[Congressional Record Volume 147, Number 61 (Monday, May 7, 2001)]
[Senate]
[Pages S4422-S4425]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. DODD (for himself and Mr. DeWine):
  S. 838. A bill to amend the Federal Food, Drug, and Cosmetic Act to 
improve the safety and efficacy of pharmaceuticals for children; to the 
Committee on Health, Education, Labor, and Pensions.
  Mr. DODD. Mr. President, I rise today to join my colleague, Senator 
DeWine in introducing the Best Pharmaceuticals for Children Act. I hope 
that this will be the continuation of our long-term efforts to improve 
the health of America's children.
  According to the American Academy of Pediatrics, only 20 percent of 
the drugs on the market have been tested and labeled specifically for 
their safety and effectiveness in children. Children are simply not 
smaller version of adults, their bodies actually react to drugs 
differently. The absence of pediatric labeling poses significant risks 
for children, without adequate information about how a drug works in 
children of different ages and sizes, children are more likely to be 
under- or over-dosed or to experience dangerous side effects.
  We have labels on the food children eat, on the shows they watch and 
the music they listen to. Why should we have less information when it 
comes to the medicine they take? And while ``off-labeling prescribing'' 
is neither illegal nor improper, forcing our children to use 
medications without adequate safety information, is a lot like playing 
Russian roulette with their health.
  That's why four years ago, Senator DeWine and I introduced 
legislation to take the guess work out of children's medicine. This 
legislation, the Better Pharmaceuticals for Children Act, provided a 
market incentive for drug companies to test their products for use in 
children or to create kid-friendly drug formulations. And, just a few 
years later, we've made extraordinary strides in closing the dangerous 
gap in knowledge.
  In the 3 years since the initiative was launched, over 300 pediatric 
drug studies have gotten underway, compared to the 11 studies conducted 
in the 6 years prior to the legislation. New pediatric information has 
been or will soon be added to the labels of 28 products, including 
drugs for AIDS, diabetes, mental health, and asthma. Not only has the 
initiative led to significant advances in pediatric medicines, in the 
long run it will also save the nation money by reducing hospital stays, 
doctors' visits and parents' taking time off of work.
  But while tremendous progress has been made, we still have a long way 
to go to make sure that children aren't an afterthought when it comes 
to pharmaceutical research. Hundreds of drugs are on the market today 
that are used in children, but still have not been tested for pediatric 
needs. Yet, unless reauthorized, the pediatric testing incentive, and 
the explosion of research it has prompted, will expire on January 1, 
2002.
  In addition to ensuring that critical pediatric drug studies 
continue, the Best Pharmaceuticals for Children Act will also ensure 
that the new safety information from pediatric studies is promptly 
added to drug labels, require drug manufacturers to pay user fees to 
participate in the program, and require the Food and Drug 
Administration to quickly disseminate information gathered from 
pediatric studies to pediatricians and parents. It will also fund 
studies of older, ``off-patent'' drugs which are not eligible for the 
existing pediatric testing incentive, and create a new Office of 
Pediatric Therapeutics at the Food and Drug Administration to 
coordinate activities related to children.

  The bill is endorsed by the American Academy of Pediatrics, the 
Elizabeth Glaser Pediatric AIDS Foundation, the National Association of 
Children's Hospitals, the American Society for Clinical Pharmacology 
and Therapeutics, and the Allergy and Asthma Network Mother of 
Asthmatics.
  I call on my colleagues to move quickly to enact the Best 
Pharmaceuticals for Children Act, commonsense legislation that will 
ensure that our children received only the very best of what medicine 
has to offer.
  I ask unanimous consent that the text of the bill be printed in the 
Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                 S. 838

       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 ``Best Pharmaceuticals for 
     Children Act''.

[[Page S4423]]

     SEC. 2. PEDIATRIC STUDIES OF ALREADY-MARKETED DRUGS.

