[Congressional Record Volume 146, Number 112 (Wednesday, September 20, 2000)]
[Senate]
[Pages S8781-S8782]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                            MEDICARE REFORM

  Mr. GRAHAM. Mr. President, for the past 3 days I have been discussing 
the need to reform Medicare and the fundamental reform of shifting 
Medicare from being a program that focuses on sickness and dealing with 
disease and the consequences of accidents after they happen, to a 
health care system that focuses on wellness and maintaining the highest 
possible quality of life. I pointed out that an essential ingredient of 
any wellness strategy is prescription drugs. Prescription drugs are a 
modality in virtually every form of therapy which is designed to 
reverse disease conditions or to manage those conditions.
  Yesterday, I talked about the fact that the prescription drug benefit 
for senior Americans should be provided through the Medicare program. 
It is the program which the seniors themselves have indicated over and 
over that they believe in, they trust, they have confidence in, and 
that they would like it to be the program through which this additional 
benefit would be added to all the other benefits that are available 
through Medicare. They would also like prescription drugs to be 
available through Medicare.
  In the context of the discussion of our colleague from California, I 
must point out that while the seniors are saying they want to have a 
prescription drug benefit administered through Medicare, the Governors 
of the States are saying they do not want to have the responsibility 
for administering a prescription drug benefit; it is not our job nor 
should it be our financial responsibility to be involved in 
prescription drugs for a group of Americans who have since 1965 been 
covered by a national program and not a State-by-State program.
  I would like to talk about the issue of cost and which alternative 
before us has the best opportunity to serve not only the interests of 
the 39 million seniors but all Americans in terms of injecting some 
control over an out-of-control, spiraling increase in the cost of 
pharmaceutical drugs.
  Let me use as an illustration what has happened to a constituent of 
mine, Mrs. Elaine Kett. Mrs. Kett is a 77-year-old widow from Vero 
Beach, FL. She lives on a fixed income of approximately $20,000 a year, 
which means that her income is above the level that would provide 
benefits for her under the kind of plan that my Teutonic cousin from 
Texas has indicated he would support.
  Like many of my constituents, Mrs. Kett sent me a list of all the 
prescription drugs that her physician has indicated are medically 
necessary for her wellness and quality of life. These are the lists of 
Mrs. Elaine Kett's drugs. As you will see when you add up all the costs 
of the drugs which she used in 1999, the total cost was $10,053.36. 
Mrs. Kett has already said her income is $20,000 a year. Fifty cents 
out of every dollar of Mrs. Kett's income was consumed in paying for 
the prescription drugs necessary for her life, wellness, and quality.
  In her letter, Mrs. Kett writes:

       This is killing me because my income is just a bit more 
     than double the cost of these drugs.

  Then she adds a postscript.

       P.S.--Someone said these are the golden years, only the 
     gold is going into someone else's pocket.

  There are millions of Americans just like Mrs. Kett. Passing a real 
prescription drug benefit to cover Mrs. Kett and all Medicare 
beneficiaries should be a priority for this session of the Congress.

  Today, we will examine one of the key reasons why so many seniors are 
unable to purchase the medications which their physicians have said are 
medically necessary. The reason is cost.
  Prescription drug prices are growing so quickly that seniors and, I 
would argue, most Americans cannot keep up. In July, Families USA 
released a report that concluded:

       The growing reliance on prescription drugs by the elderly 
     and the mounting costs of those drugs is a crisis for 
     America's senior citizens.


[[Page S8782]]


