[Congressional Record Volume 148, Number 98 (Thursday, July 18, 2002)]
[Senate]
[Pages S6968-S6971]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                           PRESCRIPTION DRUGS

  Ms. STABENOW. Mr. President, I appreciate very much being recognized 
and having an opportunity this morning to speak regarding the situation 
I believe we are in and the challenges right now as they relate to 
moving forward on addressing prices and cost containment in the 
pharmaceutical industry.
  We heard a lot of discussion yesterday. We had the opportunity to 
debate whether to open the border to Canada to have more competition 
between the prices that American companies charge in the United States 
and those in Canada. I was pleased we were able to move forward and 
come together on a plan to open the border, and now we place it in the 
hands of the Secretary of Health and Human Services to certify the 
difference in prices which we know are there and the fact that there is 
no safety risk, which we know is the case. So I look forward to moving 
ahead.
  A lot came up during that debate and I did want to, as we set the 
stage to debate additional efforts today to lower prices, speak as to 
how I view the situation in our country right now with our most 
profitable industry. I welcome the fact that we have a very profitable, 
successful prescription drug industry. There are new lifesaving drugs 
being created that keep people out of the hospital and living longer. 
We celebrate that.
  Over the last several years, we have seen more and more of a focus on 
selling and marketing and promotion than creating the next generation 
of lifesaving drugs. That is of great concern to me. When we talk about 
reducing prices, we hear that means reducing research and development. 
Yet there is nothing today that indicates that is factually accurate.
  Yesterday, Family USA produced another study showing the companies 
are spending 2.5 times more on advertising, promotion, marketing and 
administration than they do on research and development. The blue on my 
chart is R&D and the gold is advertising and marketing. For each of the 
top drug companies, the gold line is much higher than the blue line. We 
know there is more being spent in this effort.
  We also know when you look overall at the profits versus R&D, we see 
stark numbers. Merck is a successful company in the United States. 
Their profit was three times more than what they spent on R&D last 
year. I do not begrudge that profit margin, but if we are going to have 
the next generation of new lifesaving medications, we need to see that 
R&D is the focus and that prescriptions are affordable. If they are not 
affordable, they are not available. That is not acceptable. This is 
about trying to get some balance in the system. Pfizer had 1.5 times 
more in profit last year than what they spent on R&D. They spent more 
on advertising than on R&D.
  In the context of what we are talking about right now with corporate 
responsibility, and companies where executives take the dollars and 
run, leaving the shareholders or employees holding the bag, my concern 
is that while we are talking about the need to stop prescription drug 
prices from rising three times the rate of inflation, which is the 
average right now--the average drug used by seniors last year went up 
three times the rate of inflation. Our seniors do not have insurance 
coverage and are paying the highest prices in the world--but these 
companies are making top profits in the world today, and we find 
astounding salaries in compensation for the CEOs. I do not begrudge it, 
but I do when our average senior is deciding this morning: Do I eat 
breakfast or do I take my medicine? Companies are saying, no, they 
cannot lower prices; they could not possibly have more competition, 
they cannot open to Canada, they cannot allow more generics on the 
market, they cannot possibly handle more competition, or lowering 
prices without cutting R&D.

