[Congressional Record Volume 148, Number 92 (Wednesday, July 10, 2002)]
[House]
[Pages H4485-H4491]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                     OVERPRICED PRESCRIPTION DRUGS

  The SPEAKER pro tempore (Mr. Kirk). Under the Speaker's announced 
policy of January 3, 2001, the gentleman from Minnesota (Mr. Gutknecht) 
is recognized for 60 minutes as the designee of the majority leader.
  Mr. GUTKNECHT. Mr. Speaker, let me say first before I begin on the 
issue that I really want to talk about tonight, I listened to much of 
my colleagues' Special Order for the last hour. And I have to say on 
behalf of most Republicans, and I think most Americans, we agree with 
what they have said.
  The truth of the matter is when there have been frauds, and we have 
seen fraud committed against shareholders and against corporations, 
those people need to go to jail. And I think we are all in agreement on 
that. Frankly, I think just for the theater of it I would like to see 
some of these corporate executives that have been charged with crimes 
and will be charged with crimes, I would like to see them arrested and 
taken away in chains. I would like to see handcuffs on them. I think I 
speak for the overwhelming majority of people in this Congress.
  I will say this: the one thing we have to be careful of is that we do 
not try to turn this into a partisan thing. I do not think this is a 
partisan issue. I think all of us can stand and talk about our moral 
outrage for some of the things that have gone on in corporate America, 
and the time has clearly come to clean them up.
  I rise, though, tonight to talk about another crisis that all of us 
know about; and, frankly, we in Congress have done too little to really 
resolve, and that is the whole issue of about how much Americans pay 
for prescription drugs. It is a crisis particularly for those seniors, 
but not just seniors but for all Americans who do not currently have 
some kind of drug coverage in terms of insurance. And as we speak 
tonight, there are literally hundreds, if not thousands, perhaps even 
millions, of Americans who are having to make very, very difficult 
decisions about whether or not they can afford the drugs that the 
doctors say they need to regain their health. And I brought with me, 
and these charts are becoming all together too familiar to many of my 
colleagues, but I think they need to be restated because we have 
learned the more you learn about this issue, the more we can come 
together with some kind of a solution.
  But I want to point out this chart because as I was going through my 
closet here about half an hour ago, I found this chart from last year. 
This is dated 2001. And I wanted to bring this with me to show you a 
couple of examples, and what we have here is a chart that demonstrates 
the price that Americans pay, the average U.S. price versus the average 
European price.
  The source of this, these are not my numbers. This is from the Life 
Extension Network. It is an independent foundation that has been 
studying this issue for more than 10 years. They continue to come to 
the same conclusion and that is that for prescription name-brand drugs 
Americans pay more than anybody else in the world for the same drugs. 
There are a lot of reasons for that, and we will talk about that during 
this Special Order. But what is interesting to me is to see how prices 
have changed just since last year.
  Now, this chart is about a year and a half old. And what you see, for 
example, let us take a couple of these drugs, Claritin, a very commonly 
prescribed drug, a lot of people are taking it now for allergies. It is 
about to go off of patent so you will see the price come down 
dramatically in the United States in all probability, although I will 
tell you the pharmaceutical company that makes it is trying to replace 
that with a drug called Clarinex. Now according to at least one report, 
Clarinex is a better drug than Claritin. It is 2 percent better. That 
is not a huge improvement for the difference in price. But the thing 
that bothers me is that the average price for Claritin in the United 
States was about $63.06 for a 30-day supply. That same drug sold on 
average in Europe for $16.05.
  Another commonly prescribed drug is one we have talked about here on 
the House floor because my 84-year-old father takes this drug every 
day. In fact, many senior take it. It is called Cumadin. It is a blood 
thinner. It is a very good drug. It is more effective than asprin, and 
if you have had a stroke or if you have had a heart attack, if you have 
got a problem with blood clotting and platelets and so forth, it is a 
very effective drug.
  Let me say from the outset, I am not here tonight to beat up on the 
pharmaceutical industry. I am not here to say shame on the 
pharmaceutical industry. They are only doing what any free enterprise 
company would do in terms of exploiting a market opportunity that we 
have given them. No, I am not here to say shame on them. I am here to 
say shame on us because we have created this situation and we need to 
change it.
  Let us talk about Cumadin. Last year the average price, a year and a 
half ago in the United States was about $37.74. The average price in 
Europe was $8.22. Now, that price has changed.

  I will pull up the next chart, which is this year's prices; but as we 
go down the list, we have seen the big differences. When you get into 
some of the very expensive drugs, Zithromax 500, United States price 
for a 30-day supply, $486. The same drug in Europe made in the same 
plant under the same FDA approval sells for $176. Huge differences.
  There are some where the differences are less. You look at, for 
example, Lipitor. The average price for Lipitor in the United States, 
$52.86. In Europe, $41.25. Again, these prices are about a year and a 
half old.
  Let me show some of the current prices because some of these drugs 
have changed dramatically in just a year and a half. I mentioned last 
year that Cumadin in the United States the average price was $37.74. In 
just a year and a half that price has gone to $64.88. Now, that makes 
me angry to see that huge difference because nothing has changed. It is 
exactly the same drug, put in exactly the same capsules, under the same 
FDA approval and the same FDA plants.
  The interesting thing, too, is as far as I know there have been no 
major lawsuits so they have not had this tidal wave of litigation that 
we sometimes hear about. So the price has almost doubled in just about 
a year and a half.
  Now, it makes me feel just a little better that the price in Europe 
has doubled as well. The price has gone up uniformly, but the price is 
Europe today is a little over $15. The price in the United States is 
$64.