       Section 505A of the Federal Food, Drug, and Cosmetic Act 
     (21 U.S.C. 355a) is amended--
       (1) by striking subsection (b); and
       (2) in subsection (c)--
       (A) by inserting after ``the Secretary'' the following: 
     ``determines that information relating to the use of an 
     approved drug in the pediatric population may produce health 
     benefits in that population and''; and
       (B) by striking ``concerning a drug identified in the list 
     described in subsection (b)''.

     SEC. 3. RESEARCH FUND FOR THE STUDY OF OFF-PATENT DRUGS.

       Part B of title IV of the Public Health Service Act (42 
     U.S.C. 284 et seq.) is amended--
       (1) by redesignating the second section 409C, relating to 
     clinical research (42 U.S.C. 284k), as section 409G;
       (2) by redesignating the second section 409D, relating to 
     enhancement awards (42 U.S.C. 284l), as section 409H; and
       (3) by adding at the end the following:

     ``SEC. 409I. PROGRAM FOR PEDIATRIC STUDIES OF OFF-PATENT 
                   DRUGS.

       ``(a) List of Off-Patent Drugs for Which Pediatric Studies 
     are Needed.--
       ``(1) In general.--Not later than 1 year after the date of 
     enactment of this section, the Secretary, acting through the 
     Director of the National Institutes of Health and in 
     consultation with the Commissioner of Food and Drugs and 
     experts in pediatric research (including United States 
     Pharmacopoeia), shall develop, prioritize, and publish a list 
     of approved drugs for which--
       ``(A) there is no patent or market exclusivity protection; 
     and
       ``(B) additional studies are needed to assess the safety 
     and effectiveness of the use of the drug in the pediatric 
     population.
       ``(2) Consideration of available information.--In 
     developing the list under paragraph (1), the Secretary shall 
     consider, for each drug on the list--
       ``(A) the availability of information concerning the safe 
     and effective use of the drug in the pediatric population;
       ``(B) whether additional information is needed; and
       ``(C) whether new pediatric studies concerning the drug may 
     produce health benefits in the pediatric population.
       ``(b) Contracts for Pediatric Studies.--The Secretary shall 
     award contracts to entities that have the expertise to 
     conduct pediatric clinical trials (including qualified 
     universities, hospitals, laboratories, contract research 
     organizations, federally funded programs such as pediatric 
     pharmacology research units, other public or private 
     institutions, or individuals) to enable the entities to 
     conduct pediatric studies concerning one or more drugs 
     identified in the list described in subsection (a).
       ``(c) Process for Contracts and Labeling Changes.--
       ``(1) Written request to holders of approved applications 
     for off-patent drugs.--
       ``(A) In general.--The Commissioner of Food and Drugs, in 
     consultation with the Director of National Institutes of 
     Health, may issue a written request for pediatric studies 
     concerning a drug identified in the list described in 
     subsection (a) to all holders of an approved application for 
     the drug under section 505 of the Federal Food, Drug, and 
     Cosmetic Act. Such a request shall be made in accordance with 
     section 505A of the Federal Food, Drug, and Cosmetic Act.
       ``(B) Publication of request.--If the Commissioner of Food 
     and Drugs does not receive a response to a written request 
     issued under subparagraph (A) within 30 days of the date on 
     which a request was issued, the Secretary, acting through the 
     Director of National Institutes of Health, shall publish a 
     request for contract proposals to conduct the pediatric 
     studies described in the written request.
       ``(2) Contracts.--A contract under this section may be 
     awarded only if a proposal for the contract is submitted to 
     the Secretary in such form and manner, and containing such 