  The elderly already pay a significant portion of prescription drugs 
expenditures out of their pockets. Today, many seniors are without any 
prescription drug coverage.
  The traditional ways in which seniors have been covered for 
prescription drugs--which have included employers who provided those 
benefits to their retirees through the Medicaid program if they were 
medically indigent or through Medigap policies if they could afford the 
often exorbitant costs, and through HMOs which provided prescription 
drugs as a benefit--are constricting in terms of who they will cover 
and what they will cover.
  So every week, more seniors are placed in the position of either 
having to cover their entire prescription drug costs or a larger 
proportion of that cost.
  Today, almost one out of three seniors lacks any prescription drug 
coverage. Over 50 percent of Medicare beneficiaries lack coverage at 
some point during any given year. For those fortunate enough to have 
prescription drug coverage, the coverage is diminishing.
  Thus, unless seniors are assured of prescription drug coverage 
through Medicare, many will find that needed medications are 
unavailable.
  If it is true that the lack of prescription drug coverage has reached 
a crisis level for seniors, then why have we not yet enacted a real, 
affordable, and comprehensive prescription drug benefit under Medicare?
  The answer, I suspect, includes the fact that the pharmaceutical 
companies may have erected an effective blockade to the enactment of a 
prescription drug benefit through Medicare.
  In fact, the watchdog group, ``Public Citizen,'' reports that drug 
companies spent $83.6 million in lobbying costs this year alone.
  I would suspect from looking at the television ads run by the 
industry that much of those moneys have been spent on lobbying efforts 
against the passage of a universal, affordable Medicare prescription 
drug benefit.
  Why do the pharmaceutical companies cringe at a Medicare prescription 
drug proposal? It is because they know the power of the marketplace. As 
long as 39 million senior Americans have to deal, one by one, and as 
long as almost one-third of those have to deal without any assistance 
from any other source in the purchase of their prescription drugs, the 
market will not function. There is no effective purchaser-seller 
relationship.
  What we do know is that when there is an effective market, prices can 
be restrained. We know it through the Veterans' Administration, which 
is able to purchase the exact same prescription drugs Mrs. Kett has 
been purchasing, but at substantially lower prices because they are 
using the power of a large purchaser for the benefit of American 
veterans. State Medicaid programs know this because they are using the 
power of their large purchases for the benefit of the million medically 
indigent within their States. HMOs know the power of the marketplace 
because they purchase their prescription drugs on a wholesale basis and 
then share those benefits with HMO beneficiaries.
  With or without the support of the pharmaceutical companies, we must 
seek relief for seniors who are the victims of this crisis. The cost of 
prescription drugs is skyrocketing. We owe it to our seniors to examine 
the reasons and then to act.
  In 1999, the prices of the 50 prescription drugs most used by older 
Americans increased 2 to 3 times the rate of overall inflation. In 1 
year, the 50 most used prescription drugs by American seniors increased 
by 2 to 3 times the rate of overall inflation.
  The numbers speak for themselves: Lorazepam, used to treat conditions 
including anxiety, convulsions, and Parkinson's disease, rose by 409 
percent, 27 times the rate of inflation, from January 1994 through 
January 2000. Imdur, a drug used to treat angina, rose eight times the 
rate of inflation. And Lanoxin, used to treat congestive heart failure, 
rose at six times the rate of inflation.
  Not only are the prices of drugs escalating at a rapid pace in the 
United States, but prices charged to Americans are also flat out 
incomprehensible.
  We have all heard that prices of prescription drugs in other 
countries--including our neighbors, Canada and Mexico--are generally 
substantially lower than prices in the United States. The heartburn 
medicine Prilosec, the world's best seller, the largest selling 
prescription drug, costs $3.30 per pill in the United States. What is 
the price in Canada? One dollar and forty-seven cents. The allergy drug 
Claritin costs almost $2 a pill in the United States. What does it cost 
elsewhere? Forty-one cents in Great Britain and 48 cents in Australia. 
We are talking about exactly the same drug produced by the same 
manufacturer.
  A constituent from Springhill, FL, called my office yesterday 
demanding to know why drug prices are so much lower in Mexico and 
Canada than they are in his hometown. I can't answer that question. 
Frankly, I don't think anyone can answer that question. Pharmaceutical 
manufacturers have been the top-ranked U.S. industry for profits as a 
percentage of revenue throughout the past decade. After-tax profits for 
the pharmaceutical industry average 17 percent of sales. By way of 
comparison, the average for all industries was 5 percent. The effective 
tax rate for the pharmaceutical industry is 16 percent. The effective 
tax rate for all manufacturing companies is 23 percent; 31 percent for 
wholesale and retail trade, financial services, and insurance and real 
estate, and an average of 27 percent for all industry.

  While millions of seniors are sacrificing their last dollar, as is 
Mrs. Kett, to pay for medication, the pharmaceutical manufacturers are 
taking in higher profits than any other industry in the United States 
of America.
  Money does not take precedence over health. Profits cannot be the top 
priority when public health is compromised. We have that responsibility 
as the representative of those Americans to take action.
  One of the things we ought to do in addition to adding prescription 
drugs as a part of Medicaid is to assure public access to true drug 
prices as opposed to the mythic average wholesale price. This would be 
one step to encourage accountability among drug manufacturers. Rapidly 
escalating prices and inequitable prices across borders warrant an 
investigation and consideration of prescription drug costs containment.
  I submit that by having Medicare as a new force in the marketplace, 
not through regulation or cost control but by using the principles of 
Adam Smith in a capitalist society, that with an effective purchaser of 
drugs for our 39 million seniors, we can see a substantial reduction in 
the price of pharmaceuticals for them, and all Americans will 
indirectly benefit. As public servants, we have a fundamental 
responsibility to protect all of our citizens.
  We all recognize that millions of seniors in America are struggling 
to pay for prescription drugs, so it seems clear our goal in the Senate 
should be to assure that our prescription drug benefit for seniors and 
people with disabilities is included in Medicare.
  Our proposal is that Medicare would utilize an intermediary referred 
to as a ``pharmacy benefit manager.'' There would be two or more of 
these managers in each region of the country. They would be the ones 
responsible for negotiating with the pharmaceutical companies and then 
passing on those benefits to the ultimate senior user. We cannot 
achieve these kinds of benefits through the fractured plan that relies 
upon private insurance. We cannot assure these benefits by a plan which 
is fractured through 50 States. We can only assure to our seniors the 
benefits of effective control by the marketplace if we place this plan 
within the Medicare program.
  I appreciate the opportunity to share these remarks and look forward 
to a further discussion of prescription drug prices that we face in 
this Nation.
  The PRESIDING OFFICER (Mr. Hutchinson). The Senator from North 
Dakota.

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