[Congressional Record Volume 148, Number 98 (Thursday, July 18, 2002)]
[Senate]
[Pages S7019-S7028]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




  GREATER ACCESS TO AFFORDABLE PHARMACEUTICALS ACT OF 2001--Continued


                           Amendment No. 4309

 (Purpose: To amend title XXIII of the Social Security Act to provide 
 coverage of outpatient prescription drugs under the medicare program)

  Mr. GRAHAM. Madam President, I send to the desk an amendment, which 
reflects the contents of S. 2625, the Medicare Outpatient Prescription 
Drug Act of 2002.
  The PRESIDING OFFICER. The clerk will report the amendment.
  The legislative clerk read as follows:

       The Senator from Florida [Mr. GRAHAM], for himself, Mr. 
     Miller, Mr. Kennedy, and Mr. Corzine, proposes an amendment 
     numbered 4309.

  Mr. GRAHAM. Madam President, I ask unanimous consent that further 
reading of the amendment be dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  (The amendment is printed in today's Record under ``Text of 
Amendments.'')


                           Amendment No. 4310

 (Purpose: To amend title XVIII of the Social Security Act to provide 
 for a medicare voluntary prescription drug delivery program under the 
  medicare program, to modernize the medicare program, and for other 
                               purposes)

  Mr. HATCH. Madam President, I send an amendment to the desk.
  The PRESIDING OFFICER. The clerk will report.
  The legislative clerk read as follows:

  The Senator from Utah [Mr. HATCH], for Mr. Grassley, for himself, Ms. 
Snowe, Mr. Jeffords, Mr. Breaux, Mr. Hatch, Ms. Collins, Ms. Landrieu, 
Mr. Hutchinson, and Mr. Domenici, proposes an amendment numbered 4310.

  Mr. HATCH. I ask unanimous consent that further reading of the 
amendment be dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  (The amendment is printed in today's Record under ``Text of 
Amendments.'')
  Mr. GRAHAM. Madam President, this amendment represents the essence of 
S. 2625, which currently, in addition to those who cosponsored this 
amendment, has 29 other colleagues' sponsorship.
  This legislation is designed to provide to American seniors 
affordable, comprehensive, and reliable universal prescription drug 
coverage. This coverage will be available to 39 million older Americans 
and disabled citizens who are covered by Medicare--citizens who 
voluntarily elect to participate in this new Medicare benefit. More 
than 2,750,000 of those 39 million live in my State of Florida and, as 
have citizens across America, been waiting year after year after year 
for Congress to finally deliver on the commitment that we have made to 
modernize Medicare through the provision of a prescription drug 
benefit.
  When I made remarks on this issue on Tuesday of this week, I based 
those remarks on six principles that I believe should be the touchstone 
for an affordable, comprehensive universal prescription drug benefit 
for senior Americans. Let me briefly reiterate those six principles.
  First, we must modernize the Medicare Program. We must bring Medicare 
into the 21st century. In my judgment, the provision of a prescription 
drug benefit is the single most important reform of the Medicare 
Program that we can make. Why is this benefit so central? Because in 
the 37 years since the Medicare Program was created, the practice of 
medicine has been fundamentally altered by the use of prescription 
drugs.
  Prescription drugs have improved the quality of people's lives. They 
have reduced long recovery periods, and they sometimes can even avoid 
surgeries and disabling illnesses, such as strokes and heart attacks.
  We must convert Medicare from a program which, since its inception in 
1965, has focused on sickness. If you are sick enough to go to the 
doctor or to the hospital, Medicare will pay 77 percent, on average, of 
your costs. But if you want to maintain the highest level of health, 
which generally involves screening, early intervention, and 
prescription drugs to monitor the condition, Medicare will pay nothing.
  Medicare must be converted from a sickness program to a wellness 
program if it is to serve the needs of senior Americans in the 21st 
century. That is the first principle.
  The second principle is that beneficiaries must be provided with a 
real benefit. To be successful, this program must attract a wide 
variety of beneficiaries.
  The program will be voluntary, so it must attract enrollment with 
reasonable and reliable prices and a benefit that pays off from day 
one. In this manner, we will be able to attract all seniors, from those 
who today have high drug needs to those who are healthy but might be 
concerned that they, too, could be struck down with a heart attack or 
other disabling condition.
  If we are able to have a program that will attract that broad range 
of elderly in terms of their current state of health, then we will have 
a program that will be actuarially solid for years to come.

