. By 1989, they exceeded $3,000--a ten-fold increase. In 
     1940, 4.0% of the Gross Domestic Product went to the health 
     care sector. In 1960, 5.1%. But now the trend took hold. The 
     proportion had more than doubled by 1991, when Richard 
     Darman, Director of the Office of Management and Budget, 
     presented this testimony before the Senate Committee on 
     Finance:
       ``Total public and private health spending is on a growth 
     path that would take over the Gross National Product--if that 
     were not a practical impossibility. Total health spending has 
     grown from less than 6% of GNP three decades ago to about 12% 
     today. It is currently projected to reach 17% by the year 
     2000 and 37% of GNP by 2030. [Emphasis in original.]''
       In Washington, where health care costs were now assuming an 
     ever-larger portion of the federal budget owing to programs 
     such as Medicare and Medicaid, begun in 1965, the issue was 
     increasingly seen in budgetary terms. This was a profound 
     shift. I was a witness to and something of a participant in 
     the development of the Medicare and Medicaid legislation. 
     Money was the least of our concerns. We had the money. Health 
     care was what we cared about. The venerable Robert J. Myers, 
     who was actuary to the House Committee on Ways and Means at 
     that time, has recently reviewed our subsequent experience. 
     In 1965, it was estimated that the outgo for the hospital 
     insurance (HI) portion of Medicare by 1990 would be $9 
     billion. As it turned out, the actual figure was $66.9 
     billion. Thus, he writes, ``the actual HI experience was 639% 
     above the estimate.'' Myers notes that in the interval the 
     program was continually expanded in one way or another such 
     that the comparison is not entirely valid. No matter, the 
     issue succumbed to a fair amount of alarm given what, in 
     Myers's words, ``at first glance . . . seems to be a 
     horrendous variation.'' Political attention turned to the 
     issue of demand.
       This was a central theme of President Clinton's 1993 health 
     care proposal. One issue identified was what economist Alain 
     Enthoven had earlier called the question of ``physician 
     oversupply.'' Writing in the Journal of the American Medical 
     Association in 1994, Richard A. Cooper of the Medical College 
     of Wisconsin would state that a ``consensus'' had developed 
     that there needed to be a ``better balance'' in the 
     proportion of primary care physicians to specialists. He was 
     careful, however, to note that where the one was determined 
     by demography, ``the driving force behind much of specialty 
     medicine was science.''
       This was not a matter of concern to the Clinton task force. 
     Working in secret, an abomination where science is concerned 
     and no less an offense to democratic governance, the task 
     force came up with this formulation:
       ``Problem: An increasingly overabundant number of medical 
     graduates are entering specialty fields instead of primary 
     care fields (family practice, general pediatrics, general 
     internal medicine).
       ``Provide [by Federal law] that at least 50 percent of 
     residency graduates enter primary care practice.
       ``Limit Federal funding for first-year residency positions 
     to no more than 110 percent of the size of the graduating 
     class of U.S. medical schools. This would further support the 
     action to limit specialty residency positions. [Emphasis in 
     original.]''
       As I have described elsewhere, a dissenting paper dated 
     April 26, 1993, by ``Workgroup 12'' of ``Tollgate 5,'' [sic] 
     written by a physician in the Veterans' Administration, 
     began:


                        ``for official use only

       ``Subject: Proposal to cap the total number of graduate 
     physician (resident) entry (PGY-1) training positions in the 
     U.S.A. To 110 percent of the annual number of graduates of 
     U.S. medical schools.
       ``Issue: Although this proposal has been presented in toll-
     gate documents as the position of Group 12, it is not 
     supported by the majority of the members of Group 12 (listed 
     below).
       ``REASONS NOT TO CAP THE TOTAL NUMBER OF U.S. RESIDENCY 
     TRAINING POSITIONS FOR PHYSICIAN GRADUATES.
       ``1. This proposal has been advanced by several Commissions 
     within the last two years as a measure to control the costs 
     of health care. While ostensibly advanced as a man-power 
     policy, its rationale lies in economic policy. Its advocates 
     believe that each physician in America represents a cost 
     center. he not only receives a high personal salary, but 
     is able to generate health care costs by ordering tests, 
     admitting patients to hospitals and performing technical 
     procedures. This thesis may be summarized as: TO CONTROL 
     COSTS. CONTROL THE NUMBER OF PHYSICIANS.''
       It went on the state that the proposal would require ``a 
     vast regulatory apparatus.'' Then this:
       ``13. To end on a philosophic note, when the proposal to 
     cap training slots was presented to the presidents of the 
     major U.S. universities last weekend, they were incredulous 
     that the U.S. government would advance as sound social policy 
     a proposal to limit access to one of the three learned 
     professions with its millennial history of achieving social 
     good. They further recognized that in America open access to 
     careers in these professions has been a traditional path for 
     immigrant social mobility.''
       Leaving aside the politically correct last sentence--No 
     White Protestants Need Apply--this was surely an honorable 
     response. The university presidents were right to have been 
     incredulous at this proposal. It

[[Page S7209]]

     was, in the words of Walter Reich, a proposal for the 
     ``deliberate dumbing down of medicine.'' And yet, it was all 
     kept too much in the family. The administration hardly drew 
     attention to it. A 136-page White House publication on the 
     health care plan had 11 lines on the subject of ``Doctors in 
     the United States: An Unhealthy Mix.'' The press scarcely 
     mentioned the matter, even here in New York where the 110% 
     limit on residencies would have nearly eliminated foreign 
     medical graduates in our hospitals, with the real possibility 
     of many having to close. (The number of residency slots has 
     for some years now been at about 135% of the number of 
     graduates of American medical schools. Imposing a 110% cap 
     would have resulted in a reduction of almost a fifth in the 
     number of residencies nationwide. In that almost half the 
     medical residents in New York City are graduates of foreign 
     medical schools, it would have been very difficult to staff 
     the city's hospitals if such a supply constraint had become 
     law.)
       Nor did the workforce issue emerge in the House and Senate 
     hearings on the health care legislation. However, early on 
     the Finance Committee began to sense that the notion of 
     uncontrollable costs was open to question. Indeed, the 
     interval between 1993, when the administration health care 
     plan was proposed, and 1994, when it failed in the Congress, 
     was something of a break point. Average health insurance 
     costs for large employers, including government, declined 
     from $4,117 in 1993 to $4,040 in 1994. (They have since more 
     or less stabilized.) Something was going on, and in the 
     Finance Committee, at least, we began to sense what could 
     only be described as market forces. This sense, at least for 
     this Senator, was of a sudden brought into focus on April 26, 
     1994, when Monsignor Charles J. Fahey of Fordham University, 
     testifying on behalf of the Catholic Health Association of 
     the United States, said that what we were seeing was the 
     ``commodification of health care.'' Which is to say that 
     health care was beginning to be bought and sold in a market, 
     where prices would determine outcomes. This was not a 
     development Fahey found altogether congenial.
       ``We want to alert the committee that the not-for-profit 
     mission in health care is being seriously threatened by the 
     increasing commercial environment in which we find ourselves 
     operating; a real commodification of health care, if you 
     will.''
       Still, as we pursued the matter, it became ever more clear 
     that something such was happening.
       Again, Paul Ellwood did his best to tell us this. At a 
     March 1, 1994, hearing in the Finance Committee, he was asked 
     about projections that health care spending would reach 20% 
     of GDP by the year 2000.
       ``Dr. Ellwood. The problem with building these models that 
     project costs is, if you are going to go with a model, the 
     more compulsory, the more intrusive the system of determining 
     what the numbers are in there, supposedly the more accurate 
     they are.
       ``What we are having to do here is speculate about how 
     consumers will behave if they are faced with lower-cost 
     health plans versus how providers will behave if there is a 
     ceiling on it.
       ``My feeling is--I may come to regret saying things like 
     this--we are never going to hit 20%.
       ``Senator Packwood. That we are going to get what?
       ``Dr. Ellwood. We are never going to hit 20% of the GDP.
       ``The Chairman. Write that down. Everybody take notes.''
       What Mr. Darman had described--37% of GNP by the year 
     2030--was an unsustainable trend. It is years now since 
     Herbert Stein, Chairman of the Council of Economic Advisers 
     under President Nixon, offered the epiphanic observation that 
     ``an unsustainable trend cannot be sustained.'' We should 
     have known, and began to sense.
       Here are the numbers. In 1993, health care absorbed 13.6% 
     of GDP. The administration projected that without reform, the 
     proportion would rise to 18.9% by the year 2000. (Pretty much 
     along the Darman trend line.) With reform--1,362 pages of 
     it--we could hope for 17.3% of GDP by said year 2000. For 
     what it is worth, the Congressional Budget Office now 
     projects that by the year 2000 health care costs will be 
     14.3%. As they would say in the age of Thomist medicine, the 
     crisis has passed.
       But another crisis awaited. That of medical schools and 
     teaching hospitals. Slowly, beginning with Fahey's testimony, 
     the connection emerged. And it has been all over the press 
     ever since, if one reads the headlines with this in mind. 
     Here is a sample from the superb reporting of Milt 
     Freudenheim in The New York Times:


     ``hospitals are tempted but wary as for-profit chains woo them

       ``Richard Scott has made deals to take over 137 hospitals 
     in the last year, and he wants more. Now, his Columbia--HCA 
     Healthcare Corporation has its eye on some Catholic hospitals 
     in Chicago.
       ``Stay away, says Joseph Cardinal Bernardin of Chicago, one 
     of the most powerful clerics in the nation. The Roman 
     Catholic Church has an obligation to poor people and to the 
     Catholic way of health care, the Cardinal recently warned the 
     20 hospitals in his archdiocese, and selling to a for-profit 
     chain would be a betrayal. He reminded them that the 
     archdiocese could withdraw its recognition of any hospital 
     defying him.''
       For Catholics, of course, read Jewish, Presbyterian, 
     Methodist, what you will. Hospitals once were charities.


       ``big hospital chain makes a bid to buy blue cross of ohio

       ``The nation's largest for-profit hospital chain agreed 
     yesterday to buy the main business of Blue Cross and Blue 
     Shield of Ohio, raising concerns among consumers, employers 
     and providers of health care about the enormous influence 
     that such a combination could exert.
       ``The $229.5 million purchase by the Columbia--HCA 
     Healthcare Corporation would be the first acquisition of a 
     Blue Cross company by a for-profit hospital chain. If 
     approved by state regulators and the national Blue Cross and 
     Blue Shield association, the takeover could open the door for 
     similar deals by a number of nonprofit Blue Cross plans that 
     are struggling to stay in business.''
       Recall that Blue Cross began as a not-for-profit 
     cooperative, an idea much associated with resisting market 
     forces.
       A recent lead story of the Business Day section of The 
     Times, by David J. Morrow, began:


             ``warner--lambert shares plunge on glaxo move

       ``Shares of the Warner-Lambert Company plunged 18.5% 
     yesterday after Glaxo Wellcome P.L.C. halted British sales of 
     Warner-Lambert's diabetes drug, troglitazone [trade name 
     Rezulin]. . . .
       ``By day's end, Warner-Lambert's shares had dropped $25.875 
     each, to $114, with 9.9 million shares traded, the second 
     most active of the day on the New York Stock Exchange. The 
     setback shaved $7 billion off the Morris Plains, N.J., 
     company's market value, prompting analysts at Bear, Stearns & 
     Company to adjust their earnings estimates and Morgan Stanley 
     to lower its rating of Warner-Lambert before noon. At one 
     point, Warner-Lambert's stock tumbled to $112, its lowest 
     point since June 20. . . .
       Developed by the Sankyo Company Ltd. in Japan, Rezulin was 
     initially heralded as a wonder drug for type-2 diabetes, a 
     chronic disease that affects about 135 million people world-
     wide. According to Warner-Lambert data, Rezulin reduces or 
     eliminates the daily use of insulin, which has been the 
     predominant treatment for diabetes. Unlike insulin, 
     administered by injection, Rezulin is taken in tablets.''
       There was a time, surely, when the advent of a new ``wonder 
     drug'' would have been approached in terms of health care. 
     Now it becomes an affair of share prices.
       But now to our main story. This, once again, by Mr. 
     Freudenheim of The Times, on May 20, 1997:


  ``teaching hospitals under the knife; longtime missions pressed by 
                                h.m.o.'s

       ``It began as a charity supported by Paul Revere that sent 
     out doctors to the poor. It evolved into the New England 
     Medical Center at Tufts University, a research powerhouse 
     that ranks among the leaders in New England in liver 
     transplants, breast-cancer research and complex heart 
     procedures.
       ``But now, the biggest health maintenance organization in 
     Boston threatens to starve New England Medical by refusing to 
     pay for its patients to go there, even though the costs are 
     as low or lower than at other Boston teaching hospitals. . . 
     .
       ``The squeeze on academic medical centers like New England 
     Medical is particularly brutal in Boston, which has seven 
     prestigious teaching and research hospitals and far too many 
     hospital beds, and where costs per patient are among the 
     nation's highest. But dozens of teaching hospitals across the 
     country face similar challenges, and they are responding by 
     reaching out for business partners.
       ``Some, like the George Washington University Hospital in 
     Washington, D.C., and state university hospitals in 
     California, Oklahoma and South Carolina, are being sold to 
     for-profit chains; others, like New England Medical, Columbia 
     University's Presbyterian Hospital and the University of 
     Minnesota Academic Medical Center, have merged with stronger, 
     nonprofit local institutions; still others, like Beth Israel 
     and St. Luke's/Roosevelt in New York, are merging into 
     holding companies that will run their finances.''
       In April 1994, the Senate Committee on Finance held 
     hearings on the subject of ``Academic Health Centers Under 
     Health Care Reform.'' It would appear that these were the 
     first ever on that subject. The testimony was powerful and 
     dispositive. In response to a question from Senators Bob 
     Packwood, our ranking member, Paul Marks described the 
     situation at Sloan-Kettering:
       ``I think that a price-driven environment is one in which 
     we will have unintended consequences in terms of rationing 
     and quality. You cannot get something for nothing out of the 
     system. And while we can reduce costs substantially, and I 
     think all of us have tremendous pressures to reduce costs, 
     even in high-cost centers, such as the cancer centers, we 
     know right now from our experience because we are being 
     approached by insurance companies, health plans, managed 
     care, and they say how much does a bone marrow transplant 
     cost. And we will say it is $100,000. Well, we will give you 
     all our marrow transplants for $60,000.
       ``There are two things. Number one, we cannot survive as a 
     quality provider of care doing bone marrow transplantations 
     alone. Even if we got $100,000, we would not want to do it. 
     And at $60,000 we cannot really provide

