[Congressional Record Volume 148, Number 95 (Monday, July 15, 2002)]
[House]
[Pages H4664-H4670]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
MEDICARE PRESCRIPTION DRUG PROGRAM
The SPEAKER pro tempore (Mr. Keller). Under the Speaker's announced
policy of January 3, 2001, the gentleman from New Jersey (Mr. Pallone)
is recognized for 60 minutes as the designee of the minority leader.
Mr. PALLONE. Mr. Speaker, I wanted to spend the time this evening
talking about the need for a Medicare prescription drug program and
also highlight the fact that more and more of my constituents, and I
know this is true all over the country, are concerned about the price
of prescription drugs and their inability to buy the medicine or
prescription drugs that they feel that is necessary.
I have been to the floor, to the well here many times over the last 2
years, basically saying that we need on the one hand a benefit, a
Federal benefit under Medicare to provide prescription drug funding for
seniors through Medicare, through the Federal Government and through
the Medicare program. But at the same time I have said that we need the
coverage that would come from a Federal benefit, we also need to deal
with the issue of price because prices continue to go up.
I know that many times during the debate that we had a few weeks ago
over prescription drugs, when the Republican leadership would talk
about their initiative, their bill that ultimately passed the House,
and compare it with the Democratic proposal, which they did not allow
to come to the floor, that there had been a hot and heated discussion
about the differences between the two bills.
Of course, I have been very critical of the Republican proposal
because it is not Medicare. It does not provide a guaranteed benefit,
and it does not address the issue of price; and essentially, what the
Republicans did when they passed a prescription drug bill a few weeks
ago is that they decided to give some money to private insurance
companies to essentially subsidize private insurance companies in the
hope that they would offer drug-only or medicine-only policies to
seniors that the seniors would find affordable.
My major concern over the Republican proposal is that like HMOs,
which are private health insurance, that these private insurance
companies simply would not offer a prescription drug plan, that there
would be many areas in the country where there would be no coverage or
even if there was a private insurer that decided to provide a
prescription drug-only policy, that it would not be affordable and that
essentially we would be passing a program that would never work and no
one would be able to take advantage of as a senior citizen, or at least
the average senior citizen.
I contrasted that and I continue to with the Democratic proposal,
which, as I said, the Republicans never allowed us to bring up; but the
Democratic proposal was simply an expansion of Medicare. We have a
great Medicare program that almost all seniors participate in, covers
their hospitalization, covers their doctors' bills. And what the
Democrats said is we would simply add another plank, or provision, to
Medicare so that seniors could pay $25 a month in a premium. After the
$100 deductible, would get 80 percent of their prescription drug costs
paid for by the Federal Government under Medicare, and after $2,000
out-of-pocket expenditures for these seniors with higher drug bills 100
percent of the costs would be paid for by the Federal Government under
Medicare.
It is a very simple process, expansion of Medicare. The price issue
was addressed by the Democrats, unlike the Republicans, because the
Democrats said that the Secretary of Health and Human Services, who
basically administers the Medicare program now, would have the
bargaining power of 30 to 40 million American seniors under Medicare,
and he would be mandated by the Democratic bill to negotiate to reduce
prices substantially, maybe 30, 40 percent.
So we had a price provision in there, too. The Republican bill, of
course, could not do that kind of negotiation essentially with the
Republican bill because it is with private insurance companies. It is
not Medicare, and all the seniors would not be covered; but just in
case there was some concern about trying to reduce price, the
Republican bill specifically had a noninterference clause that said
that the administrator of the program could not set up a price
stricture or negotiate lower prices.
So we know the Republicans were not seeking to address the price
issue. They wanted to make sure, in fact, that it was not addressed at
all.
During this whole debate, a lot of my colleagues said to me, even
some constituents said to me, why would the Republicans want to put
forth this sham? Why would the Republicans want to pretend that they
are putting forth a prescription drug plan that no private insurance
company will offer or that no senior would be able to take advantage
of? And why do they not want to address the issue of price?
The answer to that is fairly simple, and that is because of the
special interests, because the brand-name companies do not want a
Medicare benefit. They are afraid that if there is a Medicare
prescription drug benefit like the Democrat's proposal and they are
afraid that if there is an effort to address price, that somehow they
will lose profits. I do not believe that because I think if they cover
everybody under a universal program, they will be selling more medicine
and they will make more money.
{time} 2045
Even if the price does come down individually for the senior, the
overall fact that so many more seniors are in the program should make
the drug companies happy.
But they do not feel that way. They are opposed to the Democratic
proposal, and they are doing whatever they can financially to make sure
that the Republican proposal passes and the Democratic proposal does
not. They have been taking out ads, they have been financing a huge ad
program, they have been giving a lot of money to Republican candidates,
Congressmen, and Senators, but I will go into that as part of this
special order this evening a little later.
