[Congressional Record Volume 147, Number 48 (Wednesday, April 4, 2001)]
[Senate]
[Pages S3451-S3452]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. JOHNSON (for himself and Mr. Daschle):
  S. 699. A bill to provide for substantial reductions in the price of 
prescription drugs for Medicare beneficiaries; to the Committee on 
Finance.
  Mr. JOHNSON. Mr. President, I am pleased to introduce the 
Prescription Drug Fairness for Seniors Act of 2001, legislation that 
addresses the critical issue facing our older Americans--the cost of 
their prescription drugs. Studies have shown that older Americans spend 
almost three times as much of their income on health care than those 
under the age of 65, and more than three-quarters of Americans aged 65 
and over are taking prescription drugs. Study after study has shown 
that seniors and others who buy their own prescription drugs, are 
forced to pay over twice as much for their drugs as are the drug 
manufactures' most favored customers, such as the federal government 
and large HMOs. Even more alarming is the fact that consumers in the 
United States pay far more for their prescription drugs than do 
citizens of other developed nations, resulting in price discrimination 
against millions of Americans. U.S. consumers are footing the bill for 
drug manufacturer's skyrocketing profit margins year in and year out. 
This is wrong and unfair.
  The Prescription Drug Fairness for Seniors Act will protect senior 
citizens and disabled individuals from drug price discrimination and 
make prescription drugs available to Medicare beneficiaries at 
substantially reduced prices. The legislation achieves these goals by 
allowing pharmacies that serve Medicare beneficiaries to purchase 
prescription drugs at the drugs' low ``average foreign price.'' Under 
the bill, the ``average foreign price'' means the average price that 
the manufacturer realizes on drugs sold in Canada, France, Germany, 
Italy, Japan, and the United Kingdom. Last year, the ``reimportation'' 
bill had broad bipartisan support. Estimated to reduce prescription 
drug prices for seniors by over 40 percent, this bill will help those 
seniors and disabled individuals who often times have to make 
devastating choices between buying food or medications. Choices that no 
human being should have to make.
  Research and development of new drug therapies is an important and 
necessary tool towards improving a persons quality of life. But due to 
the high price tag that often accompanies the latest drug therapies, 
seniors are often left without access to these new therapies, and 
ultimately, in far too many instances, without access to medication at 
all. This legislation is an important step towards restoring the access 
to affordable medications for all Medicare beneficiaries.
  While this may not be the magic bullet that meets all of the long 
term needs of providing Medicare prescription drug coverage, it does 
provide a mechanism for immediate relief from rising drug costs. 
Working together, reaching across the aisle, we can use this time of 
unparalleled prosperity to do the right thing by our seniors. We should 
do it this year for their sake, and for the sake of the future of 
Medicare.
  I look forward to working on this important issue in the months to 
come and hope that Congress will work swiftly in a bipartisan manner to 
enact this legislation that will benefit millions of senior citizens 
and disabled individuals across our nation.
  I ask unanimous consent that the text of this bill be printed in the 
Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                 S. 699

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Prescription Drug Fairness 
     for Seniors Act of 2001''.

     SEC. 2. FINDINGS AND PURPOSES.

       (a) Findings.--Congress finds the following:
       (1) Manufacturers of prescription drugs engage in price 
     discrimination practices that compel many older Americans to 
     pay substantially more for prescription drugs than consumers 
     in foreign nations and the drug manufacturers' most favored 
     customers in the United States, such as health insurers, 
     health maintenance organizations, and the Federal Government.
       (2) Older Americans who buy their own prescription drugs 
     often pay twice as much for

[[Page S3452]]

     prescription drugs as consumers in foreign nations and the 
     drug manufacturers' most favored customers in the United 
     States. In some cases, older Americans pay 10 times more for 
     prescription drugs than such customers.
       (3) The discriminatory pricing by major drug manufacturers 
     sustains their high profits (for example, $27,300,000,000 in 
     1999), but causes financial hardship and impairs the health 
     and well-being of millions of older Americans. Many older 
     Americans are forced to choose between buying their food and 
     buying their medicines.
       (4) Foreign nations and federally funded health care 
     programs in the United States use purchasing power to obtain 
     prescription drugs at low prices. Medicare beneficiaries are 
     denied this benefit and cannot obtain their prescription 
     drugs at the lower prices available to such nations and 
     programs.
       (5) Implementation of the policy set forth in this Act is 
     estimated to reduce prescription drug prices for many 
     medicare beneficiaries by an average of 40 percent.
       (6) In addition to substantially lowering the costs of 
     prescription drugs for older Americans, implementation of the 
     policy set forth in this Act will significantly improve the 
     health and well-being of older Americans and lower the costs 
     to the Federal taxpayer of the medicare program.
       (7) Older Americans who are terminally ill and receiving 
     hospice care services represent some of the most vulnerable 
     individuals in our Nation. Making prescription drugs 
     available to medicare beneficiaries under the care of 
     medicare-certified hospices will assist in extending the 
     benefits of lower prescription drug prices to those most 
     vulnerable and in need.
       (b) Purpose.--The purpose of this Act is to protect 
     medicare beneficiaries from discriminatory pricing by drug 
     manufacturers and to make prescription drugs available to 
     medicare beneficiaries at substantially reduced prices.