                              {time}  1845

  One that has really gone up as well is glucophage. Glucophage is a 
marvelous drug. If a person suffers from diabetes, glucophage has 
changed their lifestyle. It is a fabulous drug, and the manufacturers 
deserve credit for what they have done for all of the millions of 
people, not only here in the United States, but around the world, who 
suffer from diabetes.
  The price has gone up now to an average of $124.65 for a 30-day 
supply in the United States. The average price in Europe, $22, $22. 
Some people will say, well, how can that be, how can it be that the 
prices are so much different? Let me just, first of all, say that many 
other countries do have various forms of price controls. We have price 
controls on hospitals and doctors and medical providers under Medicare 
as well. We determine how much they can charge, and essentially with 
some of

[[Page H4486]]

the countries that is what they have done. They have price controls on 
these drugs, but that is not universally true.
  If we look at countries like Germany and Switzerland, where a number 
of the big pharmaceutical companies are based, Germany and Switzerland, 
as far as I can tell, do not have what we would describe as price 
controls. Let me give my colleagues a couple of examples, and these 
again, these are charts, the numbers are provided by the Life Extension 
Foundation. If any of my colleagues would like to take a look at these 
charts, they can just go to my Web site at gil.house.gov and we have 
this chart up there and have more information about the differences 
between what Americans pay for prescription drugs and what the rest of 
the world pays.
  I was not completely satisfied just to use the numbers that we had 
received from the Life Extension Foundation, so we had one of our 
friends, or some friends in Europe, buy some drugs for us, so according 
to the FDA what I am holding up right now are illegal drugs. The FDA 
holds that it is illegal to bring these otherwise FDA-approved drugs, 
made in FDA-approved facilities into the United States. They do not 
always enforce their rules. For personal use, if a person brings them 
back with them from Europe or Canada or other industrialized countries, 
generally speaking, the FDA will not enforce what they believe are 
their own rules.
  Let me show my colleagues this drug. It is a drug called Zocor, and 
this drug was bought about 3 weeks ago in Europe. In fact, I think I 
can even tell my colleagues where it was purchased. In fact, the story 
of Zocor is even more interesting because it is manufactured by a 
subsidiary of the Merck pharmaceutical companies. It was manufactured 
and distributed in Italy, and this was bought in a pharmacy in Como, 
Italy. The price for this Zocor in Como, Italy, was 13.94 Euros. The 
day that this was purchased, the American conversion on that was 
$14.77.
  I am sorry, it was 14.77 Euros; the American price is $13.94.
  I have a good friend who runs a pharmacy in Northfield, Minnesota, 
and so we called him and asked how much this exact same package of 
Zocor would sell for here in the United States in Northfield, 
Minnesota. The price, as I say again, in Europe was $13.94. This drug 
bought at the pharmacy in Northfield, Minnesota, is $45. I am not good 
in math, but that is more than five times the price, I am sorry more 
than four times the price for the same exact drug.
  We also checked on another drug, Claritin. Interesting story about 
this particular drug. This drug is manufactured by, actually, a Swiss 
company by the name of Schering Plough. Many of us know the name of 
Schering Plough, but many do not know that it is a Swiss company. But 
the interesting thing is, this drug was actually manufactured in Spain 
and it was reimported into Germany where, as I say, they do not have 
price controls, but they do have open markets, and the Germans have the 
right to shop where they can get the best price.
  This Claritin, manufactured by Schering Plough, a Swiss company, 
manufactured in Spain, was bought in Germany at a pharmacy in, let me 
get the name, in Riegensburg, Germany. It was purchased for 14.8 Euros; 
the American conversion that day was $13.97. Again, we called my 
favorite pharmacist in Northfield, Minnesota, and asked him how much 
this package of Claritin would sell for in Northfield, Minnesota, and 
the answer is $64.97; $13.97 in Germany where they have no price 
controls, $64.97 for the same drugs.
  We have to ask ourselves, why do we permit this to happen? We have 
open markets for almost everything else. How can it be that we are 
paying so much?
  Let me come back to something else. Let me talk about open markets 
and what open markets do for us every day. Some people say, well, if we 
open markets and if we allow Americans to purchase these drugs in other 
countries, there is a risk they may get the wrong drug or they may get 
a drug that has been adulterated or they may get a drug that is 
counterfeit. Well, that is true.
  I must tell my colleagues that is true, but every year we, as 
Americans, consume enormous amounts of food that comes in from other 
places. For example, last year in the United States of America, we 
imported 500,000 tons of pork. I love pork. In fact, we produce a lot 
of pork in my part of the district. In fact, we produce one of the 
world's finest luncheon meats. It comes in a blue can with yellow 
lettering. It is called Spam. Every day in Austin, Minnesota, we turn 
16,000 pigs into Spam.
  I love pork. It is a wonderful product, and if it is managed 
properly, as far as we know, no one has ever gotten sick of any food-
borne disease from eating Spam. It is a wonderful product. But the 
truth is, by eating imported pork, which is almost never inspected, and 
again, I want to give my colleagues that number, 500,000 tons of pork 
is imported. If a person eats pork that has not been properly 
refrigerated and so forth, they can get salmonella from pork, they can 
get trichinosis; and either one of those diseases can kill a person.
  So some people say, well, if we import these drugs people might die. 
We keep records. In the last 10 years, according to the Food and Drug 
Administration, and the FDA that is responsible, that literally has 
built this wall, that says Americans cannot import or reimport legal, 
FDA-approved drugs into the United States, they are the ones who have 
literally made it possible for the drug companies to have one pricing 
strategy for Americans and another pricing strategy for people around 
the rest of the world. Our own Food and Drug Administration admits in 
their own studies that of the hundreds of thousands of tons of fruit 
and produce that come into the United States every year, at least 2 
percent of them are contaminated with food-borne pathogens, including 
salmonella. Salmonella can kill a person. It is a very dangerous food-
borne pathogen.
  At the same time, they keep records, though, of how many Americans 
have become ill or died from taking legal, FDA-approved drugs that came 
in from other countries. Do my colleagues know what the answer is? 
Zero. No one, no one has gotten sick or died from taking legal, 
imported drugs from other countries.
  I have had town hall meetings around my district, and I can tell 
story after story, but I would like to share at least one of them with 
my colleagues.
  It is about a lady who was traveling in Europe and was traveling in 
Ireland, and she has a special skin condition. I think it is called 
eczema. She has to take a special cream, and it works very well, and 
again we thank the pharmaceutical companies for coming out with these 
marvelous drugs that help us all live better, but she ran out of that 
cream while she was traveling in Ireland, and she stopped in to just a 
local pharmacy.
  She was a cash customer. She walked in and she happened to have her 
prescription with her. She walked up to the pharmacist and said, could 
I get this prescription refilled here at this pharmacy, and he looked 
at it and he said, well, absolutely, and he sold her the cream. The 
price was $30 American. The price she says in the United States, and 
she uses about one tube every month, is $130. The difference in 
Ireland, $30; in the United States, $130.
  She got back to the United States, and as is always the case, on the 
outside of the little box of the prescription ointment was the name, 
the address and the telephone number of that pharmacy back in Ireland, 
and so as she began to get low on that tube of ointment, she did what a 
lot of us would do. She picked up the phone and she called that 
pharmacy in Ireland and asked if she could have the prescription 
refilled, and he said, sure, and I think she gave him her credit card 
number.
  He put it in a package and shipped it. I do not know whether it was 
FedEx'd or UPS'd or Parcel Post. I am not sure but when the package 
came through Customs, our own Food and Drug Administration intercepted 
that package, and they just opened it and they put a threatening letter 
in that package and ultimately sent it on its way to the lady and said 
this may be an illegal drug here in the United States, and in a sense 
they said if you try to do this again, you could be prosecuted.
  If a person is a retired single woman and they get a threatening 
letter from their own Federal Government, that is a pretty intimidating 
thing and that is what the FDA has been doing. They have been 
concentrating on honest, law-abiding citizens who are trying to