What I really want to point out is that this effort on the part of
these large pharmaceutical brand name companies to do this, in my
opinion, is very much linked to the overall problem we have in this
country that has been highlighted in the last few weeks of corporate
irresponsibility. We know that many of the corporations, and I do not
have to go through the list, Enron, WorldCom, there are so many out
there now, that basically doctored the books at the request of certain
CEOs or financial officers, used accounting systems to basically doctor
the books and show that they had profits when they were actually
operating at a net loss or at a lot less profit than they reported. And
so nationally, and here in the Congress, in the House of
Representatives, we are getting a lot of my colleagues on both sides of
the aisle coming up and talking about the need for corporate
responsibility; the need for companies, large corporations, to be
responsible in their actions.
I would suggest to my colleagues that the effort of the prescription
drug industry to mask what they are doing, to give large contributions
to candidates, to run massive ad campaigns where they did not even
indicate they are paying the cost of them in order to support
candidates or to support the Republican bill, is another example of
what I call corporate irresponsibility. They need to be held to task.
Now, I want to talk a little tonight, if I could, Mr. Speaker, about
some of the things that these pharmaceutical companies have been doing
to promote the Republican proposal and to oppose the Democratic
alternative. As we know, the other body, this week or next, will be
taking up a prescription drug bill. And since the other body is
dominated by the Democrats, the proposals that are out there are
Medicare prescription drug programs, very much like the House
Democratic bill. So we will probably have the opportunity at some point
in conference to see the House Republican version and the Democratic
version from the other body. So these efforts by the pharmaceutical
companies to kill the House Democratic bill will obviously extend over
the next few weeks in an effort to kill the Democratic majority bill in
the other House as well.
[[Page H4665]]
During the course of the debate that we had in the Committee on
Energy and Commerce on the Republican proposal here in the House, we
actually had to end our debate and our committee hearing one night in
the middle of the markup of the bill because Republicans had to go to a
fund-raiser that was being given by the National Republican Committee
that was being paid for, in large part, or in significant part, by the
pharmaceutical companies.
I want to give a little flavor of that and then I want to talk about
the ad campaign, because I see one of my colleagues has joined us
tonight and I certainly want to yield to him.
But regarding the debate a few weeks ago in the Committee on Energy
and Commerce, there was an article in the Washington Post, and I just
want to read a little bit from it, it says, ``Drug Firms Among Big
Donors at GOP Event. Pharmaceutical companies are among 21 donors
paying $250,000 each for red carpet treatment at tonight's GOP
fundraiser gala starring President Bush, 2 days after Republicans
unveiled the prescription drug plan the industry is backing, according
to GOP officials.'' Not Democrats, but GOP officials.
``Drug companies, in particular, have made a rich investment in
tonight's event. Robert Ingram, Glaxo-Smith-Klein PLC's chief operating
officer, is the chief corporate fundraiser for the gala. His company
gave at least $250,000. Pharmaceutical Research and Manufacturers of
America, a trade group funded by the drug companies, kicked in
$250,000, too. PhRMA, as it is best known inside the beltway, is also
helping underwrite a TV ad campaign touting the GOP's prescription drug
plan. Pfizer contributed at least $100,000 to the event, enough to earn
the company the status of a vice chair for the dinner. Eli Lilly and
Company, Bayer, AG and Merck each paid up to $50,000 to sponsor a
table. Republican officials said other drug companies donated money as
part of the fund-raising extravaganza.''
Then it says, ``Every company giving money to the event has business
before Congress. But the juxtaposition of the prescription drug debate
on Capitol Hill and drug companies helping underwrite a major
fundraiser highlights the tight relationship lawmakers have with groups
seeking to influence the work before them. A senior House GOP
leadership aide said yesterday that Republicans are working hard behind
the scenes on behalf of PhRMA to make sure that the party's
prescription drug plan for the elderly suits drug companies.''
Now, we had an editorial from the New York Times Saturday, June 22,
and I just want to read a certain section where it says: ``House
Republicans, who regard traditional Medicare as antiquated, would
provide money to private insurance companies, a big source of GOP
campaign donations, to offer prescription drug policies. The idea of
relying on private companies seems more ideological than practical.
Even with Federal subsidies, it is unclear that enough insurance
companies would be willing to participate and provide the economies
that come from competition.''
So the bottom line is, and the reason why this scam, the reason why
this Republican proposal, which relies on private insurance companies
and does not address the price issue is out there and passed the House
is because of the contributions from the drug companies.
And just today, and there is so much more I could talk about, but I
want to hear from my colleague from Maine, just today, Public Citizen
issued a report and basically unmasked the ad campaign that PhRMA and
the other drug companies have been conducting, which started, I guess,
about a month ago and continues.
Basically, what PhRMA and the drug companies are doing is they are
contributing money to United Seniors Association, which is the front
senior group that is now running these issue ads in various Republican
districts, telling people how wonderful Republican Congressmen are
because they voted for this Republican bill, this sham bill.
It is amazing to me. I had no idea how much money we were talking
about here. A few weeks ago we thought it was $2 million, $3 million,
or $4 million. Now this report from Public Citizen shows clearly that
it is already $10 million, and who knows where it is going, $20
million, $30 million, $40 million, $50 million, maybe $100 million that
the drug industry is going to pay to try to promote the Republican
bill.