     SEC. 3. PARTICIPATING MANUFACTURERS.

       (a) In General.--Each participating manufacturer of a 
     covered outpatient drug shall make available for purchase by 
     each pharmacy such covered outpatient drug in the amount 
     described in subsection (b) at the price described in 
     subsection (c).
       (b) Description of Amount of Drugs.--The amount of a 
     covered outpatient drug that a participating manufacturer 
     shall make available for purchase by a pharmacy is an amount 
     equal to the aggregate amount of the covered outpatient drug 
     sold or distributed by the pharmacy to medicare 
     beneficiaries.
       (c) Description of Price.--The price at which a 
     participating manufacturer shall make a covered outpatient 
     drug available for purchase by a pharmacy is a price no 
     greater than the manufacturer's average foreign price.
       (d) Enforcement.--The United States shall debar a 
     manufacturer of drugs or biologicals that does not comply 
     with the provisions of this Act.

     SEC. 4. SPECIAL PROVISION WITH RESPECT TO HOSPICE PROGRAMS.

       For purposes of determining the amount of a covered 
     outpatient drug that a participating manufacturer shall make 
     available for purchase by a pharmacy under section 3, there 
     shall be included in the calculation of such amount the 
     amount of the covered outpatient drug sold or distributed by 
     a pharmacy to a hospice program. In calculating such amount, 
     only amounts of the covered outpatient drug furnished to a 
     medicare beneficiary enrolled in the hospice program shall be 
     included.

     SEC. 5. ADMINISTRATION.

       The Secretary shall issue such regulations as may be 
     necessary to implement this Act.

     SEC. 6. REPORTS TO CONGRESS REGARDING EFFECTIVENESS OF ACT.

       (a) In General.--Not later than 2 years after the date of 
     enactment of this Act, and annually thereafter, the Secretary 
     shall report to Congress regarding the effectiveness of this 
     Act in--
       (1) protecting medicare beneficiaries from discriminatory 
     pricing by drug manufacturers; and
       (2) making prescription drugs available to medicare 
     beneficiaries at substantially reduced prices.
       (b) Consultation.--In preparing such reports, the Secretary 
     shall consult with public health experts, affected 
     industries, organizations representing consumers and older 
     Americans, and other interested persons.
       (c) Recommendations.--The Secretary shall include in such 
     reports any recommendations the Secretary considers 
     appropriate for changes in this Act to further reduce the 
     cost of covered outpatient drugs to medicare beneficiaries.

     SEC. 7. DEFINITIONS.

       In this Act:
       (1) Average foreign price.--
       (A) In general.--The term ``average foreign price'' means, 
     with respect to a covered outpatient drug, the average price 
     that the manufacturer of the drug realizes on the sale of 
     drugs with the same active ingredient or ingredients that are 
     consumed in covered foreign nations, taking into account--
       (i) any rebate, contract term or condition, or other 
     arrangement (whether with the purchaser or other persons) 
     that has the effect of reducing the amount realized by the 
     manufacturer on the sale of the drugs; and
       (ii) adjustments for any differences in dosage, 
     formulation, or other relevant characteristics of the drugs.
       (B) Exempt transactions.--The Secretary may, by regulation, 
     exempt from the calculation of the average foreign price of a 
     drug those prices realized by a manufacturer in transactions 
     that are entered into for charitable purposes, for research 
     purposes, or under other unusual circumstances, if the 
     Secretary determines that the exemption is in the public 
     interest and is consistent with the purposes of this Act.
       (2) Covered foreign nation.--The term ``covered foreign 
     nation'' means Canada, France, Germany, Italy, Japan, and the 
     United Kingdom.
       (3) Covered outpatient drug.--The term ``covered outpatient 
     drug'' has the meaning given that term in section 1927(k)(2) 
     of the Social Security Act (42 U.S.C. 1396r-8(k)(2)).
       (4) Debar.--The term ``debar'' means to exclude, pursuant 
     to established administrative procedures, from Government 
     contracting and subcontracting for a specified period of time 
     commensurate with the seriousness of the failure or offense 
     or the inadequacy of performance.
       (5) Hospice program.--The term ``hospice program'' has the 
     meaning given that term under section 1861(dd)(2) of the 
     Social Security Act (42 U.S.C. 1395x(dd)(2)).
       (6) Medicare beneficiary.--The term ``medicare 
     beneficiary'' means an individual entitled to benefits under 
     part A of title XVIII of the Social Security Act or enrolled 
     under part B of such title, or both.
       (7) Participating manufacturer.--The term ``participating 
     manufacturer'' means any manufacturer of drugs or biologicals 
     that, on or after the date of enactment of this Act, enters 
     into a contract or agreement with the United States for the 
     sale or distribution of covered outpatient drugs to the 
     United States.
       (8) Secretary.--The term ``Secretary'' means the Secretary 
     of Health and Human Services.

     SEC. 8. EFFECTIVE DATE.

       The Secretary shall implement this Act as expeditiously as 
     practicable and in a manner consistent with the obligations 
     of the United States.
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