[Congressional Record Volume 146, Number 96 (Friday, July 21, 2000)]
[Extensions of Remarks]
[Page E1299]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




LET'S REQUEST THE INTERNATIONAL TRADE COMMISSION TO STUDY HOW HIGH DRUG 
                      PRICES HURT THE U.S. ECONOMY

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                        HON. FORTNEY PETE STARK

                             of california

                    in the house of representatives

                        Thursday, July 20, 2000

  Mr. STARK. Mr. Speaker, the Chairman of the Ways and Means Committee 
recently wrote to the U.S. International Trade Commission requesting a 
section 332 study relating to the pricing of prescription drugs by 
certain U.S. trading partners. The questions asked--if one reads 
between the lines--seem to be designed by the pharmaceutical lobby to 
study whether countries that control drug prices are being unfair to 
the drug companies; whether such price controls have caused U.S. 
prescription medication prices to be higher than they would otherwise 
have been. Implicit in the phrasing of the questions, is the assumption 
that other countries should be paying more.
  Other sources of information suggest another approach. Perhaps 
Americans should be paying less.
  The pharmaceutical industry is in an enviable financial position. 
Drug firms enjoy, on average, three times the profitability (28 
percent) of the other 36 industry groups in the Fortune 500. While 
maintaining the present level of research and development, they were 
able to invest, last year, about $14 billion in direct-to-consumer 
advertising, public relations, lobbying and promotion to doctors. 
Taxpayers paid more than 30 percent of the costs of R&D through 
government grants, in addition to the millions in benefits from the 
government from R&D tax credits. The industry reaps huge benefits, 
while poor Americans choose between needed medications and paying the 
rent or for food; or they cut prescriptions in half to try and prolong 
their pharmaceutical supplies.
  The U.S. spends far more than any other country on health care (14 
percent of GDP) yet it ranks 37th in the world in the quality of health 
systems; we rank in the lowest 25 percent of industrialized nation's in 
life-expectancy and infant mortality. Our system is inefficient and 
wasteful. American health care has an over-emphasis on state-of-the-art 
cure instead of preventive care; relatively, we are overwhelmed by 
MRIs, CAT scanners and high priced drugs. Why have drug costs increased 
at more than twice the general inflation rate, leading to prescription 
drug spending growing at twice the rate of all other health 
expenditures, accounting for 10 percent of total health expenditures?
  Perhaps, the chairman's requested study could be extended to include 
the increased productivity our economy might enjoy if drug prices were 
lower and the resources used instead on repairing the country's 
infrastructure, on education or even to lower taxes. How does the high 
cost of health care impact our trade balance? How much of the ``extra'' 
cost of an American car is attributable to the inflated cost of 
providing health care to workers, driven by such factors as rapidly 
rising pharmaceutical prices?
  We may be able to coerce our trading partners into allowing prices to 
be raised for their citizens. However, I doubt that Americans will be 
overjoyed to discover that the efforts of the International Trade 
Commission resulted in poor Mexicans being deprived of their life-
saving medications, to further enrich the pharmaceutical industry 
(which will not be passed on to American consumers, in any case). The 
answer is obvious, we should be concentrating not on forcing others to 
pay more, but on convincing the prescription drug manufacturers to be a 
little less aggressive in maximizing profits here at home.

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