     agreements, assurances, and information as the Secretary 
     determines to be necessary to carry out this section.
       ``(3) Reporting of studies.--
       ``(A) Upon completion of a pediatric study in accordance 
     with a contract awarded under this section, a report 
     concerning the study shall be submitted to the Director of 
     National Institutes of Health and the Commissioner of Food 
     and Drugs. The report shall include all data generated in 
     connection with the study.
       ``(B) Availability of reports.--Each report submitted under 
     subparagraph (A) shall be considered to be in the public 
     domain, and shall be assigned a docket number by the 
     Commissioner of Food and Drugs. An interested person may 
     submit written comments concerning such pediatric studies to 
     the Commissioner of Food and Drugs, and the written comments 
     shall become part of the docket file with respect to each the 
     drug.
       ``(C) Action by commissioner.--The Commissioner of Food and 
     Drugs shall take appropriate action in response to the 
     reports submitted under subparagraph (A) in accordance with 
     paragraph (4).
       ``(4) Request for labeling changes.--During the 180-day 
     period after the date on which a report is submitted under 
     paragraph (3)(A), the Commissioner of Food and Drugs shall--
       ``(A) review the report and such other data as are 
     available concerning the safe and effective use in the 
     pediatric population of the drug studied; and
       ``(B) negotiate with the holders of approved applications 
     for the drug studied for any labeling changes that the 
     Commissioner of Food and Drugs determines to be appropriate 
     and requests the holders to make; and
       ``(C)(i) place in the public docket file a copy of the 
     report and of any requested labeling changes; and
       ``(ii) publish in the Federal Register a summary of the 
     report and a copy of any requested labeling changes.
       ``(5) Dispute resolution.--If, not later than the end of 
     the 180-day period specified in paragraph (4), the holder of 
     an approved application for the drug involved does not agree 
     to any labeling change requested by the Commissioner of Food 
     and Drugs under that paragraph--
       ``(A) the Commissioner of Food and Drugs shall immediately 
     refer the request to the Pediatric Advisory Subcommittee of 
     the Anti-Infective Drugs Advisory Committee; and
       ``(B) not later than 60 days after receiving the referral, 
     the Subcommittee shall--
       ``(i) review the available information on the safe and 
     effective use of the drug in the pediatric population, 
     including study reports submitted under this section; and
       ``(ii) make a recommendation to the Commissioner of Food 
     and Drugs as to appropriate labeling changes, if any.
       ``(6) FDA determination.--Not later than 30 days after 
     receiving a recommendation from the Subcommittee under 
     paragraph (5)B(ii) with respect to a drug, the Commissioner 
     of Food and Drugs shall consider the recommendation and, if 
     appropriate, make a request to the holders of approved 
     applications for the drug to make any labeling change that 
     the Commissioner of Food and Drugs determines to be 
     appropriate.
       ``(7) Failure to agree.--If a holder of an approved 
     application for a drug, within 30 days after receiving a 
     request to make a labeling change under paragraph (6), does 
     not agree to make a requested labeling change, the 
     Commissioner may deem the drug to be misbranded under the 
     Federal Food, Drug, and Cosmetic Act.
       ``(d) Authorization of Appropriations.--
       ``(1) In general.--There are authorized to be appropriated 
     to carry out this section--
       ``(A) $200,000,000 for fiscal year 2002; and
       ``(B) such sums as are necessary for each of the 5 
     succeeding fiscal years.
       ``(2) Availability.--Any amount appropriated under 
     paragraph (1) shall remain available to carry out this 
     section until expended.''.