[[Page H4487]]

save a few bucks because, for her, if she could buy that drug in 
Ireland, it would save her $1,200 a year, and for her, $1,200 is a lot 
of money. Let us be honest, for all of us, $1,200 is a lot of money.
  My vision, I want to make this clear, too. I want to include 
pharmacists in this whole thing. I want to be able, so that my dad or 
my wife or anybody who may be watching this particular C-SPAN program 
would be able to go to their local pharmacy and they would talk to 
their local pharmacist and say, listen, I need to renew my prescription 
for, pick one of these drugs, just name it, Claritin, I need a 3-month 
supply.
  The pharmacist ought to be able to say to them, listen, I can fill it 
out of my inventory of United States supply, and they force me to 
charge $89, or I can go on line and I can order it for you out of the 
pharmaceutical supply house in Geneva, Switzerland. We will have it 
shipped to you FedEx in about 3 days, and your price will not be $89 or 
$64, your price will be $16, plus about $8 shipping and handling.
  Which one would my colleagues prefer?
  If we multiply that by a 3-month supply, we are talking about 3 
months. We want to keep the pharmacists involved because pharmacists 
play a very important role in the health care delivery system here in 
the United States, and we must not forget that.
  I want to show my colleagues some other charts here because I think 
they deal with some of the arguments that we hear around this building 
which, in my opinion, are pretty much nonsensical, and I have already 
talked a little bit about. Some say that importation jeopardizes 
consumer safety, but as I said, the truth is, there is no known 
scientific study that demonstrates a threat of injury to patients 
importing medications with a prescription from industrialized 
countries. Zero, zero.
  As I say, more people have gotten sick from eating imported 
strawberries. Thousands of people have gotten sick from eating imported 
strawberries, and we bring thousands of tons of strawberries into the 
United States every year and people get sick, and the Food and Drug 
Administration does almost nothing to stop it.
  What is more, millions of Americans have no prescription drug 
coverage. Stopping importation of FDA-approved drugs threatens their 
safety. A drug that a person cannot afford is neither safe nor 
effective, and millions of Americans today, because they cannot afford 
the drugs, are going without the drugs, and so that drug is neither 
safe nor effective.
  Let me go to the next question people raise. Some say that the FDA 
lacks the resources to inspect mail orders. The truth is the FDA is 
focusing on the wrong problem. They are putting all their resources, 
instead of stopping illegal drugs imported by illicit traffickers, they 
are spending all their time enforcing their so-called rules on approved 
drugs imported by law-abiding citizens. We are again talking about FDA-
approved drugs from FDA-approved facilities, and let me just say this 
for the benefit of Members.
  There are only about 600 FDA-approved drug-making facilities in the 
world, and they inspect them regularly. We know what they are doing. 
They want to have FDA-approved facilities so that they can sell not 
only in the United States, but around the world.
  So far, last year, the FDA detained 18 times more packages coming in 
from Canada than Mexico. Why are we putting so much emphasis on trying 
to stop imports from Canada rather than Mexico? I am not saying 
anything disparaging about Mexico, but if we have a problem with drugs, 
counterfeit drugs, drugs that have been adulterated in some way, it 
strikes me that we have a bigger problem with Mexico than we do with 
Canada, and yet we have stopped 18 times more packages from Canada than 
we have from Mexico.
  Worse, last year, this was a year and a half ago, Congress 
appropriated $23 million for border enforcement, but the Secretary of 
Health and Human Services at that time ultimately decided not to 
enforce that particular provision and refused to spend the funds.
  Let me go to this next chart. Some say that a Medicare drug benefit 
will eliminate the need for importation, and we passed a pretty 
important bill in the House last week. I voted against it for a variety 
of reasons, but the truth is simply, shifting high drug prices on the 
government only transfers the burden to American taxpayers. It does not 
solve the problem.