  I am offended when I look at the numbers, when we are seeing more on 
promotion and advertising, more on the sales machine than on research 
and developing new drugs, more in profits, way more in profits than 
R&D, and more in the compensation for those at the top.
  I will not name individuals, but we see the five highest paid 
executives in the industry, and the top at Bristol-Myers, with a salary 
of almost $75 million last year in direct compensation, not counting 
unexercised stock options. Compare that to the average senior who is 
either not getting their medicine, cutting their pills in half, or 
taking them every other week; families who are struggling; small 
businesses whose premiums are skyrocketing and are having trouble 
affording health care for their employees because of 30 to 40 percent 
premium increases, mostly because of prescription drugs, and employees 
are told they cannot get a pay raise next year because the company has 
to cover more in medical premiums. I believe that company is sincere in 
having to struggle with those benefits, those prices.
  Put that picture together with that of the drug companies, one of the 
most highly subsidized industries in the world: $23.5 billion we as 
taxpayers put into the National Institutes of Health this year. So the 
companies can take that basic research, and I support that--I would 
support more--they take that basic research, and they then develop 
their drugs. We give them tax credits and tax writeoffs to develop 
through research. We also give them tax writeoffs for their 
administration, their sales, their marketing. We give them a 20-year 
patent so they are protected from competition for their name brand so 
they can recover their costs for R&D. What do we get at the end? The 
highest prices in the world, and an effort to fight everything we are 
trying to do in the Senate--to increase competition and to lower prices 
and to provide Medicare benefit.
  Then to add insult to injury, we see those at the top of the 
companies that who are fighting us earning $75 million a year, $40 
million a year, $28 million, $23 million, $15 million a year. We see 
unexercised stock options. At the top is Merck, $93 million in 
unexercised stock options; $76 million; $60 million; $56 million; $46 
million.
  I could live on that. I think everybody within the sound of my voice 
together could live on that. I don't begrudge that. But I do begrudge 
people in that category heading companies that fight everything we do. 
They have put more money into their lobbying corporation than anybody 
else. For every one Senator there are six drug company lobbyists who 
spend their time more on sales and marketing than anything else.
  Let me speak from the standpoint of our future health care 
discoveries. In Money and Investing, the Wall Street Journal, there was 
an article about a merger this week, and one of the disturbing parts of 
that was this:
  After falling for 5 years, new drug applications to the Food and Drug 
Administration are expected this year to slide further. Through the 
first 5 months of this year, the FDA had received just two new 
applications for new drugs. Last year, total new drug applications 
dropped to 24, less than half the 53 received in 1996. Many in the 
industry say that past mergers may be among these reasons for these 
drops in new drug discoveries.
  What I see is an effort more and more to focus on the fast, easy 
money, the quarterly report. Eighty percent of the new applications for 
patents now at FDA are not for new lifesaving discoveries that increase 
our longevity and deal with health challenges, but they are, instead, 
what are called ``me too'' drugs; 80 percent of the patents. A purple 
pill becomes a pink bill, a daily dose becomes a weekly dose, or maybe, 
to add insult to injury, the packaging changes.
  I urge, as I draw to a conclusion, that as we look at the issues 
before the Senate on increasing competition and lowering prices, we do 
so understanding there is a lot of room to bring down prices without 
ever touching R&D. I argue we need to do everything possible to change 
the incentives to a longer view, to more research and development. This 
industry is out of

[[Page S6969]]