     SEC. 4. TIMELY LABELING CHANGES FOR DRUGS GRANTED 
                   EXCLUSIVITY; DRUG FEES.

       (a) Elimination of User Fee Waiver for Pediatric 
     Supplements.--Section 736(a)(1) of the Federal Food, Drug, 
     and Cosmetic Act (21 U.S.C. 379h(A)(1)) is amended--
       (1) by striking subparagraph (F); and
       (2) by redesignating subparagraph (G) as subparagraph (F).
       (b) Labeling Changes.--Section 505A of the Federal Food, 
     Drug, and Cosmetic Act (21 U.S.C. 355a) is amended by adding 
     at the end the following:
       ``(l) Labeling Supplements.--
       ``(1) Priority status for pediatric supplements.--Any 
     supplement to a human drug application submitted under this 
     section--
       ``(A) shall be considered to be a priority supplement; and
       ``(B) shall be subject to the performance goals established 
     by the Commissioner for priority drugs.
       ``(2) Dispute resolution.--If the Commissioner determines 
     that a supplemental application submitted under this section 
     is approvable and that the only open issue for final action 
     on the supplement is the reaching of an agreement between the 
     sponsor of the application and the Commissioner on 
     appropriate changes to the labeling for the drug that is the 
     subject of the application--
       ``(A) not later than 180 days after the date of submission 
     of the supplemental application--
       ``(i) the Commissioner shall request that the sponsor of 
     the application make any labeling change that the 
     Commissioner determines to be appropriate; and
       ``(ii) if the sponsor of the application does not agree to 
     make a labeling change requested by the Commissioner by that 
     date, the Commissioner shall immediately refer the matter to 
     the Pediatric Advisory Subcommittee of the Anti-Infective 
     Drugs Advisory Committee;
       ``(B) not later than 60 days after receiving the referral, 
     the Pediatric Advisory Subcommittee of the Anti-Infective 
     Drugs Advisory Committee shall--
       ``(i) review the pediatric study reports; and
       ``(ii) make a recommendation to the Commissioner concerning 
     appropriate labeling changes, if any;
       ``(C) the Commissioner shall consider the recommendations 
     of the Pediatric Advisory Subcommittee of the Anti-Infective 
     Drugs Advisory Committee and, if appropriate, not later than 
     30 days after receiving the recommendation, make a request to 
     the sponsor of the application to make any labeling change 
     that the Commissioner determines to be appropriate; and
       ``(D) if the sponsor of the application, within 30 days 
     after receiving a request under subparagraph (D), does not 
     agree to make a labeling change requested by the 
     Commissioner, the Commissioner may deem the drug that is the 
     subject of the application to be misbranded.''.

[[Page S4424]]

     SEC. 5. OFFICE OF PEDIATRIC THERAPEUTICS.

       (a) Establishment.--The Secretary of Health and Human 
     Services shall establish an Office of Pediatric Therapeutics 
     within the Office of the Commissioner of Food and Drugs.
       (b) Duties.--The Office of Pediatric Therapeutics shall be 
     responsible for oversight and coordination of all activities 
     of the Food and Drug Administration that may have any effect 
     on a pediatric population or the practice of pediatrics or 
     may in any other way involve pediatric issues.
       (c) Staff.--The staff of the Office of Pediatric 
     Therapeutics shall include--
       (1) 1 or more individuals with expertise concerning ethical 
     issues presented by the conduct of clinical research in the 
     pediatric population; and
       (2) 1 or more individuals with expertise in pediatrics who 
     shall consult with all components of the Food and Drug 
     Administration concerning activities described in subsection 
     (b).

     SEC. 6. NEONATES.

       Section 505A(g) of the Federal Food, Drug, and Cosmetic Act 
     (21 U.S.C. 355a(g)) is amended by inserting ``(including 
     neonates in appropriate cases)'' after ``pediatric age 
     groups''.

     SEC. 7. SUNSET.

       Section 505A of the Federal Food, Drug, and Cosmetic Act 
     (21 U.S.C. 355a) is amended by striking subsection (j) and 
     inserting the following:
       ``(j) Sunset.--A drug may not receive any 6-month period 
     under subsection (a) or (c) unless--
       ``(1) on or before October 1, 2007, the Secretary makes a 
     written request for pediatric studies of the drug;
       ``(2) on or before October 1, 2007, an application for the 
     drug is submitted under section 505(b)(1); and
       ``(3) all requirements of this section are met.''.

     SEC. 8. DISSEMINATION OF PEDIATRIC INFORMATION.

       Section 505A of the Federal Food, Drug, and Cosmetic Act 
     (21 U.S.C 355a) (as amended by section 4(b)) is amended by 
     adding at the end the following:
       ``(m) Dissemination of Pediatric Information.--
       ``(1) In general.--Not later than 180 days after the date 
     of submission of a supplemental application under this 
     section, the Commissioner shall make available to the public 
     a summary of the medical and clinical pharmacology reviews of 
     pediatric studies conducted for the supplement, including by 
     publication in the Federal Register.
       ``(2) Effect of subsection.--Nothing in this subsection 
     alters or amends in any way section 552 of title 5 or section 
     1905 of title 18, United States Code.''.