[[Page S7210]]

     a quality care program in bone marrow transplantation.
       ``So I would say that at least in our environment there has 
     to be some kind of legislation which takes into account that 
     a price-driven system today will compromise the quality of 
     health care and will be associated with rationing. I do not 
     think there is any question in my mind about that because 
     they cannot compete in any other way if you are going to 
     drive down just price.''
       It would be fair, I believe, to state that the theme of our 
     hearings was, and here I quote from my opening statement, 
     that ``health insurance is important, but health is more 
     important. It comes out of discovery, and we are in a great 
     age of discovery.'' We were up against the problem of how to 
     provide for what economists call public goods. These are 
     readily described. For most goods and services, if the 
     consumer chooses not to pay, he does not receive the benefit. 
     If he does not buy a ticket, he is excluded from the 
     ballpark. By contrast, consumers are not easily excluded from 
     the benefits of a public good, say national defense or cancer 
     research, because everyone benefits whether or not they pay. 
     As Richard A. Musgrave noted in his classic 1959 text, The 
     Theory of Public Finance, the existence of public goods 
     provides a rationale for the government to intervene on 
     markets and either directly provide the public good--as it 
     does with national defense--or support the provision of the 
     public good through indirect payments.
       The Finance Committee resolved to do just this for medical 
     schools and teaching hospitals. The chairman's mark, as is 
     our term, of June 29, 1994, provided for a Graduate Medical 
     Education and Academic Health Center Trust Fund to be 
     financed by a 1.5% tax on all private health care premiums. 
     An additional .25% levy, proposed to us by Senator Mark 
     Hatfield, provided for medical research. In all, this made 
     for an average annual revenue to the Trust Fund of $17 
     billion over five years. To may knowledge, this was the first 
     such proposal of its kind. It did not go unnoticed in our 
     Committee; a motion to strike the 1.75% premium tax failed by 
     13 votes to seven.
       It would be pleasing to report that there was at least some 
     response to the bipartisan approval by the Senate's tax-
     writing committee of a trust fund for this purpose. But there 
     was none. The Committee finished its work on Saturday, and 
     there was a long front-page report in The Times. The tone was 
     cool. Our assignment had been to provide universal health 
     care; we had only provided for 95% coverage by 2002. That a 
     bipartisan majority had approved a very considerable measure 
     meant nothing to those who had vowed never to compromise. 
     These included a fair number of journalists, whose 
     disappointment, even distaste, was made plain. In the end, of 
     course, no bill was brought to a vote in either chamber. The 
     Congressional elections that followed were widely understood 
     to mark a repudiation of the whole enterprise, and indeed, 
     the subject has receded, in Congress at least, while health 
     maintenance organizations continue their seeming predestined 
     course.
       The one exception is this matter of medical schools and 
     teaching hospitals. In the 104th Congress, four bills were 
     introduced. This time the Senate Finance Committee rejected 
     the trust fund on a tie vote, ten to ten. (Tie votes fail.) 
     By contrast, on the House side, in the Committee on Ways and 
     Means, the new chairman, Representative Bill Archer of Texas, 
     proposed and carried a Teaching Hospital and Graduate Medical 
     Education fund that would receive, among other revenues, 
     $13.5 billion in appropriated general funds over a six-year 
     period. This measure became part of the Balanced Budget Act 
     of 1995. It passed both House and Senate, but was vetoed by 
     President Clinton over other matters. In the current, 105th 
     Congress, I have reintroduced S. 21, the ``Medical Education 
     Trust Fund Act of 1997.'' This was a ``first day'' bill, and 
     accorded some prestige, as the first 20 numbers are reserved 
     for the Majority and Minority leaders. For all that, at the 
     end of the year there are no cosponsors and few prospects. 
     The subject has not made its way onto the national political 
     agenda as a singular public good that has been placed in 
     jeopardy by what Columbia's great seer, Robert K. Merton, 
     described back in 1936 as the ``unintended consequences'' of 
     actions arising in other contexts.
       Expect matters to grow more difficult in the near future. 
     There will be all manner of proposals to regulate managed 
     care, much as a century ago we commenced to regulate the 
     railroads and such like commercial activities. This can be 
     helpful; it can be hurtful. James F. Blumstein of the Health 
     Policy Center at Vanderbilt University suggests that the 
     current federal investigation into various health care 
     providers ``is taking its cues from past task forces on the 
     Mafia.'' Or desert warfare, for that matter, given the formal 
     title, ``Operation Restore Trust.'' Again, expect more. But 
     be of good cheer. Some things take a long time, as Lewis 
     Thomas attested. Most importantly, may a layman urge that you 
     physicians be importunate. You are too precious to let your 
     collective well-being be taken for granted. I close with the 
     words with which Dominic P. Purpura, dean of the Albert 
     Einstein College of Medicine here in New York, on October 5th 
     opened the new Jerome and Dawn Greene Medical Arts Pavilion 
     at Montefiore Hospital in the Bronx:
       ``We are gathered here for several reasons. Most 
     importantly to bear witness to the felicitous marriage of 
     high-spirited philanthropy and good works, now consummated in 
     this . . . Medical Arts Pavilion. We are here for another 
     purpose as well. To dispel the septic rumor oozing from some 
     health policy think tanks to the effect that academic 
     medical centers such as ours are dinosaurs doomed to 
     extinction by the impact of the asteroid of managed care. 
     Look skyward! On this day of noble purpose the sun shines 
     brightly. No ashen clouds obscure the values that have 
     made American medicine a crowning achievement of Western 
     Civilization. And what are these core values? Simply 
     stated: Faith in evidence-based medicine and trust that 
     our superbly trained physicians will translate the basic 
     science of medicine into the art and science of patient 
     care.''
       The author thanks Dr. David Podoff, minority chief 
     economist for the Senate Committee on Finance, for assistance 
     with this article.
  Mr. JEFFORDS. Mr. President, I yield 4 minutes to the Senator from 
Minnesota.
  The PRESIDING OFFICER. The Senator from Minnesota.
  Mr. WELLSTONE. Mr. President, I am very pleased to be involved in 
working on this legislation with the Senator from Vermont and other 
legislation with Senator Dorgan.
  To my colleague from Utah, if we read the amendment carefully--all 
colleagues who are going to vote--we are very clear on protections. If 
safeguards are not in place, the drugs cannot be reimported. That is 
clear language.
  These are some of the protections: strict FDA oversight; proof of FDA 
approval of imported medicines; only licensed pharmacists and 
wholesalers can import medicines for retail sale; importers will have 
to meet requirements for handling as strict as those already in place 
for manufacturers; lab testing to screen out counterfeits; lab testing 
to ensure purity, potency, and safety of medications. It is all clear.
  I have a letter from the National Community Pharmacists which is in 
favor of this exact concept of our pharmacists and wholesalers being 
able to reimport these drugs so our consumers can afford it.
  The only protection we don't have in this amendment is protection for 
the pharmaceutical industry to continue to make excessive profits. I 
quote from Fortune magazine:

       Whether you gauge profitability by median return on 
     revenues, assets, or equity, pharmaceuticals had a Viagra 
     kind of year.

  We are talking about an industry making enormous profits, profits as 
a percentage of revenue up around 18.6 percent. We have all the 
protection for consumers. We just don't want to protect the 
pharmaceutical company from being able to gouge consumers. People in 
Minnesota and in Alabama and in Vermont and in North Dakota are saying: 
Why can't we have the trade? Why can't we have the competition? Why 
can't our pharmacists and wholesalers reimport these drugs back to us 
so we can get the drugs we need for ourselves and our families at a 
price we can afford?
  This is a real simple amendment. You are on the side of consumers, 
you are on the side of real competition, or you are on the side of the 
pharmaceutical industry. On this one, Senators have to be on the side 
of consumers.
  I am glad we finally have the chance to bring up legislation that 
corrects the injustice that finds American consumers the least likely 
of any in the industrialized world to be able to afford drugs 
manufactured by the American pharmaceutical industry because of the 
unconscionable prices the industry charges only here in the United 
States.
  When I return to Minnesota which I do frequently, I meet with many 
constituents, but none with more compelling stories than senior 
citizens struggling to make ends meet because of the high cost of 
prescription drugs--life-saving drugs that are not covered under the 
Medicare program. Ten or twenty years ago these same senior citizens 
were going to work everyday--in the stores, and factories, and mines in 
Minnesota--earning an honest paycheck, and paying their taxes without 
protest. Now they wonder, how can this government--their government--
stand by, when the medicines they need are out of reach.
  But it is not just that medicare does not cover these drugs. The 
unfairness which Minnesotans feel is exacerbated of course by the high 
cost of prescription drugs here in the United States--the same drugs 
that can be purchased for frequently half the price in Canada or Mexico 
or Europe. These are the