I just want to give a little breakdown of some of the things that
this report says about United Seniors Association that is fronting the
pharmaceutical industry ads. It says today that ``Public Citizen
estimates that USA,'' that United Seniors Association, I hate to use
the acronym USA for them, but that is what they use, I guess, ``that
United Seniors Association has spent $12 million on issue ads during
the past 17 months. The lion's share of this spending, $9.6 million,
was used to promote President Bush and House Republican leaders'
prescription drug plan.''
It is amazing to me, because this talks about how in the 2000
election United Seniors Association joined Citizens for Better
Medicare, which was also a drug industry front group created by the
brand name drug company's trade association PhRMA, and they spent
approximately $65 million on TV advertising, a large chunk dedicated to
electioneering issue ads.
So I do not know, the sky is the limit. I have to assume that we are
probably talking, what, maybe $100 million, if 2 years ago it was 65.
Maybe now it will be 100. With inflation and everything, it is probably
going to go up.
I will not go into all this now because I see my colleague from
Maine. But we have to point out, and I want to say to my colleague, who
has been the person that has been the most outspoken in this Congress
on the issue of price, and how the price of prescription drugs is just
making it impossible for so many people, and not just senior citizens
but all Americans, to afford their medicine any more. It is just a
shame that the reason this is happening is because of the money coming
from the brand name drug industry.
I said before that we keep talking about corporate responsibility. I
think this is the height of corporate irresponsibility that they spend
this kind of money to basically back a plan that will help no one, in
my opinion.
I yield to the gentleman from Maine.
Mr. ALLEN. Mr. Speaker, I thank the gentleman from New Jersey for
yielding to me and for his leadership on this issue; for constantly
trying to articulate to the American people the profound differences
between the Republican prescription drug plan and the Democratic
alternative here in the House.
As the gentleman knows, the Republican plan that was passed last
month in this House was really a remarkable plan. Members on the
Republican side stood up and said there is a $35-a-month premium. They
repeated it over and over again, $35-a-month premium. Yet when we go to
the bill and try to find the $35 figure in the bill, it is not there.
It is only an estimate. This is a bill with no guaranteed monthly
premium, no guaranteed copayment, no guaranteed reduction in price.
It is one of those marvelous things that my friends on the other side
of the aisle think will somehow emerge from the wonders of the private
sector; that we will have a private stand-alone insurance policy that
will take care of seniors. It is remarkable that they can imagine a
world in which the insurance industry, which has said repeatedly we
really do not want to provide these kinds of insurance policies, will
have a change of heart and will step forward and will provide a policy
that will not change year to year, will have a consistent premium, a
consistent copay, and some reduction in price. We know it will not
happen.
Anybody who has been paying any attention to politics in the last 2
years knows that if this prescription drug coverage for seniors were a
priority for the Republican Party, it would have been brought up last
year; that it would have been brought up before the tax cut. But for
Republicans, tax cuts for the wealthy are far more important than
prescription drug coverage for seniors. Now we can see that, as the
gentleman referred to a few moments ago, the pharmaceutical company is
thanking our friends on the Republican side of the aisle for coming up
with this sham proposal and voting for it.
This is a hope, which has proved successful in the past, that if you
repeat something often enough to a large enough group of people, a
certain percentage of them will actually believe
[[Page H4666]]
it. And that is basically what is going on. Almost $10 million spent by
the pharmaceutical industry in the last 15 months or so, $4.6 million
in the last 2 months alone, thanking Republicans for supporting a bill
that has no guaranteed premium, no guaranteed benefit, no guaranteed
reduction in price, no guaranteed copay, but sounds good.
It is another election year inoculation. And if we are not successful
this year in passing a real prescription drug benefit, then 2 years
from now Republicans will step forward and they will say, just before
the next election, we have a plan. We have a plan, and somehow it will,
like magic, emerge.
There was a physician in Bangor, Maine, who wrote recently in a
letter to the editor, and I quote, ``The bill would be dropped like a
bad date by House Republicans if they and President Bush did not need
it in reelection campaigns.''
It seems to me that this really comes down to a question of values,
and the fundamental value is whether the first priority, when it comes
to prescription drugs, is to protect the profits of the pharmaceutical
industry or whether the first priority is to make sure that our seniors
can afford to buy the drugs that their doctors tell them they have to
take.
Now, the first half of last year, as my colleague will remember, the
President traveled all across the country, and there was not any talk
of prescription drugs for seniors then. It was one theme repeated over
and over and over and over again: It was simply, ``It is not the
government's money, it is your money.''
{time} 2100
Mr. Speaker, it was an appeal to the American people to think of
themselves first, to think of their own individual interests before the
common good. That appeal was pounded in in the first 6 months of the
administration, pounded in over and over again. It is not the
government's money; it is your money.
What is the refrain today? Now that we are deep in deficit with $165
billion projected deficit for this year with a comparable deficit
projected for next year, is there an effort to say, We are in this
problem together and we have to work out of it together? No. What we
see is the same kind of appeal to individual interests over the common
good and the common interest.