     SEC. 9. TECHNICAL AND CONFORMING AMENDMENTS.

       Section 505A of the Federal Food, Drug, and Cosmetic Act 
     (21 U.S.C. 355a) (as amended by sections 2(1), 4(b), 7, and 
     8) is amended--
       (1) by redesignating subsections (a), (g), (h), (i), (j), 
     (l), and (m) as subsections (b), (a), (g), (h), (l), (i), and 
     (j), respectively;
       (2) by moving the subsections so as to appear in 
     alphabetical order; and
       (3) in paragraphs (1), (2), and (3) of subsection (d) and 
     subsections (e), (g) (as redesignated by paragraph (1)), and 
     (l) (as redesignated by paragraph (1)), by striking 
     ``subsection (a) or (c)'' and inserting ``subsection (b) or 
     (c)''.

  Mr. DeWINE. Mr. President, I rise today to join my friend and 
colleague from Connecticut, Senator Dodd, to introduce a bill that 
builds on a previous law that he and I wrote four years ago, called the 
``Better Pharmaceuticals for Children Act.'' The bill we are 
introducing today the ``Best Pharmaceuticals for Children Act'', re-
authorizes our 1997 law and makes additional improvements.
  I'd like to thank Senator Dodd for his tireless dedication to this 
effort and to other vital children's health initiatives. We have worked 
together on many bipartisan efforts that protect children, and I 
commend him for his commitment to ensuring that all children are safe 
and healthy. I also would like to recognize the efforts of Elaine 
Vining with the American Academy of Pediatrics and Mark Isaac with the 
Elizabeth Glaser Pediatric AIDS Foundation, who have devoted countless 
hours to providing us with technical assistance and ideas for how to 
improve our already successful pediatric studies law.
  Under our law, the FDA has granted market exclusivity extensions for 
28 products, of which 18 include new labeling. Let me tell you what 
this means for me as a parent: We now have dosage, safety and adverse 
event information that we did not previously have to help us provide 
our children the correct dose of these medicines and to avoid potential 
adverse effects. The more information doctors and parents have on 
dosing, toxicity, adverse effects, and adverse drug interactions--the 
more informed our decisions will be when giving medicines to children 
and ultimately, the more we will be protecting our kids.
  Creating the proper formulation, such as a liquid form, of a drug is 
also essential. I know that my children all went through a stage in 
which a pill form was problematic for them to swallow or the taste of 
the medicine was unacceptable. Having a child spit out a tablet or 
having to crush a tablet in order to give half of the recommended adult 
dose are compliance issues that we, as parents, have all experienced.
  When Senator Dodd and I set out in 1997 to change the fact that only 
20 percent of all prescription drugs marketed in this country were 
labeled for pediatric use, we heard many proposals on how to fix the 
problem, from giving tax incentives for research to offering this 
market exclusivity extension. Since children only account for 30 
percent of the population and less than 12 percent of personal health 
care spending, they were not getting the kind of pediatric-focused 
research that they deserve.
  Because of the help and support of many of my colleagues like 
Senators Frist, Kennedy, Jeffords, Bond, Mikulski, Hutchinson, Collins, 
and many others who helped us pass this landmark law, we have begun to 
turn the tide in favor of children. In considering any proposals to 
change the current law, however, we must not lose sight of the fact 
that the goal of this law is to encourage pediatric studies of new and 
already marketed drugs that are currently used in children, but are not 
labeled for such use. Anything that hinders the ability of the FDA to 
implement this law will impede future progress in pediatric research 
and ultimately defeat the purposes of this law.
  FDA and others, including the American Academy of Pediatrics and the 
Elizabeth Glaser Pediatric AIDS Foundation, have offered many helpful 
suggestions on how we can improve the current law. The most significant 
improvement I would like to stress is something our original law was 
never intended to address--the issue of how to get off-patent drugs 
tested for use in children. The market exclusivity extension only works 
as a pediatric testing incentive if a company has an existing patent to 
which we can attach an additional six months of market exclusivity. 
Once the patent expires, however, there is no way to prevent 
competition from entering the market for that drug.
  So, in the new bill that Senator Dodd and I are introducing today--
the ``Best Pharmaceuticals for Children Act'', we propose creating a 
``Research Fund.'' This Fund would require the Secretary of HHS to 
award contracts for entities with expertise in conducting pediatric 
clinical trials (such as PPRU's, hospitals, universities) to conduct 
pediatric studies of certain drugs that are off-patent. The list of 
these off-patent drugs would be developed according to criteria--such 
as whether new studies might produce health benefits for children, and 
then prioritized and published by the Secretary, acting through the NIH 
Director and in consultation with the FDA Commissioner and experts in 
pediatric research. Written requests would be issued by the FDA 
Commissioner.
  The significance of this Research Fund is that off-patent drugs, like 
Ritalin, would be tested for pediatric use. Currently, many drugs are 
being prescribed off-label, based on limited, if any, pediatric studies 
and/or on the personal experiences of health professionals. Ritalin, 
for example, includes the following precaution and warning:

       Precaution: Long-term effects of Ritalin in children have 
     not been well established. Warning: Ritalin should not be 
     used in children under six years, since safety and 
     [effectiveness] in this age group has not been established.

  The point is that Ritalin is being prescribed off-label for children 
under six, and yet we don't know the safety and long-term effects on 
children. This Research Fund would establish the means by which testing 
on this and other off-patent drugs could be performed.
  Our new bill makes other improvements to current law including: 
expediting the dissemination of information generated by pediatric 
studies to the public; expediting labeling changes; acknowledging the 
need to study the neonate, zero to one month in age, population if 
appropriate and at the appropriate point in pediatric studies; applying 
prescription drug user fees to pediatric studies to give FDA the 
resources

[[Page S4425]]

it needs to conduct timely reviews of studies and labeling changes; and 
establishing an Office of Pediatric Therapeutics within FDA to 
coordinate activities among review divisions and provide oversight for 
all pediatric activities undertaken by FDA.
  Finally, I would like to address a concern that has been expressed by 
many in the press, and rightfully so. No one can ignore the risk 
involved in having children participate in clinical trials. Parents 
with sick children, sadly, have to weigh these risks and make treatment 
decisions. I want to commend Senator Dodd for his foresight in this 
area of providing research protections for children involved in 
clinical trials. With the increase in pediatric research through this 
law and other laws, we needed to ensure that research protections exist 
and are strengthened, if necessary.
  That is why last year, in the ``Children's Health Act,'' Senator Dodd 
and I proposed language that would ensure that federally funded, 
conducted, and regulated research adheres to scientific and ethical 
review standards. There is currently a review of these federal 
protections for children involved in clinical trials to further ensure 
that the highest standards of scientific and ethical review are in 
place. The alternative to clinical trials is uncontrolled, unregulated, 
and unreported studies of smaller groups of children. Pediatric experts 
agree that controlled clinical trials are the much-preferred 
alternative.
  We must make the health of our children a priority. Through our new 
bill we are doing that. We are furthering the success of current law by 
providing parents and doctors with more information to make better 
informed decisions when medicating children. Our children deserve no 
less.
  I urge my colleagues to support this important measure.
                                 F_____
                                 