whack, just as the other industries we were talking about, the system 
of accounting and auditing, the whole process that has now put us in a 
position where the incentives are to run right up to the line or over 
the line, to push for the quarterly profit statement, to look for the 
intermediate gain, the immediate cash rather than the long-term view.
  Unfortunately, this is not a pair of shoes. It is not even a new 
car--and I want everybody to buy a new car. This is not an optional 
buy. This is lifesaving medicine. The research is heavily subsidized 
and paid for by taxpayers, and I think we deserve better. I think that 
is what this debate is about.
  We want a healthy industry, we want R&D, but we want the American 
taxpayers to get their money's worth and be able to afford the 
medicines they have invested in and helped to create, medicines that 
will help them and their families be able to be healthy.
  The ACTING PRESIDENT pro tempore. The Senator from New Jersey.
  Mr. CORZINE. Madam President, I ask to speak for 10 minutes in 
morning business.
  The PRESIDING OFFICER (Mrs. Stabenow). The Senator has that right and 
is recognized for a period of 10 minutes.
  Mr. CORZINE. Madam President, I rise today to support passage of a 
Medicare prescription drug benefit and express my strong belief that 
the time has come when a Medicare prescription drug benefit that 
provides affordable and meaningful coverage for all our Nation's 
seniors should be implemented. We have a historic opportunity to reform 
our Medicare programs and put in place something that I think we all 
know is necessary and important for our Nation's well-being.
  I particularly also thank Senator Stabenow, the Presiding Officer, 
for her extraordinary leadership in raising the level of awareness, the 
level of concern and consideration, not only inside the Chamber but 
across the country. She has done a remarkable job of elevating the 
quality of debate on the subject.
  Furthermore, and equally so, I thank my colleagues, Senator Bob 
Graham, Senator Kennedy, and Senator Miller, for their efforts to bring 
forward a real and meaningful prescription drug program. It is one that 
I think all of us should get behind and support. It is measured but 
certain.
  I have yet to speak out on specific programs. As the Chair knows, the 
industry which you just so eloquently spoke about is an important part 
of the community which I represent. It has been important, in my view, 
to find a response to this great need in our Nation that also does not 
undermine all the elements that I think make the industry so important 
to our Nation and so entrepreneurial. In fact, I think the Graham-
Kennedy-Miller program has found that balance. It is for that reason I 
also want to make sure I am on record expressing my support.
  All of us know it is time to act. We need to ensure that seniors can 
afford their prescription drugs. We have heard the refrain that we 
should not be forcing people into these hard choices, and it is a 
reality. Anyone who is in public life, who interfaces with our senior 
citizens around our country--just as much in New Jersey as anyplace 
else--knows that these are real world choices for people: Whether they 
can afford their lifesaving, quality-of-life-producing prescription 
drugs or whether they have to choose between that and other aspects of 
quality of life, including the simple things such as house and home, 
and their ability to have quality of life in general, which our Nation 
can afford, absolutely, including putting food on the table.
  The fact is, this is a choice far too many of our seniors are having 
to make, and it is time for us to move to make these costly drugs 
available so our seniors can lead that independent, productive life 
that I think all of us hope for, for our families, our parents, and 
certainly we want for our generation as well.
  That is why I support this bill. I will be very aggressive in getting 
out and trying to promote it, not only here in the Chamber but actually 
among those in the industry so we can move forward.
  This effort truly does guarantee prescription drug coverage for every 
senior--it is universal--rather than relying on the private insurance 
industry to provide that coverage. That is what the alternative House 
bill is all about. I think many of us think that is going to leave a 
lot of folks out of the system.

  The Democratic package also ensures that seniors will have coverage 
all year. It does not have to deal with so-called doughnut holes, or 
black holes, two-thirds of the calendar year where people are left out 
of any kind of coverage. That is certainly the case with the proposal 
that is coming out of the House, the Republican proposal.
  Under that proposal, a senior would pay $400 a month for her or his 
prescriptions, but they would essentially be out of coverage for nearly 
two-thirds of the calendar year. I think that is a major flaw that 
needs to be addressed. I think it is very effectively done in the 
Graham-Kennedy proposal.
  Furthermore, the Republican proposal threatens to undermine the 
private insurance market. This is really a perverse economic impact. 
Their proposal would have the effect of encouraging employers to drop 
prescription drug coverage from employer-provided health plans. In 10 
minutes I am not going to go through this, but the fact is, individual 
workers facing catastrophic drug costs would not have their drugs 
provided by the Government if their employer paid for some portion of 
those drug costs. It is a really serious flaw about which I think 
almost anyone who has analyzed the proposal coming from the House is 
concerned. It needs to be addressed under any circumstances.
  I also ask those who have criticized the cost of the Democratic 
package that they consider the high cost of not providing comprehensive 
drug coverage. They call that a cost-benefit analysis. It is well known 
that prescription drugs reduce the number of hospital admissions, 
surgical procedures, and doctor visits. They also can reduce costly 
admissions to nursing homes, helping seniors to stay home longer. Those 
are real savings that will come. I do not think we have fully 
appreciated that or explained those or factored those into our 
thinking.
  Needless to say, this is not just about saving money, it is about 
improving the quality of life for our seniors, allowing them to lead 
longer, healthier, and more productive lives. This is reform that 
Medicare needs. It is one we cannot afford not to address, not to deal 
with, not to move on.
  In my own State of New Jersey, we recognized this need about 25 years 
ago when we created a pharmaceutical benefit for seniors--probably the 
best in the Nation. By the way, we have to make sure that as we 
legislate here, we engineer this legislation in a way that it is 
supportive of the prescription drug program we have in New Jersey, 
which is designed to serve the low- and middle-income seniors in an 
extraordinary way.
  But I have to say it is almost unconscionable that States such as New 
Jersey and Pennsylvania--I think it has a similar program--have stepped 
to the plate to provide this important health care benefit to seniors 
while the Federal Government has failed to do it. As a matter of fact, 
it makes New Jersey a magnet for seniors--a positive element in our 
society. But people have recognized this fundamental need and have 
voted with their feet with respect to the follow-through on this.
  The Democratic plan will help States such as New Jersey expand, if we 
are careful about how we write this legislation, and improve that 
prescription drug program for everyone. By contrast, the Republican 
proposal does nothing. As a matter of fact, it will increase--if we are 
to meet the constraints that are put down in the bill--co-pays and 
coverage under our PAAD Program, which is what our benefit program is 
called. That is simply unacceptable and will require a lot of 
resistance from those of us who care about our seniors--in New Jersey 
specifically.
  Last year, the Senate passed a Patients' Bill of Rights to ensure 
that Americans with private health insurance have access to 
prescription drugs and medical procedures they need to maintain their 
health. Should we not offer the same protection to our seniors, 
millions of whom currently lack access to essential medicines? It is a 
fundamental flaw of Medicare. It is one we need to deal with, 
particularly because Medicare was designed before the explosive growth 
of medications, so the