Mr. Speaker, the question really is when it comes to prescription
drugs and the other issues that we face before us, whether the
governing ideal of this House of Representatives will be me first or
all of us together. That really is the fundamental choice. Those who
come and say we are going to rely on private stand-alone insurance for
prescription drugs for seniors are really saying that each individual
should go out and buy his or her own insurance policy rather than
having the Secretary of Health and Human Services, as in the Democratic
bill, negotiate lower prices on behalf of all Medicare beneficiaries.
That is what we have done in our legislation. We have said seniors
belong to the largest health care plan in the country. It is called
Medicare. Well, they ought to get a discount. If they are in the
largest health care plan and 39 million Americans are getting their
prescription drugs through Medicare, there ought to be a discount that
reflects the market power of that buying group; but seniors on Medicare
do not have the buying power of Aetna beneficiaries or Cigna
beneficiaries. They do not have bargaining power at all today.
We have this anomaly. We have the largest group of health care
beneficiaries in the country, Medicare beneficiaries, paying the
highest prices not just in the United States but in the world for their
prescription drugs. Here we have a group of seniors that make up 12
percent of the population, but they buy one-third of all prescription
drugs, 33 percent of all prescription drugs. Half of them have either
no coverage or very inadequate coverage for their prescription drugs,
and our friends on the Republican side of the aisle, for fear of
strengthening Medicare because it is a Federal health care plan, are
basically saying no, no, you have to rely on the private insurance
market.
In Maine and many other rural States, 15 to be exact, there is no
private managed care under Medicare, no options at all. And those who
say the private market provides more choice ignore the fact when
private insurance companies do not want to offer prescription drug
coverage or health insurance in a particular area, they just pull up
and leave.
We have a program that works. It is called Medicare. It has kept our
seniors with affordable health care despite its flaws, despite its
problems. There is not a health care plan in the world that does not
have problems. It has lifted seniors out of the condition where a trip
to the hospital meant a trip to the bankruptcy court as well. That is
something we have to preserve.
But coming back to this question of values, what we have seen in all
of the corporate scandals over the last few years is an attitude at the
top in too many American corporations which basically comes down to the
same thing, me first. I will get mine. We will cook the books, drive up
the stock price, and then the CEOs and officers sellout. And who gets
hit in the end? The shareholders get hit in the pocketbook.
Shareholders find that their pensions have dropped dramatically. What
happens to the workers? They get laid off. They do not have all this
money tucked away. They cannot party on their yachts when they leave
the company, as some CEOs have done. They are stuck. This is
fundamentally a question about values.
Are we going to take our common problems and deal with them as common
problems, or are we going to say to the American people, as our friends
on the other side of the aisle do all the time, each person on his own?
Each person stands alone. Do the best you can with what you have got,
but we are certainly not going to all work together.
Well, it is time for this country to pull together. It is time for us
to take our common challenges, our economic challenges, our health care
challenges, our environmental challenges and work together to build a
better and stronger America. I know we can do it; but we have to shed
that old motto, the ``me first'' motto and get to something that really
reflects how much we depend on each other and how much we need to work
together to build a better country.
Mr. Speaker, I thank the gentleman from New Jersey (Mr. Pallone) for
his leadership on this issue.
Mr. PALLONE. Mr. Speaker, I have to say until I saw this latest
information about the level of funding that was going to United Seniors
Association and how much money they were spending on this ad campaign,
I still was under the belief that some of our Republican colleagues did
not like the Democratic proposal and liked the private insurance option
because ideologically they did not like Medicare, they thought Medicare
was not a good program, they did not like government, and they had a
hard time supporting a government program like Medicare, even if it
works, because it is a government program.
But I am becoming more cynical now as I see the level of funding that
is being spent on these ad campaigns and how it is just targeting
Republicans, and particularly Republicans that are vulnerable. If we
talk about a $100 million ad campaign divided over some of the most
seriously contested seats, it will be almost as much money as some of
the candidates will spend on their own campaigns. I think the support
on the other side is linked to the money, is linked to the fact that
PhRMA and the drug companies are putting all this money out to promote
Republican campaigns.
I am so glad that the gentleman raised the value issue. That is what
this is about. This is about some greedy people who want to make more
profit and do not care about the consequences for the average senior.
Last week, last Thursday I believe, there was a bus load of about 50
seniors that came from New Jersey. They did not go to Canada; they were
highlighting that they were taking a bus to come to Washington instead
of Canada. The gentleman from Maine knows about all of the people that
go over to Canada because of the cheaper drug prices. We had 15 buses
that went the week before to Canada from all of the border States. All
the seniors from New Jersey were talking about was the price, how the
price of prescription drugs keeps going up, and it is so
[[Page H4667]]
unaffordable to them. I do not understand how these brand-name drug
companies can spend $100 million on ad campaigns which are going to do
nothing more than prevent these senior citizens from getting the
medicine that they need. It is pathetic. It really is.