[[Page S7211]]

exact same drugs, manufactured in the exact same facilities with the 
exact same safety precautions. A year ago, most Americans did not know 
that the exact same drugs are for sale at half the price in Canada. 
Today, you can bet the pharmaceutical industry wishes no one knew it. 
But the cat is out of the bag--and it is time for Congress to right 
these inequities.
  All the legislators speaking today have heard the first-hand stories 
from our constituents--in Minnesota, Vermont, North Dakota, South 
Dakota, Washington state--constituents who are justifiably frustrated 
and discouraged when they can't afford to buy prescription drugs that 
are made in the United States--unless they go across the border to 
Canada where those same drugs, manufactured in the same facilities are 
available for about half the price.
  Senior citizens have lost their patience in waiting for answers--and 
so have I.
  Driving to Canada every few months to buy prescription drugs at 
affordable prices isn't the solution; it is a symptom of how broken 
parts of our health care system are. Americans regardless of party have 
a fundamental belief in fairness--and know a rip-off when they see one. 
It is time to end that rip-off. While we can be proud of both American 
scientific research that produces new miracle cures and the high 
standards of safety and efficacy that we expect to be followed at the 
FDA, it is shameful that America's most vulnerable citizens--the 
chronically ill and the elderly--are being asked to pay the highest 
prices in the world here in the U.S. for the exact same medications 
manufactured here but sold more cheaply overseas.
  That is why I introduced with Senator Dorgan the International 
Prescription Drug Parity Act, and with Senator Jeffords the Medicine 
Equity and Drug Safety Act, two bills which will amend the Food, Drug, 
and Cosmetic Act to allow American pharmacists and distributors to 
import prescription drugs into the United States as long as the drugs 
meet FDA's strict safety standards. Pharmacists and distributors will 
be able to purchase these drugs--often manufactured right here in the 
U.S.--at lower prices overseas and then pass the huge savings along to 
American consumers.
  What these bills do is to address the absurd situation by which 
American consumers are paying substantially higher prices for their 
prescription drugs than are the citizens of Canada, and the rest of the 
industrialized world. These bills do not create any new federal 
programs. Instead they use principles frequently cited in both Houses 
of the Congress--principles of free trade and competition--to help make 
it possible for American consumers to purchase the prescription drugs 
they need. Now we have the chance to adopt an amendment that includes 
the best of both those bills.
  And the need is clear. A recent informal survey by the Minnesota 
Senior Federation on the price of six commonly used prescription 
medications showed that Minnesota consumers pay, on average, nearly 
double (196%) that paid by their Canadian counterparts. These excessive 
prices apply to drugs manufactured by U.S. pharmaceutical firms, the 
same drugs that are sold for just a fraction of the U.S. price in 
Canada and Europe.
  Pharmacists could sell prescription drugs for less here in the United 
States, if they could buy and import these same drugs from Canada or 
Europe at lower prices than the pharmaceutical companies charge here at 
home.

  Now, however, Federal law allows only the manufacturer of a drug to 
import it into the U.S. Thus American pharmacists and wholesalers must 
pay the exorbitant prices charged by the pharmaceutical industry in the 
U.S. market and pass along those high prices to consumers. It is time 
to stop protecting the pharmaceutical industry's outrageous profits--
and they are outrageous.
  Where the average Fortune 500 industry returned 3.8 percent profits 
as a percentage of their assets, the pharmaceutical industry returned 
16.5 percent.
  Where the average Fortune 500 industry returned 15 percent profits as 
a percentage of shareholders equity, the pharmaceutical industry 
returned 36 percent.
  Those record profits are no surprise to America's senior citizens 
because they know where those profits come from--they come from their 
own pocketbooks. It is time to end the price gouging.
  We need legislation that can assure our Senior Citizens and all 
Americans that safe and affordable prescription medications at last 
will be as available in the United States of America as they are in all 
the other countries of the industrialized world. This amendment which I 
am introducing along with Senators Jeffords and Dorgan accomplishes 
that end.
  And contrary to the campaign of false information being promoted by 
the pharmaceutical industry, the Amendment includes all the safety 
precautions needed to protect the American public. This amendment 
includes the specific protections--which were not included in the 
House-passed amendments--to make sure we are not sacrificing safety for 
price.
  The only things that are not protected in this amendment are the 
excessive profits of the pharmaceutical industry. My job as a United 
States Senator is not to protect those profits but to protect the 
people. Colleagues, please join in and support this thoughtful and 
necessary amendment that will help make prescription drugs affordable 
to the American people.
  Mr. JEFFORDS. Mr. President, I yield 4 minutes to the Senator from 
Michigan.
  The PRESIDING OFFICER. The Senator from Michigan.
  Mr. LEVIN. Mr. President, I commend Senator Jeffords and Senator 
Dorgan for this amendment. There is no reason why American consumers 
should not have access to lower-priced medicines, while assuring the 
safety of those medicines that are imported.
  I quote from an editorial from the Detroit News. This is an editorial 
department which is very outspokenly conservative, avowedly 
conservative in its editorial policy. It says:

       . . . Congress should remove the prohibition because the 
     federal government ought not to restrict the purchasing 
     options of Americans.

  It goes on to say:

       . . . using government coercion to prevent Americans from 
     purchasing drugs from abroad is not the way to go.

  That is what this issue is all about. This is whether or not we are 
going to use the free market. This has nothing to do with setting 
prices. This has to do with using a free market to allow the 
reimportation of something manufactured in the United States after it 
has been certified by the FDA that it is safe to do so.
  It is incredibly galling as well as incredibly expensive for my 
constituents in Michigan to go across the border to Canada in order to 
buy drugs at about half the price of what they are charged for those 
same drugs in Michigan. Again, these are drugs manufactured in the 
United States and exported to Canada. All this amendment says is that 
it ought to be possible for our wholesalers and our pharmacists to 
import something back into the United States manufactured in the United 
States and having been approved by a process of the FDA to make sure 
that it is safe.
  We have done a survey in my home State. We have compared the prices 
of these drugs. They are quite extraordinary. We have many people who 
cannot afford these drugs. These are often lifesaving drugs, life-
extending drugs. These are drugs which reduce pain, which make it 
possible for people to be more mobile than they otherwise would be.
  We looked at seven of these most popular drugs because there were 
three on which we could not make a comparison because they were over-
the-counter drugs in Canada or otherwise unavailable to get prices, but 
seven of the most popular drugs. Premarin is an estrogen tablet taken 
by menopausal women. It costs $23 in Michigan, $10 in Ontario. 
Synthroid--this replaces a hormone which is normally produced by the 
thyroid gland--costs over $13 in Michigan, under $8 in Ontario. We 
could go through the next five drugs on this list, and I have done this 
already in the Record in previous remarks I made on the Senate floor.
  We cannot afford to be subsidizing the consumers in other countries. 
We ought to use the free market that we are all so proud of to allow 
the import of something which is, by the way,