[[Page S6970]]

use of medicines is not covered where they are now being applied.
  We have an opportunity and a responsibility to correct this flaw by 
enacting a prescription drug benefit.
  I want to work with my colleague in the Chair, my friend from New 
York, and all of those who truly care about making our society one 
where access to quality of life that America can offer is made 
available to all citizens. It is absolutely essential that we move 
forward.
  Lastly, it concerns me that we are willing to spend $4 trillion to 
make last year's tax cuts permanent, which essentially goes to a lot of 
those people the Chair was talking about who are making $70 million and 
$40 million, the well off in our society, and we don't think we have 
the resources to pass a $100 billion prescription drug benefit for 
senior citizens in our Nation.
  It is time for us to act. Those people have worked hard, paid their 
taxes, and supported our Nation in all kinds of ways. It is time to get 
a prescription drug benefit, get it through this Chamber, get it to the 
House and to the President's desk.
  I thank the Chair. I look forward to working with you and all my 
colleagues to make sure this comes to pass as soon as possible.
  The PRESIDING OFFICER. The Senator from New York.
  Mrs. CLINTON. Madam President, I commend my colleague from New Jersey 
for his statement, which I think all of us recognize was arrived at 
after considerable study and thought since he does represent a State 
which has a concentration of our finest pharmaceutical companies. His 
statement today, which shows a balance and a very thoughtful approach 
to policies that affect us, is a great addition to this debate.
  Madam President, I ask unanimous consent to speak for up to 12 
minutes as in morning business.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mrs. CLINTON. Thank you, Madam President.
  Madam President, I wish to pick up on a comment that you made at the 
end of your remarks before assuming the Chair.
  I, as all of our colleagues, deeply respect the leadership you have 
provided on this issue. You are down here on the floor day after day 
making the case on behalf of the need for prescription drug coverage 
and reform that would provide the lifesaving quality-of-life drugs to 
our seniors and open the doors to others who are not yet of Medicare 
eligibility but who have very high prescription drug costs.
  At the end of your remarks you said this was connected to the debate 
that we finished last week concerning the serious issues about 
accounting and corporate governance to which we have to pay special 
attention. I agree with that. We may be debating prescription drug 
coverage, but it is in the larger context of what kind of country we 
want to be. What kind of values do we espouse? How are we going to 
ensure that people not only have the perception but the reality that 
our system works for everybody, not just for the rich and the powerful, 
not just for the big companies but for the small businesses and for the 
average citizen? There is a connection. I think that connection 
deserves to be drawn. I thank you for doing so.
  The legislation we are discussing this week addresses not just a top 
health priority but a fundamental value of who we are as Americans. 
Will we or will we not provide access to affordable prescription drugs 
for our seniors? Will we or will we not make equivalent generic drugs 
available for all Americans? Simple question; complicated answer. That 
is what we are attempting to work out today.
  The prescription drug issue is well known to any of us who have had 
to fill a prescription in the last several years. Prescription drug 
costs have been rising at an annual rate of 20 percent, far outpacing 
inflation and more than doubling in the last 5 years.
  We set a goal a couple of years ago to double NIH funding within 5 
years, but instead we have seen the doubling of drug industry costs.
  Costs have increased for a number of reasons. People have begun to 
use more of these so-called lifestyle drugs in addition to the 
lifesaving drugs. Costs are also increasing because of drug company 
marketing efforts to shift patients away from older, less expensive 
drugs to newer, costlier, so-called ``me too'' drugs which have had an 
impact. ``Me too'' drugs are copycat drugs that actually do little or 
nothing more than the existing drugs we already have, but they are more 
expensive because they are new. It is like when you go to the 
supermarket and they say new and improved, new and different. These are 
new but not necessarily improved drugs. They are copycat drugs.
  We have recently heard examples of Vioxx and Celebrex, expensive, 
new, heavily advertised drugs that doctors now tell us may be no better 
than the kinds of drugs you get across the counter for which you don't 
need a prescription.
  Drug companies are also spending up to $13,000 per doctor annually 
trying to influence research results and prescribing patterns. Think 
about it. Every doctor in America has a $13,000 allocation from drug 
companies that flood his or her offices with salespeople with all kinds 
of inducements--with trips and dinners and the like in order to 
convince the doctor to use this different drug than the doctor has been 
using or to try the new and improved copycat drug. This is going on 
despite the ethics and gift guidelines that the American Medical 
Association has developed and that the pharmaceutical association--
known as PhRMA--has agreed to follow.