      By Mrs. HUTCHISON (for herself, Mr. Bayh, Mr. Hutchinson, Mr. 
        Burns, Mr. Kerry, Mr. Chafee, Mr. Kennedy, Mr. Helms, Mrs. 
        Clinton, Mr. Schumer, and Mr. Biden):
  S. 839. A bill to amend title XVIII of the Social Security Act to 
increase the amount of payment for inpatient hospital services under 
the medicare program and to freeze the reduction in payments to 
hospitals for indirect costs of medical education; to the Committee on 
Finance.
  Mrs. HUTCHISON. Mr. President, I rise today to introduce, along with 
Senators Bayh, Hutchinson, and several other distinguished colleagues, 
the American Hospital Preservation Act.
  Our hospitals are the very foundation of our health care system, a 
system that is considered the best in the world. To ensure this quality 
of care remains at this high level, we cannot ask yet more cuts of our 
financially troubled hospitals.
  Two such cuts currently being faced by our nation's hospitals are a 
reduction in the annual inflation update hospitals receive for their 
Medicare payments, and a reduction in the Medicare adjustment teaching 
hospitals receive to support their medical education programs. Both of 
these issues are critical to the long-term stability of hospitals, and 
to maintaining the scope and quality of the care they provide.
  We do have the best health care in the world. Why should we put it at 
risk? Especially when the savings we have achieved already are far in 
excess of what was originally estimated. In other words, the cuts that 
were enacted have more than achieved their goals. There is no more fat 
left to trim.
  Last year, through enactment of the Medicare, Medicaid and SCHIP 
Benefit Improvement and Protection Act, BIPA, we were successful in 
getting approximately half of the annual market basket update restored 
for our hospitals. In addition, we delayed further reductions in the 
indirect medical education, IME, adjustment for teaching hospitals. 
This legislation would build upon that success, and would help to 
ensure hospitals' long-term financial stability. In effect, it would 
preserve the ability of American hospitals to continue to provide the 
highest level of health care to be found anywhere in the world.
  With respect to the IME provisions of this bill, all of the evidence 
points to the fact that the financial health of major teaching 
hospitals continues to deteriorate. In fact, with projections that 
Medicare margins could drop to negative 3.8 percent by 2005, it is 
becoming an increasingly common phenomenon that when a Medicare patient 
walks in to a hospital, he or she represents a money loser for that 
institution. While our hospitals must remain committed to providing 
care no matter the patients' circumstance, that sort of monetary 
shortfall will logically result in many hospitals closing down. Or, as 
we have seen happen many times recently, many hospitals will 
dramatically scale back their outpatient and other services for those 
in need.
  Particularly in the rural areas of our nation, having a hospital 
close down would mean losing access to life-saving medical services. It 
would also have a dramatic effect on the community's economy. Hospitals 
are often the core components of the local community. To have the 
hospital close down would mean the loss of jobs and of businesses. It 
would have a ripple effect on the neighborhood, destroying its sense of 
stability and community.
  This legislation addresses the unique situation of teaching 
hospitals. These hospitals, which are centers of experimental, 
innovative and technically sophisticated services as well as routine 
care and services, tend to incur much higher costs. We must recognize 
the higher costs these teaching hospitals incur to provide adequate 
learning experiences and faculty support to medical students. To do 
this, we must increase the indirect medical education adjustment one 
percentage point to 6.4 percent for FY 2003 and the future.
  In addition, this legislation will reverse cuts previously enacted by 
Congress regarding the annual market basket updates. These cuts are 
unnecessary and harmful. For a hospital to effectively compete for 
skilled workers, especially in these days of tight labor markets, it is 
critical to have an adequate overall revenue stream. Medicare's measure 
of inflation, the market basket update, plays a key role in determining 
the adequacy of these payments from year to year.
  As hospital costs increase rapidly in every area from labor to 
pharmaceuticals to blood and blood products to the costs of compliance 
with new regulations, the market basket update must keep pace. This 
legislation eliminates the update reductions mandated earlier.
  It is critical that we not neglect our health care system and that we 
continue to invest in the very foundation of that system, our 
hospitals. I look forward to working with my colleagues on both sides 
of the aisle to ensure that this bill meets that objective yet still 
fits within our overall budgetary constraints.
  This legislation represents our obligation to not only our most 
vulnerable citizens, but also to all Americans. Our hospitals provide 
the highest level and quality of care in the world. This bill ensures 
that they will be able to continue to do so, and I urge my colleagues 
to cosponsor and support it.

                          ____________________