Mr. ALLEN. Mr. Speaker, they may be spending millions and millions on
contributions to candidates, on TV ads promoting their point of view,
or the feel-good ads about the industry itself as a way of trying to
resurrect the industry's image; but it is also the case that many of
the drugs that they have been developing these days are so close to
drugs that already exist on the market that they cannot get the kind of
sales volumes they want without a very heavy investment into direct-to-
consumer advertising. Last year the industry spent $2.5 billion on
direct-to-consumer advertising. We can feel what has happened to the
industry. It really has become a marketing operation. They depend very
much on blockbuster drugs. Some of those drugs are blockbuster. This is
an industry that does some remarkable things, but they move from the
argument that we are earning very high profits right now to the
conclusion that we have to sustain those profits at exactly the level
we are at; and more particularly, that we have to charge our seniors
the highest prices in the world in order to get enough money to do
research. That is not true.
Just think about it. We are 280 million people in this country.
Thirty-nine million are on Medicare. That is a very small percentage of
the total market for prescription drugs in this country. There are 330
million people living in Europe, 125 million living in Japan, 25
million living in Canada. There are lots of people around the world who
are buying prescription drugs. They are all paying lower prices than
the seniors, that 39 million or maybe half that, really, half that
group which is buying their prescription drugs from the pharmacist with
no support from an insurance company.
Mr. Speaker, it just cannot be the 20 million Americans, very high
prices charged to 20 million Americans, is the salvation of the
pharmaceutical industry. It cannot be. It is not true.
But if we give enough money to groups like United Seniors
Association, which sounds like a legitimate seniors organization, and
they will run ads supporting the pharmaceutical industry's solution to
the issue that is raised here, thanking our friends on the Republican
side of the aisle for supporting a bill that will do virtually nothing
for America's seniors, then we begin to understand how money has
distorted the policy-making process in this House.
It is profoundly troubling that we cannot get a clean vote even. We
could not get a clean vote from the Republican Committee on Rules on
the Democratic alternative. That, I think, is a scandal that if people
fully understood, they would be outraged about. They expect us to have
a debate here. They expect us to have a choice between competing
alternative plans, and we do not. The Democratic plan gets buried in a
few minutes of debate on a procedural motion. That is another part of
the scandal that really we need to deal with.
If we do not pass a real Medicare prescription drug bill this year,
we will just do it again 2 years down the road. They will come in with
a bogus plan and hope that once again for the third cycle in a row that
enough of the American people will be fooled into thinking that for
them, prescription drugs is as important as tax cuts for the wealthy.
It is not. We know it is not; but that is the continuing effort, to try
to prove that they care.
Mr. PALLONE. Mr. Speaker, reclaiming my time, what I do not
understand, it seems to me if we provide a Medicare benefit the way we
have proposed as Democrats, and we take in that other half of the
senior population, 20 million that are having problems, some of them
are not buying the drugs or have difficulty, we are going to increase
the volume of sales that the brand-name manufacturers are going to
have. If we do some of the other things, like the gentleman has
addressed the issue of price, not just in the context of a senior
benefit, but we have collectively talked about doing more with
generics, like the other body passed the bill last week that would plug
up the loopholes and make it easier to move to generics.
{time} 2115
We have talked about this: I know that in the other body, one of the
Members has a bill which I have sponsored here that would eliminate the
tax underwriting of advertising for pharmaceuticals. I mean, those are
the kinds of things that would make a lot more people, even those who
are not seniors, able to buy drugs. Even generics, a lot of the brand-
name companies own a lot of the generic companies too, so it is not
like there is this huge division between generics and brand names. A
lot of the brand-name companies manufacture generics too.
So why is it that they do not see the increased volume that would
come with that with many more Americans purchasing the drugs, even at a
reduced price, as basically lifting their sales and their profits as
well? That is what I do not understand.
Mr. ALLEN. Mr. Speaker, I am confident that they do. They do, in
fact, understand that. The evidence I would give for that is the
largest pharmaceutical company, Pfizer, has offered to seniors living
under 200 percent of the poverty level, with incomes of less than 200
percent of the poverty level, they have said that we will sell to you
all of our drugs, which average in retail $61 or $62 a month; we will
sell all of our drugs to you for $15 a month. That is a 75 percent
discount; $61 and $62 drugs on average, all of them for $15 a month.
How can they do that? Well, they will sell more medication. They will
sell more drugs. We can bet that the cost of producing pills is a very,
very small amount of the sale price. There is a lot that goes into
research and development, no question. There is a lot, obviously, that
goes into marketing. But the cost of production itself is a minor
thing.
Mr. PALLONE. So what the gentleman is saying is that there may be one
or two companies that see the benefit if they can get a larger volume;
but overall, the trade group PhRMA does not see it that way, and they
would rather keep their prices artificially high.
Mr. ALLEN. Mr. Speaker, I would distinguish between what they say and
what they believe. Because if we look at all of the pharmaceutical
industry drug discount card plans, they are out there advertising their
discounts at being between 25 and 40 percent. That is what we have been
talking about with my legislation and with other bills, getting to a 25
to 40 percent discount for all seniors. The pharmaceutical industry is
out there saying, we have discount cards that will do that; we have
discount prices that will do that.