                              {time}  1900

  Americans are paying far too much. Moreover, Medicare coverage will 
not help the millions of Americans that do not have prescription drug 
coverage in their health insurance plan.
  Let me finally just show this last chart. Some say that importation 
is merely an indirect way of enacting price controls. But the truth is 
importing prescription drugs into the United States will lower prices 
here and, in the long run, force Europe to pay more of the drug 
research and development cost. The best way to break down price 
controls is to open up markets.
  I did not say that. That is not a quote from me. That came from Steve 
Schondelmeyer, who has a Ph.D. and is a pharmacology professor and 
director of the Prime Institute at the University of Minnesota. He is 
the one who said the best way to bring down or to end price controls is 
to open markets.
  And for those who do not believe it, look back at what happened to 
the former Soviet Union. When President Reagan went to Berlin and said, 
Mr. Gorbachev, if you mean what you say, come here to Berlin and tear 
down this wall. And he knew better than anybody that markets, and as he 
said, markets are more powerful than armies. What ultimately brought 
down that wall more than anything else was they could not hold back 
free markets. And, my colleagues, neither can we.
  Finally, let me just say that when we talk about how much Americans 
pay for research, and the drug companies are all saying, well, if we 
bring down the prices in the United States, and incidentally we believe 
that if we just open up markets we will see prices of prescription 
drugs in the United States come down by at least 35 percent, but some 
people say, well, if that happens, we are not going to have any money 
to spend on research. My colleagues, people need to know how much we 
subsidize research in the United States.
  We often hear that the United States, the American people, represent 
roughly 4 percent of the world's population, and we consume 20 percent 
of the world's energy, and we consume 30 percent of the world's paper, 
and 30 percent of this and 22 percent of that. But, my colleagues, most 
people do not know this. We may represent 4 percent of the world's 
population, but we represent 44 percent of all the dollars spent on 
basic research. Americans are paying more than their fair share for the 
cost of research.
  We subsidize that research in three separate ways here in the United 
States, and we all need to be aware of this: first of all, we subsidize 
it through government-paid research. This year, we will spend roughly 
$21 billion in basic research through the NIH, the National Science 
Foundation, and others. Twenty-one billion for basic research will come 
out of this Congress and go into research, which ultimately the 
pharmaceutical companies know much of that research they can use to 
their benefit at no cost. The results of that research is published on 
the Internet and is available to everybody essentially free of charge.
  The second way we subsidize them is through our Tax Code. Now, if 
they are profitable companies, and these are the most profitable 
companies in the Fortune 500, they are at a 50 percent tax bracket. So 
50 percent of the research right off the top is written off on their 
Federal tax forms. Now, on top of that, many times they get tax 
credits. Some of them have moved their operations to Puerto Rico, where 
they pay no taxes; and as a result, we are subsidizing them through the 
Tax Code in several ways.
  Finally, we subsidize in the prices we pay. When we are paying two, 
three, four, five times as much as they pay in Europe for exactly the 
same drugs, we are paying more than our fair share for all of the cost 
of research. We ought to pay more. And let me just say that, and I have 
said this on the House floor, and I will say it again and again. I am 
more than willing as an American consumer, and as a public policymaker 
and

[[Page H4488]]