[[Page S7212]]

manufactured in the United States and, by the way, in some cases had 
previously received financial support from the taxpayers of the United 
States through either the Tax Code on research and development or, in 
some cases, direct grants from the National Institutes of Health to the 
scientists who developed these drugs.
  It is really an intolerable situation when we have people in our 
States who can't afford these critically important drugs and are simply 
prohibited from having a wholesaler or a pharmacist import that drug 
from another country. Since the amendment provides for safety through a 
process which has to be approved by the FDA, it seems to me this is a 
sensible thing to do.
  I thank the Chair.
  The PRESIDING OFFICER. Who yields time?
  Mr. JEFFORDS. Mr. President, I yield 5 minutes to the Senator from 
North Dakota.
  The PRESIDING OFFICER. The Senator from North Dakota is recognized.
  Mr. DORGAN. Mr. President, there is nothing worse than losing an 
argument you are not having. We had four or five opponents talk about 
this legislation, and they were making arguments about a bill that 
doesn't exist. So they win. What is the argument? Listen carefully and 
you will hear the scare tactics, suggesting that somehow in an old 
garage with a dirt floor on a dusty street somewhere in Haiti, someone 
is going to produce a counterfeit drug and ship it to the U.S. We 
should not do that, they say. Well, I agree. But that has nothing to do 
with this legislation. They are winning an argument we are not having.
  This legislation establishes very strict controls and pertains only 
to prescription drugs that are produced in manufacturing plants 
approved by the FDA, with strict FDA oversight and proof of FDA 
approval on all imported medicines. Only licensed pharmacists and 
wholesalers can import the medicine for resale, and there is lab 
testing to screen out counterfeits. That is what this is about. Risk? 
This isn't about risk.
  One of our colleagues said what we need is more insurance coverage 
for prescription drugs. Well, I agree that we need to add a 
prescription drug benefit to Medicare to help our senior citizens pay 
for their medications.
  But we also need lower prices for prescription drugs. There is a 
famous football coach who is on television just about every night in an 
advertisement for a drug called Zocor. He is one of America's better 
professional football coaches and, I gather, a wonderful man. He says 
that Zocor reduces his cholesterol. I am sure it does; it is a 
wonderful drug. Zocor is advertised widely on television. If you buy it 
in the United States it is $3.82 per tablet. If you buy it in Canada--
the same pill by the same company--it is $1.82 per tablet.
  I ask anybody who spoke today in opposition to this amendment, how 
does one justify that? Do you support it? Do you think it is right? Do 
you want to tell the American consumer we have a global economy for 
everyone except for them? The compounds and chemicals used in this pill 
can be accessed globally by the companies that produce it, and that is 
fine. But the global economy isn't for you, American consumers. The 
drug companies can price their products any way they want here in the 
United States, and the American consumer has no business accessing them 
at a lower price anywhere outside the United States.
  I ask all those who oppose this, do you support this pricing 
strategy--$1.82 for the person in Winnipeg, Canada, and $3.82 for the 
U.S. consumer?
  The Senator from Vermont offers a very simple piece of legislation. 
The amendment allows for the importation only of products approved for 
sale in the United States by the FDA and manufactured in FDA-approved 
plants.
  At a hearing before the HELP committee earlier this year, Dr. 
Christopher Rhodes, a professor of applied pharmaceutical sciences at 
the University of Rhode Island, who has 30 years of experience on the 
development and evaluation of drug products, said this:

       It is my considered professional opinion that the process 
     of using re-imported prescription drugs in the United States 
     need not place the American public at any increased risk of 
     ineffective or dangerous products.

  I understand what is at work here. The pharmaceutical industry wants 
to protect what they have. They have a pretty good deal. They can price 
their products at whatever price they want. But this is about fair 
prices for American consumers. I heard a colleague say: If we don't 
price products like this in the U.S., there won't be research and 
development for new drugs.
  Oh, really? Every European country receives lower prices for the same 
drugs. Yet a larger percentage of research and development on 
prescription drugs takes place in Europe than in the United States. 
Explain that.

  This is a good piece of legislation. I hope my colleagues will see it 
for what it is. It doesn't pose any risk. It says to the American 
consumers that they have rights as well.
  Mr. COCHRAN. Mr. President, I yield the remainder of the time on our 
side to the distinguished Senator from North Carolina, Mr. Helms.
  Mr. HELMS. Mr. President, I ask unanimous consent that I may deliver 
my remarks while seated at my desk.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. HELMS. Mr. President, I don't question the sincerity of those who 
advocate this amendment which is intended to repeal the law that 
prohibits the wholesale reimportation of potentially unsafe drugs from 
Canada or Mexico. While they may scoff at the opposition, I predict 
that one day, somewhere down the line, they will regret sincerely their 
support of this proposal which is fatally flawed.
  Most Americans never doubt the safety of the drugs in our pharmacies 
and hospitals. That is because they understand that no drug can be sold 
in America without manufacturers first making enormous investments in 
research and development, the compound passing rigorous testing and 
review by the FDA, and then being distributed through a supply system 
that ensures that drugs must pass through a reliable and verifiable 
chain of custody.
  No country in the world does as much to ensure the safety and 
efficacy of drugs used by its citizens.
  FDA Commissioner, Dr. Jane Henney, recently warned that the United 
States demand for Canadian drugs could cause Canada to ``be used as a 
front for counterfeit or contaminated products becoming available.''
  Some Senators have said: Forget that; it is not going to happen. 
Well, I predict that it is going to happen. Commissioner Henney went on 
to emphasize: ``One has to be concerned about a safety issue here.''
  Echoing Commissioner Henney's concerns, the former FDA Commissioner 
and current Dean of the Yale Medical School, Dr. David Kessler, warned 
last year: ``with the rise of Internet pharmacies, the opportunities 
for illicit distribution of adulterated and counterfeit products have 
grown . . . Repealing the prohibition on reimportation of drugs would 
remove one of the principal statutory tools for dealing with this 
growing issue.''
  Mr. President, current law has protected American consumers from the 
importation of substandard, impotent, adulterated, contaminated, and 
counterfeit pharmaceuticals--problems that have plagued many other 
countries. There is simply no good reason to undermine the integrity of 
our pharmaceutical supply system and to expose American consumers to 
corrupt middlemen and counterfeiters.
  Foregoing the benefits of free markets and innovation for the false 
promise of cheaper, price-controlled drugs will lead not to improved 
health care but rather to a proliferation of unsafe and counterfeit 
drugs, a reduction in incentives and investment to develop new life-
saving and life-improving medications; and ultimately, if this proposal 
passes, disastrous and fatal consequences for countless Americans.
  Mr. President, I yield the floor.
  Mr. JOHNSON. Mr. President, I rise to join Senators Dorgan and 
Jeffords in support of the prescription drug amendment being offered to 
the Agriculture Appropriations bill currently pending before this body. 
I commend my colleagues for their steadfast commitment to addressing 
this critically important issue. Like all of my colleagues, I deplore 
conditions that lead to Americans choosing between buying food for 
their family or medicine for their illnesses which is a choice that 
millions of consumers in this country are forced to make every day. 
This is a travesty and one that I am committed to put an end to.