  Many of my physician constituents continue to complain to me that, 
despite these ethical guidelines, drug company representatives have 
attempted to circumvent and flout them.
  With the multibillion-dollars that drug companies spend annually on 
drug promotion and on physicians, this shocks me, I have to tell you. I 
said to my staff: You have to go and triplecheck this. I couldn't 
believe it. But with the money they spend on drug promotion mostly 
directly to physicians, their spending exceeds the amount of money that 
we spend as a nation educating all medical students and medical 
residents in our Nation.
  That just isn't right. We have a voluntary set of guidelines that are 
supposed to control it, but, unfortunately, as with a lot of human 
nature, those voluntary guidelines don't have enough teeth in them to 
make it happen.
  I am also concerned about the erosion of privacy. Drug companies are 
doing everything they can to convince patients--that is you and me--to 
try the drug. In addition to convincing physicians with all of their 
money, they are spending a heck of a lot of money trying to convince us 
to try something.
  A friend of mine said she didn't even know she had a problem until 
she saw an advertisement. And all of a sudden, she now thinks she has a 
problem. She talked to her doctor. Her doctor said she really didn't 
need it. She said: I am not sure. She said: Should I listen to the 
doctor or should I listen to the advertising? I said: For Heaven's 
sake, you wouldn't do that on anything else. Why would you do it on 
this?
  Advertising really works. It gets into our psyche. It kind of 
convinces us of things and makes us feel that we are not doing what we 
should unless we go out and buy a new product. That is the same with 
new drugs.
  The privacy aspect is different than going out and being convinced 
that you need a different car or that you should try a different 
detergent.
  Under the Bush administration, privacy regulations previously issued 
by the Secretary of Health and Human Services have been changed. These 
changes make it easier for drug companies to acquire patient 
information about us and then to use that patient information they get 
from doctors, pharmacists, or health provider organizations without our 
full knowledge, and certainly without our prior consent.
  Several weeks ago, we heard about a woman in Florida who received an 
unsolicited prescription drug, Prozac, in the mail. She believes her 
privacy was violated. I think she is right. It was violated. Can you 
imagine, all of a sudden, into your mailbox come drugs that you never 
asked for, that were never prescribed for you? I do not think any drug 
company should have access to a patient's records or be able to use 
that kind of intimate information without a patient's full agreement 
and consent.
  So I worry about the combination of the Bush administration weakening