a Member of Congress I think Americans ought to pay our fair share. I 
appreciate what the pharmaceutical industry has done. I appreciate the 
miracle drugs they have come out with. I am willing to pay more than 
the starving people of central Africa, but I am unwilling to continue 
to subsidize the starving Swiss.
  The time has come for Europe, for Canada, for Japan, and the other 
industrialized countries around the world to pay their fair share. And 
the easiest, simplest, fastest, least bureaucratic way to do that is to 
open up the markets. I will repeat again to congressional leaders: If 
you mean what you say about free trade, whether we are talking about 
blackberries, whether we are talking about blueberries, whether we are 
talking about bananas, whether we are talking about pork bellies, or 
whether we are talking about Biaxin, then come here to the floor of 
this House, come here and tear down that wall, because that is the way 
we are going to bring down prices.
  When we do that, it will be much easier for us to provide the kind of 
coverage that Americans need, particularly seniors in Medicare, if we 
can come up with a plan that will reduce those prices.
  Mr. Speaker, with that, I yield to my close friend and dear 
colleague, the gentleman from the great State of Georgia (Mr. 
Kingston), who has been a fighter in this battle for a number of years 
with me.
  Mr. KINGSTON. Mr. Speaker, I thank the gentleman from Minnesota, and 
I wanted to say that I did not catch all of the gentleman's remarks on 
the way over here, so some of this may certainly be repetitive; but 
first of all, I think we need to say a word of thanks to the chairman 
of the Committee on Energy and Commerce, the gentleman from Louisiana 
(Mr. Tauzin), and also to the House Republican leadership for 
scheduling some hearings on the drug reimportation issue. I am very 
excited about the hearings.
  Because when people around America see some of the differences in the 
costs, and I see the gentleman has his latest chart up there, for 
instance with Premarin, and if I am reading it correctly, it is $55.42 
in America compared to $8.95 in Europe. A statistic that our friend and 
colleague, the gentleman from Vermont (Mr. Sanders) has brought up is 
that the Boston University School of Public Health, a particular 
professor there, says that America could save $38 billion a year if 
American consumers could buy medications at Canadian prices. Of course, 
the gentleman has European prices on there, but we have also other 
charts with Canadian prices, and they are just as attractive as the 
European prices.
  What is odd, and I just want to enter into a dialogue with the 
gentleman, does the gentleman know how many people it is that have died 
because of drug reimportation? Surely it must be thousands upon 
thousands, given the great resistance some Members of Congress have to 
this.
  Mr. GUTKNECHT. I mentioned this earlier. The Food and Drug 
Administration does keep pretty good records, and we know that 
thousands of people have become ill and died as a result of eating 
imported foods that were contaminated with some kinds of food-borne 
pathogens. As best we know, with the latest numbers we have over the 
last 10 years, the number of people who have died as a result of taking 
a legal drug imported from an industrialized country, that number is 
zero.
  Mr. KINGSTON. Zero people.
  Mr. GUTKNECHT. Zero. Not one. And let me say that we pay a very dear 
price for what apparently is no real protection.
  Mr. KINGSTON. So for $38 billion more in expenses a year, it appears 
that there was no real difference in public health.
  Mr. GUTKNECHT. We do have to ask, Who are they protecting us from?
  Mr. KINGSTON. Now, there is a statistic, though, that the Secretary 
of Health and Human Services gave to the gentleman and myself recently 
that 98,000 people a year actually do die from misapplication of 
prescription drugs, not taking their medicine properly or timely. And I 
know that the University of Minnesota, which I think is not in the 
gentleman's district, has done a study to find something like 40 
percent of prescription drugs are used incorrectly. Is that the 
gentleman's understanding?
  Mr. GUTKNECHT. I believe that is correct. That was a study that was 
done at the University of Minnesota, and I believe the gentleman's 
numbers are correct; that literally tens of thousands of Americans 
become seriously ill or die every year from not taking their 
medications correctly.
  And we do not know at this point, based on that study, how many of 
them were cutting their pills in half or were mixing medications that 
they should not have mixed. Which brings me back to the point I did 
make before the gentleman came over, and that is our vision is to keep 
the pharmacists involved. We believe that the pharmacist is a very 
important component in the health care delivery system. They are the 
ones who know how drugs interact and how these drugs should be taken; 
whether they should be taken at mealtime or before bed, whether they 
should take a whole glass of water or drink with milk.
  There are a number of different things that are important; and we 
know an awful lot of people do become ill, thousands, tens of 
thousands, because they take the drugs incorrectly or they mix and 
match drugs they should not.
  Mr. KINGSTON. I believe the last vote we had on this was July 10, 
2000, which was, well, 2 years ago today, but at that point out of 435 
Members, 363 voted in favor of drug reimportation. And, again, that was 
July 10, 2000.
  To make sure folks understand, we are talking about drugs that have 
strict FDA oversight, proof of FDA approval of imported medicine. There 
must be a paper chain of custody so people know that they are not 
counterfeit drugs. We are also stating that only licensed pharmacists 
and wholesalers can import medicines for resale, not just somebody who 
decides to open up a shop somewhere. Importers would have to meet 
requirements for handling as strict as those already in place for 
existing manufacturers, and a registration of Canadian pharmacies and 
wholesalers who would be selling or exporting to America would need to 
be registered with Health and Human Services. And we would need to have 
lab testing to screen out counterfeits.
  And counterfeit drugs can happen under the current market. This does 
not change the threat of counterfeit drugs.
  Mr. GUTKNECHT. If the gentleman would yield, we know of at least one 
example that was well publicized of a pharmacist in the Kansas City 
area who was adulterating drugs. He was a licensed pharmacist, and he 
was ultimately caught. We do not know how many Americans ultimately 
died or lives were shortened or lost their health as a result of what 
he was doing. But that did not happen because of drugs that were being 
imported from a pharmaceutical supply house in Geneva, Switzerland. 
That happened right here in the United States of America, in Kansas 
City, Missouri.
  Mr. KINGSTON. Well, I think that is important to point out, because 
people often bring up this counterfeit drug situation, and it is 
something that certainly scares us. My mother had breast cancer this 
year and has to take Tamoxifen, and I certainly want to know that the 
pill she is taking is as represented. I do not want any counterfeit 
pill for any American.
  But it is a red herring to mix that with the reimportation question, 
because counterfeiting is taking place today without reimportation.
  But another issue that I wanted to mention to the gentleman is one 
about the patent bill that our colleagues, the gentlewoman from 
Missouri (Mrs. Emerson) and the gentleman from Ohio (Mr. Brown), have 
been pushing. Now, as I understand it, and I do not know if the 
gentleman has covered this already, but most drugs have a 17-year 
patent. When that patent expires, in order for a generic company to get 
to make that name-brand drug, they have to file, I guess with the FDA.
  If the gentleman has a definition for generic drug, maybe he could 
share that with us.
  Mr. GUTKNECHT. Let me share with my colleagues and those who may be 
watching, because this is something I did not know until a few years 
ago.
  Before somebody can begin to make a generic drug, the patented drug, 
the name-brand drug, that patent will have had to expire. Or sometimes 
they will