[[Page S7213]]

  The discussion of prescription drug pricing, accessibility, 
affordability, and safety has been elevated to new heights in the last 
year as we in Congress work to develop a practical and cost-effective 
approach to providing relief to combat escalating prescription drug 
prices for consumers throughout the United States.
  Numerous studies have been conducted that highlight the price 
differentials existing between the United States, our neighbors to the 
North and South, and countries in the European Union. Several reports 
confirm that pharmaceutical prices are substantially higher in the 
United States than other countries.
  Consider how drug prices charged to Americans differ from the drug 
prices paid by people living in other areas of the world as reported 
from a study done by the PRIME Institute at the University of 
Minnesota.
  The study found that if Americans pay an average of $1.00 for a 
pharmaceutical product, that exact same product with the exact same 
dosage would have a much lower average cost in other industrialized 
nations. On average, that $1.00 product in the United States would cost 
.64 cents in Canada, .68 cents in Sweden, .65 cents in England, .71 
cents in Germany, .57 cents in France, and .51 cents in Italy.
  This amounts to price-gouging of Americans. It's wrong, and it has to 
stop.
  So you ask, why don't Americans just buy it over the border and bring 
it back to the U.S.? Well, some individuals are being forced to take 
such drastic measures. South Dakota, though it does not share a border 
with another country, has an increasing number of individuals willing 
to make the drive to either Mexico or Canada, knowing full well that 
the savings are great enough to more than offset any expenses occurred 
in the process.
  Presently, anecdotal evidence suggests that thousands of Americans 
cross the border to see a doctor and get their prescriptions filled for 
25-50% less in cost for many popular prescription drugs. Here are a 
couple stories that have been shared with me over the last year:
  A 72 year-old woman in Arlington, SD who spends $243 a month on 
prescription drugs wrote to me and said, ``The meds are so high in 
South Dakota. I try to get as much of them in Mexico as I can. I don't 
understand why there has to be such a difference in price.''
  A 41-year-old man suffering from a disease that requires daily 
medication at a cost of more than $400 per month wrote to me and said, 
``I want you to know that while I recognize that seniors are 
particularly hurt by unfair prescription pricing due to their fixed 
incomes, other Americans also feel the pinch. The same medication that 
I take is available in Mexico at less than half the price that it costs 
me in the U.S. Unfortunately, I can not afford to travel to Mexico 
periodically to obtain my prescription.''
  Under current federal law, however, pharmaceutical companies are the 
only ones allowed to import drugs approved by the U.S. Food and Drug 
Administration into this country. Yet, if an American pharmacist or 
distributor wants to purchase these FDA-approved drugs at the lower 
prices available in other countries and pass the savings along to their 
customers, they are prohibited by law from doing so.
  On July 10, the House of Representatives overwhelmingly passed two 
amendments to the Agriculture Appropriations bill that would allow 
widespread importation of prescription drugs without any FDA oversight. 
The overwhelming bipartisan support for these amendments clearly shows 
that Congress no longer wants to deny American consumers access to FDA 
approved medications that are available in other countries at much 
lower prices. I support that position and, in fact, have sponsored 
legislation introduced by my colleagues Senators Dorgan and Jeffords 
regarding international pricing disparities.
  While I agree with the intent of the House action, I have concerns 
that the House provisions do not include the safety mechanisms 
necessary to ensure that only safe and effective FDA approved 
medications cross our borders. Perhaps the number one concern mentioned 
in regard to the reimportation of prescription drugs is the safety of 
the consumer. As with any product that passes through multiple 
distribution channels, it is important that a baseline be established 
to ensure proper handling and storage. This is particularly crucial in 
maintaining the therapeutic equivalence of prescription drugs.
  The amendment we are offering today, which would amend federal law to 
allow pharmacists, distributors and licensed wholesalers to legally 
import U.S. FDA approved prescription drugs, addresses this concern by 
implementing assurances that any prescription drug reimported under 
this proposal be manufactured, packaged, and labelled according to FDA 
standards. It includes the essential safety provisions that will allow 
American consumers to benefit from international price competition for 
prescription drugs in the safest manner possible.
  Many pro-consumer groups such as Families USA, Public Citizen and the 
National Community Pharmacists Association endorse this amendment 
saying it is a positive step towards leveling the playing field for 
prescription drug prices and would save U.S. consumers billions of 
dollars by allowing the safe reimportation of American-made, FDA-
approved prescription drugs.
  Of course, the pharmaceutical industry presents many economic and 
proprietary rationales for price disparities. From price controls to 
R&D to currency exchange rates, arguments are made that the prices 
garnered by some pharmaceutical companies are justified in a world 
where price is a measure of willingness to pay and price elasticity, 
not compassion or empathy.
  Industry representatives have stated it would be profoundly fatal to 
allow for the reimportation of pharmaceutical drugs from other 
countries who purchase them at a much lower cost than our nation's 
senior population as this will create instability in the world's 
pharmaceutical markets. Personally, I can think of nothing more tragic 
than charging Americans prices for prescription medications that cost 
far more than the majority of Americans are able to pay without 
sacrificing one or more basic needs in their lives.
  In my home state of South Dakota, I am conducting prescription drug 
meetings where constituents are able to communicate their concerns 
regarding prescription drug prices and express their ability, or 
perhaps inability, to pay for therapeutic regiments prescribed by their 
physician. Many of them ask, ``Why are citizens of other countries able 
to purchase their prescriptions at such lower prices?'' After all the 
arguments I have heard from the industry on why this is the case, 
I have yet to hear an acceptable response that I could give.

  Perhaps the most disturbing argument that I have heard in the past 
year came from an industry representative during an Alliance for Health 
Reform briefing last year. Our colleague, Senator Rockefeller, read a 
question from the crowd that asked why this individual's brother-in-law 
got the same medication from the same U.S. manufacturer for a 
considerable amount less. What I heard in response was shocking. The 
following quote is taken verbatim from the transcript of that briefing:

       Price discrimination is an economic concept that merely 
     means different people in different markets are charged 
     different things. In this particular case, price 
     discrimination exists between the Canadian market and 
     American market, for lots of reasons: differences in medical 
     practice, how much of the product is sold, difference in 
     exchange rates, different kinds of patent protections, the 
     length and cost in time of distributing drugs and the 
     marketing of drugs, and differences in living standards.
       [You] could have used Mexico as your example and would have 
     found that it is less than a third of the price potentially 
     and that's in large part because the standard of living is 
     substantially lower and they can afford so much less. Beyond 
     that, and the other income differences, there is the 
     difference in willingness to pay.

  The idea that Americans are charged what they are because they are 
willing to pay for it, is perhaps the most insensitive of all 
arguments. Can you imagine measuring the value of someone's life by 
whether or not they are willing to fill their prescription to control 
their cholesterol level or pay their rent? As well, the standard of 
living that exists for most elderly in the United States is precisely 
the reason

[[Page S7214]]