Now, the question is, if they are willing to do that, what is the
problem with the legislation that requires them to do that? Well, the
answer is, we do not want to be hemmed in. We do not want to be
required. We do not want the government to be able to tell us what to
charge. In fact, a promise that is made on a temporary basis to say, we
are going to promise you 25 to 40 percent does not mean they can
actually deliver that or will deliver it. They will, in all likelihood,
do what they have done with all of their other markets, which is charge
what the market will bear; and if they give a little bit of a discount
today, they may take it away tomorrow.
Seniors need predictability and continuity and stability in their
Medicare plan. They need to know what the benefits are; they need to
know what the premiums are for whatever services they are getting. If
it is a physician service or if it is, as we have proposed, a
prescription drug benefit on top of that, they need to have
predictability. The pharmaceutical industry is not willing to provide
it voluntarily. That is why we need legislation, so that seniors can
sleep at night knowing that they are going to be able to take the
medication that their doctors tell them they have to take.
That ultimately is the goal, because ultimately, lifesaving
prescription drugs should not be dispensed on the basis of seniors'
income. They ought to be dispensed on the basis that everyone who needs
the medication will be able to get it; everyone should be able to have
to pay some portion of the cost, but people who need lifesaving drugs
ought to be able to get them.
Mr. PALLONE. Mr. Speaker, I see that the gentleman from Ohio (Mr.
[[Page H4668]]
Strickland) is here joining me. I know he was there at the Committee on
Commerce markup the day that we had to adjourn so that the chairman,
the Republican chairman of the committee and other Republican members
could go to the big fundraiser; and at the end, at 5 o'clock, because
we knew that the clock was getting close to 5 and they had to leave for
the fundraiser, we were sort of kidding them and hoping that they would
stay for an extra half hour or hour; but boy, they certainly did not
want to do that; they were determined to get out of there by 5 o'clock,
no matter what. I mean, I laugh, and it really is not funny, because we
have talked about the consequences in terms of seniors. But there is no
question about what they were up to that night.
Mr. STRICKLAND. Mr. Speaker, I want to thank my friend. I was there
and, as the gentleman knows, the next day we worked all day long and
all night long; and we finally passed out a bill which only provides
coverage for a person who has a prescription drug need of $400 a month.
The bill that finally passed out, the Republicans passed it out, would
only provide coverage for 4\1/2\ months out of the 12-month year; and
yet the poor senior would have to pay premiums every month, even during
the months when they were receiving no coverage at all and, as the
gentleman knows, they tell us that the premium would be on average $35
a month, but there is no guarantee that it would not be $65 or $85 or
$125 a month.
So it is quite shameful, I think, that at a time when nearly every
person in this Chamber, as they go home and talk to their constituents,
say the right words, and they tell their seniors that they want to get
them a prescription drug benefit and they want it to be affordable and
they want it to provide choice, but when it comes to making the tough
decisions here in this Chamber, they simply make the wrong decision.
Now, the Democratic proposal would add a voluntary drug benefit to
Medicare. Why is that important? I know the gentleman from New Jersey
and the gentleman from Maine have been talking about the fact that
every citizen in every other country on Earth pays less for their
prescription medications than does the American citizen. That is really
quite sad because, as the gentleman knows, so many of these drugs are
discovered, developed using tax dollars. So the American citizen pays
the taxes to help develop these drugs, and then the pharmaceutical
companies decide they are going to charge American citizens more than
citizens anywhere else on Earth. That is shameful, and we ought to
change it.
But there is something that I think is even more shameful than that,
and that is the fact that here in America, America's most vulnerable,
who are our elderly, our seniors citizens, end up paying more for their
drugs than do HMOs or large insurance companies or even the Federal
Government. Why is that? It is simply because the individual senior
citizen does not have any clout when it comes to buying their
medications. They are only one little individual. And the large
insurance companies, the large HMOs and the Federal Government, they
buy in bulk, they buy in large quantities, and so they can get
discounts. But the individual senior citizen, because we have no
Medicare benefit, just simply is on their own. It is quite shameful.
It is troubling to me that this vulnerable population, the people who
are most likely to be on fixed incomes, are seniors; the people most
likely to have chronic health conditions that require continuous
medications for the rest of life are senior citizens. The population
that is most likely to need multiple medications are senior citizens.
Yet senior citizens are the ones who are being charged the most for the
medications. There is something really fundamentally wrong about that.
I believe the American people expect us to fix that problem.
I hope the American people are paying attention, because we are going
to have an election here in 4 months or so, and I believe that those of
us who are willing to stand up to the pharmaceutical companies, to
stand for America's senior citizens, to fight for a Medicare
prescription drug benefit that is predictable, affordable, voluntary,
accessible to any senior who wants to participate, I think we are the
ones, quite frankly, who deserve to be returned to this lofty Chamber;
and I believe those who will not support America's senior citizens,
quite frankly, do not deserve to return to this Chamber.
So I hope the American people are paying attention. It is important
that they pay attention to the details because, as the gentleman knows,
the devil is always in the details, and words are cheap, talk is cheap.
Certainly actions speak louder than words, especially when it comes to
this particular issue.