[[Page H4489]]

turn them back. Occasionally, they will turn them into an over-the-
counter drug before the patent expires. But the point is, they have to 
go to the FDA and ask for approval just as if it were a new drug they 
were making, a brand-new drug.
  What they are doing is they are copying the recipe for that drug, and 
they have to prove to the FDA beyond a shadow of a doubt that the 
difference between their drug, the generic drug, and the name-brand 
drug will be no more than the difference between one batch of the name-
brand drug and the next batch.
  Sometimes there is an impression left with people that, oh, if you 
take the generic drug, that is inferior to the name-brand drug. It 
simply is not true. The active components are identical in every way to 
the name-brand drug. And the savings can be 60, 70, 80, or 200 percent.
  Mr. KINGSTON. So if I follow the gentleman, it is not going to be a 
substitute, for instance, Coca Cola with Pepsi Cola, two products that 
are very similar and neither one would cause any problems. The 
gentleman is not saying that at all. What the gentleman is saying is 
that we are simply taking the Coca Cola that is in this nice 
traditional Coca Cola can and pouring it into a cup, but it is the same 
content inside. The same brand-name inside that pill, is what a generic 
drug is, then.
  Mr. GUTKNECHT. I will give an even better example. Go down to the 
Mint here in the United States capital, just a few blocks down here. 
They print $1 bills. What I am saying is the difference between one 
sheet of $1 bills will be no different than the next sheet.
  Mr. KINGSTON. So that is it. I think it is very important because 
there is this stigma promoted by the name-brand drug companies, and I 
certainly can understand why they want to do it, but there is a stigma 
about generic drugs.
  But getting back to the patent issue, when the patent expires on a 
drug, the generic company files with the FDA to say that they want to 
start making that drug. The FDA can say yes or no.

                              {time}  1915

  And if the name brand company protects it and says we are changing 
this drug, then they get a 30-month extension; is that correct?
  Mr. GUTKNECHT. Mr. Speaker, that is my understanding, that almost any 
minute change, including changing the color of the tablet, if they say 
we are going to change the color of the tablet because it will increase 
the effectiveness of the drug or its shelf life, they almost 
automatically get a 30-month extension. And a 30-month extension is 
worth an enormous amount. But from the other side, that is an 
additional expenditure that American consumers have to make.
  Mr. KINGSTON. And seniors who have to choose between drugs and food, 
in many cases they are going without medicine.
  Prozac went off patent last August; is that correct?
  Mr. GUTKNECHT. I am not sure if it has, or is in the process of going 
off patent.
  Mr. KING. How much has the price fallen?
  Mr. GUTKNECHT. Mr. Speaker, according to these charts, we have not 
seen a dramatic reduction.
  But Claritin and Clarinex are a good example. Claritin is going off 
patent and so the drug company that manufactures it is in the process 
of converting people from Claritin to Clarinex. According to one 
published report, the improvement, if you can say the quality or the 
effects of moving from Claritin to Clarinex, and Claritin will soon be 
available in generic if they do not get a 30-month extension, which I 
do not think that they should, but the difference is 2 percent. One of 
the published reports says there is a 2 percent advantage in taking the 
Clarinex over Claritin.
  What the drug companies try to do as they have a drug coming off 
patent, they try to come out with a new and improved version, which I 
appreciate, but a 2 percent improvement hardly justifies a $60 a month 
difference in price.
  Mr. KING. Mr. Speaker, the patent issue is a separate issue from 
reimportation, but we are all interested in making drugs affordable and 
accessible to the seniors of America. The Republican Party has made 
that one of its top issues this year.
  To just review the patent situation, if you invent a computer chip 
like Steve Jobs, the proverbial dot.com success story, if you do that 
tinkering away in the midnight hours at your house, you get a patent. 
That patent helps you recoup the costs and all your time and pays you 
off for your ingenuity and genius mind.
  With a drug company, they are a little different. The research is 
subsidized by the taxpayers, so why are we giving them such a long, 17-
year patent when in fact so much of the research is subsidized?
  Mr. GUTKNECHT. Mr. Speaker, I think that is a fair question and I am 
not sure I can completely answer the question. That has happened with 
the taxpayers have underwritten most of the cost of developing at least 
the basic formula for a new drug, and then the company has gone out and 
patented that, and they have reaped all of the benefits. In fairness, 
they probably pay over the life of that drug, they pay an awful lot of 
taxes and so we recoup some of that through taxes. But the question is 
a fair one.
  If a drug is developed mostly with taxpayer-funded research money 
through the NIH or other Federal grants, the taxpayers should get some 
kind of royalty and that is a question that we have not resolved. 
Frankly, we may need some help from the Secretary of Health and Human 
Services, the people at NIH, the National Science Foundation, as well 
as some of the folks at the Patent Office.
  I am delighted to hear that we may have a hearing on this whole issue 
in the Committee on Energy and Commerce, and I hope we can bring some 
of those people in to explain to us as policymakers and to the people 
of the United States how it is that we can get shorted on both ends. In 
other words, we pay for the research and we pay exorbitantly high 
prices for the drugs relative to the rest of the world.
  Mr. KINGSTON. I think the patent issue is one that we should discuss. 
On Glucophage, which is for diabetes, has the 17 years on that patent 
run out?
  Mr. GUTKNECHT. I do not know about that one. I know some of the most 
important drugs for diabetes have literally been off patent for several 
years, or had their patents renewed. A number of these drugs were 
developed 50 years ago and are still being sold at relatively high 
prices, and the company has recovered all of what you could remotely 
suggest is a cost, and still have received additional patent protection 
from the U.S. Patent Office.
  Mr. KINGSTON. So a patent, if it is gamed properly, it can be a 
government-sanctioned monopoly for drug companies.
  Mr. GUTKNECHT. I think it was Glucophage that originally you had to 
take twice a day. There is a legitimate question whether or not they 
should have gotten an extra 17 years simply because they went from a 
two-a-day capsule to a once-a-day capsule.