why we are having this hearing today. The simple fact is many seniors 
are not able to meet all of their basic needs and adhere to their 
prescription regiment. The number of South Dakotans who, due to their 
standard of living, can not afford their prescription drugs suggests 
that the pricing of pharmaceutical goes far beyond reasons based on 
standard of living and willingness to pay otherwise South Dakotans 
would have no problem affording their prescription drugs.
  Mr. President, I am reminded of a popular fast food chain motto some 
years back that proclaimed, ``Make a run for the border.'' Who would 
have ever thought that we would be applying this same motto to the 
citizens of our country with regard to their prescription drug needs.
  The amendment before us is an appropriate response to the 
discriminatory pricing practices engaged in by much of the 
pharmaceutical industry. The pharmaceutical industry, year after year, 
sits at the top of the Fortune Magazine list of most profitable 
industries in the country. The latest report covering 1999 showed the 
industry maintained top rankings from previous years: No. 1 in return 
on revenues, No. 1 in return on assets, No. 1 in return on equity. And 
the prices they charge to the uninsured in America remain the highest 
in the world.
  For years, Americans have paid the price in more ways than just at 
the pharmacy counter for the cost of their prescription drugs. Improper 
prescription drug usage results in thousands of deaths a year though 
the exact number of seniors included in this number may never be known. 
How many seniors skip a day's pill or cut them in half in order to 
stretch their prescription just one more day? I would argue that even 
one is too many.
  We are all working to address the concerns of not only our 
constituents in our respective home states but for citizens across this 
nation that rely on prescription drugs for their health care needs. I 
believe that every Senator here today is deeply concerned about the 
rising out-of-pocket costs for prescription drugs and hopefully we can 
address many of these concerns here today with passage of this 
amendment.
  I am pleased to join Senators Dorgan and Jeffords in cosponsoring 
this crucial amendment and urge all of my colleagues to support its 
immediate passage.
  Mrs. MURRAY. Mr. President, I applaud the efforts of the sponsors of 
this amendment.
  As a Senator from a border State, I recognize the frustrations that 
have brought us to this point.
  American consumers must have access to safe, affordable prescription 
drugs.
  Mr. President, I intend to vote for this amendment because I believe 
we must move this debate forward.
  I know that many Americans are facing serious problems because of the 
cost of prescription drugs.
  I hope this amendment will have some impact on the market forces and 
that we will see some savings as a result.
  But, Mr. President, while I will support this amendment, I do have 
two serious concerns.
  First, we must be careful that we don't weaken the high safety 
standards for drugs in this country.
  And second, we should not think for a moment that passing this 
amendment will mean we have helped senior citizens get access to the 
drugs they need.
  We still must pass a Medicare prescription drug benefit.
  I'm concerned that this amendment could draw attention away from the 
much larger issue of providing a prescription drug benefit through 
Medicare.
  Mr. President, I've spent a lot of time working on this issue.
  In fact, back in 1997--as a member of the Senate Health, Education, 
Labor and Pensions Committee--I examined the drug approval process so 
that we could enact a responsible and balanced FDA reform bill.
  The one lesson I took away from that process is that, while some of 
the rules for drug approval in this country can be lengthy, they have 
been successful in ensuring that America's prescription drugs are safe 
and effective.
  We've worked hard to ensure we have safe pharmaceuticals in this 
country, and I don't know any American who would accept anything less 
than the safety we have today.
  Unfortunately, this amendment does not guarantee that those standards 
will remain as strong as they must be. That's because other countries 
have lower standards.
  In fact, a recent hearing in the House Commerce Committee clearly 
illustrated a number of lapses in safety inspection at facilities 
outside the United States.
  I'm concerned that even with ``importation restrictions'' we can't be 
as confident as we should be of the manufacturing standards used 
abroad.
  This amendment gives us no assurance about the conditions under which 
the products were packaged, stored, handled, or shipped.
  Consumers have no way to determine the potency of the individual 
units.
  We know there are these types of problems with imported drugs today, 
and I'm concerned that unless this amendment is implemented very 
carefully, we could magnify those problems.
  While I am pleased that the sponsors have made significant 
improvements from the House-passed amendment on drug reimportation, I'm 
still concerned that implementation could undermine our faith in the 
safety of all prescription drugs.
  Mr. President, I'm also concerned that there is no guarantee that 
consumers would reap the benefits that are being suggested.
  There is no requirement that the wholesaler or distributor pass the 
savings on to consumers.
  Today, each consumer today often pays a different price for a 
prescription drug depending upon whether or not they have insurance 
coverage.
  This amendment could simply enrich drug wholesalers at the expense of 
consumers.
  In fact, back in 1999 David Kessler, the former FDA Commissioner, 
made this point regarding the effect on the consumer when he said:

       . . . prices to ultimate consumers are generally not 
     lowered. . . . Rather, the profits go to the various 
     middlemen, here and abroad, while consumers bear the risk.

  Mr. President, the bottom line is that drug re-importation does not 
guarantee any savings for the consumer.
  Mr. President, I have heard many of my colleagues talk about the need 
for a prescription drug benefit for seniors to ensure affordable access 
to prescription drugs.
  If any of my colleagues think this amendment will meet this 
objective, they will be disappointed.
  This amendment will simply not provide affordable, continuous, 
comprehensive access to prescription drugs for Medicare beneficiaries.
  A prescription drug benefit is not just something to be ``tacked-on'' 
to Medicare. It has to be a fundamental change in how we provide health 
care to seniors and the disabled.
  Today, prescription drugs are the doctor's office visits of 20 years 
ago and that must be considered as we work on adding a prescription 
drug benefit.
  Mr. President, I do plan on supporting this amendment with the 
reservations I've mentioned.
  I am hopeful that the regulatory process can address some of these 
risks, and I believe this amendment will--at the least--address some of 
the issues of fairness that have been raised.
  I just hope that America's seniors are not fooled by this amendment.
  No one should claim that--with this amendment--we have addressed the 
issue of prescription drug costs for seniors.
  It is still a job we must undertake, and I hope that this amendment 
strengthens--rather than weakens--the resolve of the Senate to provide 
a prescription drug benefit through Medicare.
  Mr. JEFFORDS. Mr. President, how much time do I have remaining?
  The PRESIDING OFFICER. The Senator has 5 minutes.
  Mr. JEFFORDS. Mr. President, we have heard long arguments today about 
the bill. I think there is general agreement, however, that if it is 
safe and possible, we should allow our people in this country to be 
able to take advantage of international competition to bring the cost 
of pharmaceuticals down to a reasonable rate and to that which other 
people in this world are able to receive.

[[Page S7215]]

  Keep in mind, that is what the goal is. Right now, the bill requires 
the FDA to ``contain such additional safeguards as the Secretary may 
specify in order to ensure the protection of the public health of 
patients in the United States.''
  I would like to pose a question to the chairman on his amendment. The 
amendment requires that the section may not operate unless it poses 
``no risk.'' Am I correct in assuming that the author's intent is that 
there be ``no risk'' above that which prevails today?
  Mr. COCHRAN. Mr. President, to respond to the question of the 
distinguished Senator, I answer in the affirmative. Yes.
  Mr. JEFFORDS. Mr. President, I accept the amendment.
  Mr. COCHRAN. Mr. President, time has been used on this side.
  Does the Senator yield back his time?
  Mr. JEFFORDS. I yield the remainder of my time.
  Mr. COCHRAN. Mr. President, I ask for the yeas and nays on the 
Cochran amendment.
  The PRESIDING OFFICER. Is there a sufficient second?
  There is a sufficient second.
  The question is on agreeing to amendment No. 3927. The clerk will 
call the roll.
  The legislative clerk called the roll.
  Mr. REID. I announce that the Senator from Delaware (Mr. Biden) and 
the Senator from New Jersey (Mr. Torricelli) are necessarily absent.
  I also announce that the Senator from South Carolina (Mr. Hollings) 
is absent due to a death in the family.
  The PRESIDING OFFICER (Mr. Voinovich). Are there any other Senators 
in the Chamber who desire to vote?
  The result was announced--yeas 96, nays 0, as follows:

                      [Rollcall Vote No. 216 Leg.]

                                YEAS--96

     Abraham
     Akaka
     Allard
     Ashcroft
     Baucus
     Bayh
     Bennett
     Bingaman
     Bond
     Boxer
     Breaux
     Brownback
     Bryan
     Bunning
     Burns
     Byrd
     Campbell
     Chafee, L.
     Cleland
     Cochran
     Collins
     Conrad
     Craig
     Crapo
     Daschle
     DeWine
     Dodd
     Domenici
     Dorgan
     Durbin
     Edwards
     Enzi
     Feingold
     Feinstein
     Fitzgerald
     Frist
     Gorton
     Graham
     Gramm
     Grams
     Grassley
     Gregg
     Hagel
     Harkin
     Hatch
     Helms
     Hutchinson
     Hutchison
     Inhofe
     Inouye
     Jeffords
     Johnson
     Kennedy
     Kerrey
     Kerry
     Kohl
     Kyl
     Landrieu
     Lautenberg
     Leahy
     Levin
     Lieberman
     Lincoln
     Lott
     Lugar
     Mack
     McCain
     McConnell
     Mikulski
     Moynihan
     Murkowski
     Murray
     Nickles
     Reed
     Reid
     Robb
     Roberts
     Rockefeller
     Roth
     Santorum
     Sarbanes
     Schumer
     Sessions
     Shelby
     Smith (NH)
     Smith (OR)
     Snowe
     Specter
     Stevens
     Thomas
     Thompson
     Thurmond
     Voinovich
     Warner
     Wellstone
     Wyden