[[Page S6971]]

privacy regulations and the drug companies using that information, 
which is extremely personal, to try to sell us something.
  I do not have any argument with the lifesaving benefits that are 
provided to all of us because of the work done by pharmaceutical 
manufacturers. Their role in the American health system is not only 
vital but should be rewarded through exclusive patents on their 
discovery for the full patent term of up to 20 years, as set forth by 
one of our colleagues and a colleague from the House in the Hatch-
Waxman bill passed years ago.
  However, Hatch-Waxman represented a carefully crafted balance 
designed to make the American consumer--the American patient--the 
ultimate beneficiary. On the one hand, Hatch-Waxman established full 
restoration of the monopoly patent time for a brand name drug as an 
incentive for real innovation. On the other hand, Hatch-Waxman ensured 
that after the monopoly term ended, the consumer would get the benefit 
of competition because there would no longer be an exclusive right to 
manufacture and market that drug.
  We know the consumer will get benefits with lower drug prices and 
generic versions which are just as good as the brand name patented 
versions. Generic drugs share the same active ingredients as the brand 
name drugs but, as this chart shows, the generics are usually 
considerably less expensive. Generic drugs have also increased in price 
but at a much slower rate than brand name drugs have.
  Generic drugs help keep prices down, particularly for our seniors. If 
you look at this next chart, it is a chart showing the costs that are 
involved in manufacturing and advertising drugs. It is very clear that 
the amount of money that is spent to market these drugs goes right into 
the cost of them. That $13,000 per doctor, that has to be paid by 
somebody, and we are the ones who end up paying for it.
  It is important to protect innovation. Nobody wants to undermine 
innovation. But in recent years, drug companies have clearly taken 
advantage of these loopholes to keep generics off the market. What we 
have found is that the brand name manufacturers are frivolously listing 
patents not because the generics will infringe on the patents but 
simply to force generics to certify that those patents are invalid in 
order to get the lower priced generic drugs to market. The reason is 
that forcing this certification gives the brand name drug an automatic 
2\1/2\-year extension, called a 30-month stay, on their monopoly, 
regardless of the merits of the patent.
  Let me give you a few quick examples.
  There is a medication called Pulmicort, which is an asthma 
medication. In addition to all the patents on the compound--in other 
words, the active ingredients that are in the drug that makes it work 
for asthma--in addition to all the patents on the compound, on its use, 
and on its formulation, they have a patent on the container, which is 
in what is called the Orange Book. The container may be a really nice 
container, it may look great inside your medicine chest, but when a 
generic company is seeking to make a pill for asthma, it is not trying 
to make the bottle, it is trying to make the pill. So a patent on the 
bottle should not prevent the generic version of the drug from coming 
to market.
  In addition, we know that some drug companies make sweetheart deals 
with generic companies, literally paying them--I would say bribing 
them--to stay off the market, which under one of the loopholes in the 
current law means that other generics also have to stay out of the 
market.
  So generic X comes and says, we are going to the market with this 
drug, and the big drug company says, we will pay you not to; and they 
say, OK, we will not. That means nobody can come with a competitive 
drug that will do the same thing at a lower price.
  I support adequate patent terms for pharmaceutical manufacturers to 
conduct research and development, which all of us know is high risk and 
high stakes, but the best way to encourage that research and 
development is a prospective approach rather than a patent extension 
after the fact.
  Companies, as we know, have been maneuvering at the 11th hour just as 
their patents are about to expire. This legislation, the underlying 
Schumer-McCain legislation, is intended to prevent that.
  So let's do the right thing. Let's get our generic manufacturers a 
level playing field. Let's get a prescription drug benefit for our 
seniors. And let's send a message to America that we want to treat 
people fairly in this great country of ours.
  Thank you, Madam President.
  The PRESIDING OFFICER. The Senator's time has expired.
  Mr. THOMAS. Madam President, how much time is remaining on the 
division in morning business?
  The PRESIDING OFFICER. Five minutes is remaining in morning business.
  Mr. THOMAS. That is the share the Republicans have?
  The PRESIDING OFFICER. That is the current share, yes.
  Mr. THOMAS. I wish we could have divided the time up if we say we are 
going to.
  The PRESIDING OFFICER. The Senator from Pennsylvania was accorded, I 
believe, 15 minutes.
  Mr. THOMAS. And we were accorded 30 minutes, and we didn't get 30 
minutes.

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