  Mr. KINGSTON. I think we should look at that with a very large 
magnifying glass because with what we are seeing with corporate greed, 
and there are a lot of great corporate citizens and CEOs, but the 
accounting games which seem to have been pulled by the Global Crossings 
of the world, and the Enrons and the Arthur Andersens, it seems like 
big corporations are just in it for themselves and are not worrying 
about the good of humanity.
  One of the things that we in the Republican Party did April 24, we 
passed an accounting accountability act to separate accountants from 
consultants and put things at arm's length. I am glad to hear that the 
Senate is waking up to this. I am glad to hear that Mr. Daschle and the 
other body has discovered there is an issue out there. We did ours on 
April 24. The Democratic leadership voted against it. It is time for 
the Senate to act on it. Let us get a bill into conference and hammer 
out the differences.
  I think right now it is time for corporate goodwill to be exhibited. 
It is not time to game the accounting procedures and patent procedures. 
Maybe we as a Congress should look at an issue of patents and when are 
they legitimate and when are they not legitimate.
  I know one thing that we have also done, switching back to the 
prescription drug issue, is shortened the drug

[[Page H4490]]

approval time for FDA. FDA under the Clinton administration was taking 
about 8 years to approve a new drug. Today that is down to 2 to 3 
years, and a lot of that progress was actually made under the Clinton 
administration as well, so I want to give them a compliment where 
compliments are due.
  Mr. Speaker, 3 years is probably as short a time as we are going to 
get. I believe 2 years and 1 month on an average, and generics 
sometimes can take a little longer. But one of the things that our 
constituents complain about is a drug for cancer or epilepsy that is 
being used in France or another country, it has a track record and has 
been on the market for 15 or 20 years but it is not approved in 
America. I think for that reason we have to keep the heat on the FDA to 
get drugs approved faster.
  Mr. GUTKNECHT. Mr. Speaker, I think the whole issue of reimportation 
will begin to force that issue. The question we are really asking today 
is how safe is safe. What is the FDA protecting us from? In their 
effort to make us absolutely safe from any imported drug that is 
clearly legal in the United States, and to keep us safe from drugs that 
have already been approved in other parts of the world, they are 
putting roadblocks in the way, and in many cases are costing American 
lives and not improving their health.
  I think the question we have to ask as policymakers is how safe is 
safe enough. As I mentioned earlier, we import 500,000 tons of pork 
every year. You can get sick and die from bad pork, and yet 500,000 
tons is imported every year with very little inspection by the Food and 
Drug Administration.
  I think we have to be honest with ourselves. Even with all of the 
time and research that goes on, some people are going to have an 
adverse reaction to some drugs. That is just absolutely going to 
happen. Some people are going to take a drug, and they are going to get 
well. Some other people may get sick, and some might die from taking 
that drug.
  There were some studies that came out on Premarin and Prempro. They 
are female hormone drugs. They come from horses. We have known about 
them for literally years and years. What we did not know, that by 
taking these two drugs, either of these drugs, you may begin to develop 
and have a significantly higher rate of breast cancer, heart disease 
and other diseases. I do not know what the future is going to be, but 
the point is we studied these hormone replacement therapies for years, 
and yet we did not know what we now know today about those drugs.
  I think we have to ask ourselves how safe is safe. Is the FDA really 
protecting us from serious injury, and we want them to do that, or are 
they being so careful, both on the reimportation side and on the 
approval side, that they are endangering American lives? We are asking 
them for a serious analysis, and compare what we do in the United 
States with what they do in Europe. Ultimately I think we will get 
drugs on the market faster, we will get generic drugs on the market 
faster, and if we have reimportation, we will get much cheaper drugs.
  Mr. KINGSTON. In terms of tort reform, what the drug companies are 
also telling us is in the two examples the gentleman gave us, if a 
woman is taking a hormone-enhancing drug and because of research down 
the road, for whatever reason, that drug develops or accelerates the 
development of breast cancer, the drug company, of course, is going to 
get sued. What kind of protection should the drug company have, if any, 
in terms of tort reform or liability?
  Remember, when you go to court and you sue, you can get compensatory 
damages for the money you have lost. Then there is noncompensatory 
damages, and that is for pain and suffering. And that is harder to 
calculate, but still possible, it is an agreed-upon figure.
  A third kind of damage is a punitive damage where the State holds up 
the tortfeasor, in this case the drug company, as an example to others 
who would exhibit negligence, and punitive damages really was more for 
intentional or gross negligence, but lately it has not been.
  It would appear to me that limiting punitive damages at some point is 
sensible because the victim is already going to get compensatory and 
noncompensatory damages. We have not had much success with tort reform. 
Is that going to be part of the solution?
  Mr. GUTKNECHT. Mr. Speaker, I think it definitely needs to be part of 
the solution. I think part of the reason that health care costs are so 
high in the United States relative to the rest of the world is the fact 
that we have literally allowed this jackpot justice.
  Now, I do not think that the manufacturers of any of these drugs have 
intentionally put those drugs on the market knowing that they were 
going to have these adverse consequences to whatever percentage of the 
people who take them. I think they have put these drugs on the market 
in good faith believing that the patients would receive a real health 
benefit from taking these drugs.
  My view of tort liability is much more restrictive. I am not an 
attorney. I do not play one here in Congress. I do not think the 
gentleman is one, either. I think we have allowed this whole system to 
go out of control, and we all pay for it. They have a much more 
restrictive system in Europe, and that is part of the reason the drug 
companies are willing to sell the drugs for considerably less in Europe 
than in the United States. So long term, this needs to be part of the 
solution.