                             NOT VOTING--3

     Biden
     Hollings
     Torricelli
  The amendment (No. 3927) was agreed to.
  Mr. COCHRAN. Mr. President, I move to reconsider the vote.
  Mr. WELLSTONE. I move to lay that motion on the table.
  The motion to lay on the table was agreed to.
  The PRESIDING OFFICER. The question is on the first-degree amendment.
  Mr. JEFFORDS. Mr. President, have the yeas and nays been ordered?
  The PRESIDING OFFICER. They have not.
  Mr. JEFFORDS. Mr. President, I ask for the yeas and nays.
  The PRESIDING OFFICER. Is there a sufficient second?
  There is a sufficient second.
  The yeas and nays were ordered.
  Mr. JEFFORDS. Mr. President, I ask unanimous consent I have 20 
seconds to explain the amendment.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. JEFFORDS. The Jeffords amendment, as modified by the Cochran 
amendment----
  Mr. WELLSTONE. Mr. President, may we have order in the Chamber.
  Mr. BYRD. Mr. President, may we have order in the Chamber.
  The PRESIDING OFFICER. There will be order in the Chamber.
  The Senator from Vermont.
  Mr. BYRD. Mr. President, may we have order in the Chamber.
  The PRESIDING OFFICER. The Senate will suspend until there is order 
in the Chamber.
  The Senator from Vermont.
  Mr. JEFFORDS. The Jeffords amendment, as modified by the Cochran 
amendment, now states the bill requires the Food and Drug 
Administration----
  Mr. BYRD. Mr. President, we still do not have order. May the Senate 
be in order. May we have order.
  The PRESIDING OFFICER. The Senate will be order.
  The Senator from Vermont.
  Mr. BYRD. Mr. President, I insist that there be order in the Senate 
before the Senator from Vermont proceeds.
  I hope Senators will listen to the Chair. The Chair is entitled to 
that respect, and so is the Senator from Vermont.
  The PRESIDING OFFICER. The Senator from Vermont.
  Mr. JEFFORDS. Mr. President, on the critical provision, the bill now 
requires that the Food and Drug Administration's regulation contain 
such additional safeguards as the Secretary may specify in order to 
ensure the protection of the public health of patients in the United 
States so that it creates no risk above that which prevails today.
  I ask for a yes vote and I urge the question.
  Mr. BREAUX. Mr. President, is there any time in opposition to the 
amendment?
  The PRESIDING OFFICER. There is none.
  Mr. NICKLES. Mr. President, I ask unanimous consent the Senator from 
Louisiana be recognized.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. BREAUX. Thank you very much.
  I just make the point, we have a Food and Drug Administration and 
Health and Human Services Department that already is overburdened. The 
amendment as is currently pending is going to require them to set up a 
program in 150 countries around the world to ensure that every 
warehouse, every manufacturer, every person who handles every drug in 
their country that is coming to this country be certified as healthy. 
They cannot do that. That is an impossible burden.
  This should not be passed. I think we should vote no.
  The PRESIDING OFFICER. The question is on agreeing to amendment No. 
3925, as amended. The yeas and nays have been ordered. The clerk will 
call the roll.
  The bill clerk called the roll.
  Mr. NICKLES. I announce that the Senator from Mississippi (Mr. Lott) 
is necessarily absent.
  Mr. REID. I announce that the Senator from Delaware (Mr. Biden) and 
the Senator from New Jersey (Mr. Torricelli) are necessarily absent.
  I also announce that the Senator from South Carolina (Mr. Hollings) 
is absent due to death in family.
  The PRESIDING OFFICER. Are there any other Senators in the Chamber 
who desire to vote?--
  The result was announced--yeas 74, nays 21, as follows:

                      [Rollcall Vote No. 217 Leg.]

                                YEAS--74

     Abraham
     Akaka
     Allard
     Ashcroft
     Baucus
     Bingaman
     Boxer
     Brownback
     Bryan
     Burns
     Byrd
     Campbell
     Chafee, L.
     Cleland
     Collins
     Conrad
     Craig
     Crapo
     Daschle
     DeWine
     Dodd
     Domenici
     Dorgan
     Durbin
     Edwards
     Feingold
     Feinstein
     Fitzgerald
     Gorton
     Graham
     Grams
     Grassley
     Gregg
     Harkin
     Inouye
     Jeffords
     Johnson
     Kennedy
     Kerrey
     Kerry
     Kohl
     Kyl
     Landrieu
     Lautenberg
     Leahy
     Levin
     Lieberman
     Lincoln
     Lugar
     McCain
     Mikulski
     Moynihan
     Murkowski
     Murray
     Reed
     Reid
     Robb
     Roberts
     Rockefeller
     Roth
     Sarbanes
     Schumer
     Sessions
     Shelby
     Smith (NH)
     Smith (OR)
     Snowe
     Specter
     Stevens
     Thomas
     Thurmond
     Warner
     Wellstone
     Wyden

                                NAYS--21

     Bayh
     Bennett
     Bond
     Breaux
     Bunning
     Cochran
     Enzi
     Frist
     Gramm
     Hagel
     Hatch
     Helms
     Hutchinson
     Hutchison
     Inhofe
     Mack
     McConnell
     Nickles
     Santorum
     Thompson
     Voinovich

                             NOT VOTING--4

     Biden
     Hollings
     Lott
     Torricelli
  The amendment (No. 3925), as amended, was agreed to.

[[Page S7216]]

  Mr. JEFFORDS. I move to reconsider the vote.
  Mr. COCHRAN. I move to lay that motion on the table.
  The motion to lay on the table was agreed to.


      notice of intent to move to suspend paragraph 4 of rule xvi

  Mr. ASHCROFT. Mr. President, in accordance with Rule V of the 
Standing Rules of the Senate, I hereby give notice in writing that it 
is my intention to move to suspend paragraph 4 of rule XVI for the 
purpose of considering title IV of H.R. 4461, making appropriations for 
Agriculture, Rural Development, Food and Drug Administration and 
Related Agencies programs for the fiscal year ending September 30, 
2001, and for other purposes, as amended on July 18, 2000, by unanimous 
consent. (The UC is as follows: That all after the enacting clause of 
H.R. 4461 be stricken and the text of S. 2536 with a modified division 
B be inserted in lieu thereof, and that the new text be treated as 
original text for the purpose of further amendment, and that no point 
of order be waived.)
  At the request of the Senator from Nevada (Mr. Reid) the following 
statement was ordered to be printed in the Record.
 Mr. BIDEN. Mr. President, because of the sudden death of the 
former mayor of Wilmington, Delaware, who was a close friend of mine, I 
had to return to Delaware today directly after the funeral for Senator 
Pastore. Consequently, I was necessarily absent for the roll-call votes 
on Senate amendments No. 3925 and No. 3927 to the Agriculture 
Appropriations bill. Had I been present, I would have voted yes on both 
amendments.
  The high cost of pharmaceuticals in this country relative to the cost 
of the same drugs in nearby countries, such as Canada and Mexico, is a 
major irritant to many seniors struggling to make ends meet in the face 
of fixed incomes and high expenses for medications. Reimportation of 
drugs from foreign countries, although it may lower prescription drug 
costs for Americans, should not be permitted if it will jeopardize the 
health of this country's citizens. The potential effect of these 
provisions to reduce pharmaceutical research and development in the 
U.S. is an unknown but important factor. The controversy over these 
provisions serves to emphasize once again the need to expand Medicare 
to provide prescription drug insurance coverage for seniors and the 
disabled.
  The PRESIDING OFFICER. The Senator from Alabama.
  Mr. SHELBY. Mr. President, I ask unanimous consent to speak as in 
morning business for 5 minutes.
  The PRESIDING OFFICER. Without objection, it is so ordered.

                          ____________________