I would like to point out another problem that I think deserves
attention. The Congress, I think, must take action in this era of
corporate misdeeds. They must look at the drug industry's behavior,
including the misstatement of profits and the abuse of patents.
Particularly damaging to consumers is when drug companies use patent
laws to file frivolous claims that extend their market exclusivity,
blocking far more affordable generic drugs from coming to the market. I
would just like to use a case in point.
Prilosec is a case study of the failure of our current patent law.
Many seniors in my district take Prilosec. It is a good medication. It
is the number one medication prescribed for seniors for the treatment
of heartburn and acid reflux disease. Now, the original patent for
Prilosec expired in October of 2001, but the manufacturer delayed
market entry of a generic by filing nearly a dozen lawsuits and by
claiming that Prilosec has unique benefits when administered with
applesauce. As a result, the generic manufacturer had to do time-
consuming research on how the generic research works when given with
applesauce before it could be approved.
In 2001, the company had Prilosec sales of more than, and this is an
astounding figure, more than $16 million per day. And during the year,
the company raised the price of Prilosec by more than four times that
of the rest of the inflation within our economy.
Now, this specific scenario and others like it amount to an
incredible windfall for the drug industry, one that Congress simply
must not allow to continue. These higher drug prices hurt seniors who
depend on Medicare the most, because they are not shielded by the full
cost of drugs like those who have insurance coverage.
During the past 10 years, 10 of the 50 drugs most frequently used by
seniors were generic drugs, while the remaining 40 were brand-name
drugs. Now, the prices of generic drugs used most frequently by seniors
rose 1.8 percent, 1.8 percent from January 2001 to January 2002. During
the same period, prices for the brand-name drugs increased by an
average of 8.1 percent, or three times the rate of inflation.
So I think this brings us to only one reasonable conclusion and that
is that we need a voluntary prescription drug benefit with a
predictable premium that is a part of the Medicare benefit package that
America's seniors can depend upon, just as they depend upon the
Medicare system today.
As I said, I hope the American people are paying attention, because
talk is cheap, actions speak louder than words; and those who do what
is right for America's senior citizens, in my judgment, are those who
deserve to remain in this institution. And those who turn their back on
America's seniors and instead support the pharmaceutical industry, they
are the ones that I think have relinquished their right to serve here.
{time} 2130
Mr. PALLONE. Mr. Speaker, I want to thank the gentleman because he
brought up so many good points on this issue. But particularly when the
gentleman was talking about the roadblocks, if you will, that the
brand-name companies put up to try to prevent generics from coming to
the market, I think that is so significant.
As the gentleman mentioned earlier, the other body last week actually
passed out of committee a bill that would close a lot of these
loopholes with the generics, and particularly this idea that once they
file suit, it is up to 30 months that they can prevent the generic from
coming to market. Thirty months? We are talking about almost 3 years,
2\1/2\ years, which is absolutely crazy, when we know all these seniors
that are out there that are suffering.
[[Page H4669]]
In fact, they passed that bill before they even passed the benefit
bill. They are probably going to attach the benefit structure to that
bill. I have to say that the other body, I think in large part because
they have a Democratic majority, has been trying to address this price
issue even before, in a sense, they have addressed the benefit issue,
because they realize how important the price issue is.
The gentleman could argue, and I do not agree with that, but the
gentleman could argue that if we addressed the price issue effectively,
that that would go far toward solving the problem. I still think we
need the benefit; but we need both, essentially.
I just find that so often the issue of price, though, is what people
talk about, as my colleague, the gentleman from Maine, knows. That is
what our constituents are constantly bringing up when we have a town
meeting or when we see them on the street. That is what they talk
about: how to address the price issue.
The Republicans here in the House did absolutely nothing to address
that issue. They had that noninterference clause. I actually brought it
with me, because it is amazing.
The gentleman will remember, in the Committee on Commerce markup,
they never even mentioned it. They sort of suggested they were going to
have discounts through competition. I remember the Republican chairman
kept saying, well, we are going to have discounts.
I think the gentlewoman from Connecticut (Mrs. Johnson) on the floor
said there was going to be a discount because of competition between
the private insurance companies. But they have right in the bill, I am
just going to read it, that ``the administrator may not institute a
price structure for the reimbursement of covered outpatient drugs, or
interfere in any way with negotiations between the sponsors and
Medicare+Choice organizations and drug manufacturers'' that relate to
price. In other words, they cannot bring up the price issue in the
course of negotiations.
It is just amazing to me how, on the one hand, they suggest that
somehow these private insurance companies are going to compete with
each other, but that has to be totally on their own. That cannot be
anything that the administrator of the Medicare program does. They
cannot interfere in any way to try to bring the price down.
Mr. STRICKLAND. If the gentleman will continue to yield, Mr. Speaker,
that provision certainly was influenced by the pharmaceutical industry.
Basically, they are putting into law a prohibition on the Secretary of
Health and Human Services, who is supposed to be representing the
American people. They are really going to try to prohibit him by law
from doing anything that is going to lower the prices of these
prescription drugs.
Mr. PALLONE. Exactly.
Mr. STRICKLAND. Why would we do that if it were not simply to satisfy
the pharmaceutical industry?