                              {time}  1930

  Mr. KINGSTON. Mr. Speaker, may I say the gentleman has brought back 
his chart on the cost of drugs, and that is an astronomical figure, 
$1.8 trillion. In fact, there is a book that was written in Georgia 
several years ago that is called The Coming Economic Earthquake. You 
may have read it, a Georgia author, so I have to brag on him.
  He is saying the difference between 1 million and 1 trillion is that 
if you took $1,000 bills, to stack them up to get to $1 million, stack 
one $1,000 bill on top of another $1,000 bill, it would be about 4 
inches high. That would become $1 million at 4 inches. To get to $1 
trillion, it would be 33 miles high. People do not understand that.
  Mr. GUTKNECHT. One million $1,000 bills would be 4 inches high?
  Mr. KINGSTON. $1 million, 4 inches.
  Mr. GUTKNECHT. Of $1,000 bills.
  And to get to $1 trillion, how high?
  Mr. KINGSTON. Thirty-three miles.
  Mr. GUTKNECHT. Thirty-three miles?
  Mr. KINGSTON. Thirty-three miles. That is from Larry Burkett in The 
Coming Economic Earthquake.
  Mr. GUTKNECHT. Again, these are not my numbers, I am not making these 
things up. The only thing we have done in terms of real raw research is 
we had these drugs brought in Europe, and we found out what they were 
in Northfield, Minnesota, for the same drugs. But the other charts came 
from the Life Extension Foundation.
  This number comes from the Congressional Budget Office, and they are 
the official scorekeeper of what they think things are going to cost as 
we go in the future. Now, they could be wrong. They could be high, they 
could be low. But this is their best guess in terms of how much seniors 
will pay for prescription drugs over the next 10 years. That is $1.8, 
and then a zero - zero - zero - zero - zero - zero - zero - zero - zero 
- zero. It is $1.8 trillion.
  Mr. KINGSTON. Excuse me, but that is just seniors.
  Mr. GUTKNECHT. That is just people over 65. That is just seniors. 
That does not include you and me and our kids and grandkids and 
whomever, all the other people.
  Mr. KINGSTON. How many people are over 65 are on a fixed income? Is 
it not about 70 percent?
  Mr. GUTKNECHT. Yes.
  Mr. KINGSTON. That $1.8 trillion is going to be paid by 70 percent of 
the people on a fixed income. That is incredible.
  Mr. GUTKNECHT. Here is what is interesting. Again, this is not my 
number, but this is what outside experts have told us, that if you just 
do reimportation, just reimportation, allowing seniors or anyone to go 
to their local pharmacy and at least price-shop from country to country 
to get the best price on the same drug, our estimate is you could save 
35 percent.
  Now, 35 percent of $1.8 trillion is $630 billion. That would go a 
long ways to helping to pay for the prescription drug coverage for 
those people who are currently falling through the cracks. We are 
talking about real money.

[[Page H4491]]

  I think Everett Dirksen said a billion here and a billion there, and 
pretty soon you are talking about real money. $1.8 trillion times 35 
percent, $630 million is a whole lot of money.
  I want to congratulate our colleagues for the bill we passed last 
week. There are a lot of good things in it. But I do want to chastise 
them on this. The author of that bill stood here in front of this very 
microphone and said his plan would save about $18 billion over 10 
years. Well, that is good. $18 billion versus $630 billion. I will ask 
America which program they want.
  Mr. KINGSTON. Well, I think that it is sensible to explore both 
options.
  Mr. GUTKNECHT. Right.
  Mr. KINGSTON. I did support the Tauzin bill, the Thomas bill, the one 
the gentleman from Ohio (Mr. Portman) and the gentlewoman from 
Connecticut (Mrs. Johnson) and so many others on the Committee on Ways 
and Means and Committee on Energy and Commerce, the gentleman from 
North Carolina (Mr. Burr), have championed.
  The way I understand that bill, it is basically for a premium of 
about $35 a month, seniors on a voluntary basis would enroll in a 
program where they would take a $250 deductible, and from $250 to 
$1,000 Medicare would pick up 80 percent of the cost of drugs; then 
from $1,000 to $2,000, Medicare would pick up 50 percent; and then 
there is a gap, and there is a reason for that.
  Most of the people are going to fall under $2,000, but from $2,000 to 
about $3,800, the senior would pay for 100 percent. Beyond that, 
Medicare picks up the tab. So you have catastrophic coverage. 
Unfortunately, there are a lot of people these days having to pay 
$6,000, $7,000, $8,000, $10,000, $20,000 a year on drugs. But so many 
people are in a lifestyle now where they have to take three, four, 
five, six pills a day.
  I talked to a man over the weekend or over last week at one of my 11 
town meetings, and he is actually having to take 2 pills a day, $17 
each. So he is having to spend each and every day $34 on just two 
pills. He is only 51 years old. I hope he lives 50 more years at least, 
but the reality is, can you imagine at age 51 having to pay $34 each 
and every single day?
  These miracle drugs are important. They have done a lot. They reduce 
our pain, they give us a better quality of life, they keep us out of 
the hospital, so there is no argument about you are going to take your 
medicine. But the cost of it is phenomenal.
  I do think that the Republican Party took a very significant first 
step on a bipartisan basis the week before last with the prescription 
drug plan. I hope that the other body will act on theirs and maybe we 
can get together. But the point is, we have taken a very significant 
step. But I certainly agree with the gentleman that the next logical 
step is drug reimportation.
  Mr. GUTKNECHT. We only have about 1 minute left. I want to thank the 
gentleman for joining us for this special order tonight. I certainly 
agree with the gentleman. I think it is time we do something in terms 
of covering those seniors falling through the cracks, but I think as I 
said, and the gentleman and I both said at a news conference a few days 
before the vote on that bill, that the real issue is affordability. If 
we are to do our job and effectively deal, we cannot sustain this kind 
of a chart. With 19 percent increases in the costs of prescription 
drugs and 3.5 percent increases in Social Security cost-of-living 
adjustments, that just cannot last.
  We have to do more on the affordability side so that we can do more 
on the coverage side, and reimportation, reforming the FDA, reforming 
the tort liability laws, making it easier for generic drugs to come on 
the market, all of those things will go a long ways toward making 
prescription drugs affordable here in the United States.
  We are willing to pay our fair share in terms of the research for 
those prescription drugs, but the time has come to say to the rest of 
the world, we are not going to continue to subsidize the starving 
Swiss.

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