I want to tell the gentleman, this is not a Republican or Democratic
issue back home at the grassroots. I went to a VFW hall this past
Sunday morning for breakfast, and there were people there at that hall
that were talking about not being able to afford their medicines. They
were Republicans and Democrats. This is an issue that cuts across
parties.
It cuts across economic levels, as well, because people can be fairly
well-to-do and be unable to see that their parents or their relatives
or their neighbors, their elderly neighbors, have access to life-saving
medications.
People are sick of this. They are absolutely outraged at what is
happening. Why that outrage does not result in some meaningful action
here in the House of Representatives is beyond me. This problem has
been with us for quite some time. We talk and we talk, and we have
campaigns, and we say we are going to do something about it; yet time
passes, and then we go through that kind of farcical exercise that we
went through in our committee, where every amendment that we brought up
that was designed to make these drugs more affordable was shot down by
our Republican friends. They simply would not take the first step in
trying to lower the cost of these drugs.
They use all kinds of rhetoric. They talk about price controls. Well,
I think when a pharmaceutical company charges a large HMO a certain
amount for a medication and then charges some elderly, sick, income-
limited senior citizen two or three times as much for that same
medication, I think that is price discrimination; and I think that is
what we should be looking for, getting rid of price discrimination that
is directed toward America's most vulnerable citizens.
Mr. PALLONE. Mr. Speaker, if the gentleman will remember
specifically, they actually went the opposite direction, because they
wanted to eliminate the Medicaid, not Medicare, but the Medicaid price
structure, if you will. And actually they did vote to do that at one
point and suggested that somehow it was something that the
pharmaceutical industry opposed; that somehow the pharmaceutical
industry did not want to eliminate the pricing structure that existed
under Medicaid. That is just not true. That was another thing that was
a bone, basically, to the pharmaceutical industry.
And then I remember the biggest affront to me is when, I think it was
our colleague, the gentleman from Michigan (Mr. Stupak), who introduced
a couple of amendments that would basically use the negotiating or
price structure, the price negotiations that we use now for the VA and
I guess maybe for military, as well, and we just wanted to take that
and use it for seniors. They said no, no, we do not want that; we
cannot do that for seniors. We can do it for the military and the
veterans, but we cannot do it for the seniors. It was amazing.
Mr. Speaker, I yield to the gentleman from Maine (Mr. Allen).
Mr. ALLEN. Mr. Speaker, I thank the gentleman for yielding; and I
agree with my friend, the gentleman from Ohio, that this is really an
issue of price discrimination. Why do seniors in America pay the
highest prices in the world? It is because, frankly, they do not have
any bargaining power or leverage now. The only way they can get that
leverage, get that bargaining power, is through Medicare, through
giving the Secretary of Health and Human Services the ability to
bargain on their behalf.
I have to smile sometimes when we hear about how competition is going
to drive down price. Well, I am open to hearing from anybody the last
time there was a price war among brand-name pharmaceutical companies,
where first one cut prices and then another cut prices, and then the
original one responded with a further cut in prices. I do not remember
that happening, ever.
In fact, the prices basically keep going up, even though the
utilization is also going up. Even though people are using more drugs,
they are buying more drugs; and it does not cost that much to make
them. So when people use more Prilosec, or whatever, the profits go up
at a very rapid rate; but even so, the pharmaceutical companies are
increasing prices on brand-name drugs. We do not have competition.
Mr. PALLONE. We do not because we have a monopoly. Basically, the
patent structure is giving a particular company a monopoly for that
particular drug for a period of time. Unless we allow generics or
others to come in, which they obviously try to prevent, as my
colleague, the gentleman from Ohio, mentioned, we essentially have a
monopoly for a period of time and do not have competition.
The thing that was amazing to me, too, is this whole idea that they
are going to create competition among the private insurance companies,
but the private insurance companies do not even offer the insurance.
How can there be any competition? That is the competition they are
talking about with the private insurance companies.
Mr. STRICKLAND. If my friend, the gentleman from New Jersey (Mr.
Pallone), will continue to yield, I keep going back to the fact, how
long are the American people going to tolerate this situation? We can
go to Canada, we can go to Mexico, Belgium, England, Japan, we can go
anywhere on Earth and buy medications that are developed within this
country, many of them, in part using American taxpayer dollars; and we
can buy those medications with much less cost to the consumer than the
American citizen must pay.
[[Page H4670]]
How much longer are the American people going to put up with that
situation? This is just a matter of gross discrimination. American
citizens are subsidizing the costs of prescription medications for
citizens all over this world. When are we going to put a stop to it?
When are we going to say that our people are being treated unfairly?
Then, when are we going to say that in this country, America's
seniors are not going to continue to be gouged and charged more than
insurance companies or HMOs for the same medication? It seems like a
no-brainer to me. I cannot understand why there is so much
determination on the other side of the aisle to keep us from taking
action against this situation.
Mr. PALLONE. I want to thank my colleagues. The answer, obviously, is
because of what the brand-name pharmaceutical companies are doing to
pay for the ads and pay for the campaigns. It is the special interest
money.
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