[[Page S7020]]

  Seniors must be able to understand the benefit they receive. The 
coverage should be consistent, and seniors should receive that coverage 
without any unexpected gaps or omissions. In other words, it should 
operate as much as possible as the employer-provided coverage which 
they had during their working years.
  The third principle is that beneficiaries must have choice. All 
Americans deserve choice in how they receive their health care. We must 
offer choice in who delivers their prescription drugs, which is why we 
must assure that each region of the country has an adequate number of 
providers of the prescription drug benefit. This will encourage 
competition, helping to keep costs down for seniors, as well as the 
taxpayers of the Medicare Program, and assure a sustainable 
prescription drug benefit for this and future generations of America's 
seniors.
  Principle No. 4 is we must use a delivery system upon which seniors 
can rely. It must be a tried-and-true system, not an untested scheme 
that will turn older Americans into laboratory animals upon which to be 
experimented. We want to model our delivery system on what private 
sector plans have used and with what seniors are familiar.
  Principle No. 5 is the program must be affordable. The reality is the 
majority of seniors live on fixed incomes. In my State of Florida, 
where many people have the idea that all or most of the seniors live at 
a level of luxury, the median income of our 2,750,000 seniors is 
$13,982 a year, and 770,000 seniors in our State live on incomes below 
150 percent of poverty.
  These fixed-income seniors need a prescription drug benefit that has 
a low premium, that does not require a deductible, has reasonable 
copayments that are easy to calculate, and will avoid wide variations 
from month to month in their coverage.
  Finally, principle No. 6 is we must have a fiscally prudent program. 
We must find that balance between giving seniors what they need, that 
balance between a realistic assessment of what prescription drug costs 
are likely to be over the next 10 years for our seniors, and, finally, 
the balance of what our overall Federal budget will allow.
  The Graham-Miller-Kennedy-Corzine amendment meets these six criteria. 
As a result, it has the support of the major organizations that 
represent America's seniors, including AARP.
  I ask unanimous consent to print in the Record eight letters of 
support of this legislation.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                                             AARP,


                                        National Headquarters,

                                    Washington, DC, June 12, 2002.
     Hon. Bob Graham,
     Hon. Zill Miller,
     U.S. Senate, Washington, DC.
       Dear Senators: We are pleased to restate our position on 
     your revised Medicare prescription drug proposal. Action on a 
     bipartisan prescription drug benefit is a top priority for 
     AARP, our members and the nation.
       Medicare beneficiaries have waited long enough for access 
     to meaningful, affordable prescription drug coverage. We know 
     from our membership that in order for a Medicare prescription 
     drug benefit comprehensive coverage it must include:
       An affordable premium and coinsurance;
       Meaningful catastrophic stop-loss that limits out-of-pocket 
     costs;
       A benefit that does not expose beneficiaries to a gap in 
     insurance coverage;
       Additional assistance for low-income beneficiaries; and
       Quality and safety features to curb unnecessary costs and 
     prevent dangerous drug interactions.
       AARP supports your initiative to incorporate these goals. 
     We commend you for including key elements in your proposal 
     that Medicare beneficiaries and our members have indicated 
     they find valuable. For instance, your proposal includes a 
     premium that many Medicare beneficiaries view as affordable 
     and a benefit design that does not include a gap in insurance 
     coverage. Your proposal also now includes co-payments 
     specified as dollar amounts, an approach that our research 
     shows our members prefer to coinsurance. In our view, this 
     plan could provide real value to beneficiaries in protecting 
     them against the high costs of prescription drugs.
       It is important that any prescription drug benefit be made 
     a permanent and stable part of Medicare, and we want to work 
     with you to achieve this before enactment.
       Thank you for your leadership on this issue. We look 
     forward to working with you and your colleagues as the 
     legislation moves forward. AARP will continue to urge 
     Congress to work in a bipartisan manner to enact affordable, 
     meaningful Medicare prescription drug coverage.
           Sincerely,
                                               William D. Novelli,
     Executive Director and CEO.
                                  ____

                                            Generic Pharmaceutical


                                                  Association,

                                    Washington, DC, June 12, 2002.
     Hon. Bob Graham,
     524 Hart Senate Office Building,
     Washington, DC.
       Dear Senator Graham: On behalf of the Generic 
     Pharmaceutical Association (GPhA), we would like to commend 
     you and Senators Miller and Kennedy for your leadership in 
     introducing legislation to create a Medicare prescription 
     drug benefit for our nation's seniors. We agree with you that 
     the passage and enactment of a voluntary Medicare 
     prescription drug benefit is long overdue. We are strongly 
     supportive of your innovative tiered co-pay structure, as 
     well as the other provisions advocated by you and your 
     colleagues, that are designed to increase the utilization of 
     high-quality, affordable generic medicines.
       Generic pharmaceuticals have a proven track record of 
     substantially lowering drug costs. Studies have shown that 
     for every 1 percent increase in generic drug utilization, 
     consumer, business, and health plan purchasers save over $1 
     billion. The increased use of generics can play an invaluable 
     role in helping Medicare, Medicaid, the Federal Employees 
     Health Benefit Plan (FEHBP) and other Federal and private 
     plans assure that beneficiaries have access to quality, 
     affordable medications. A tiered co-pay system with a 
     significant differential between brand and generic 
     pharmaceuticals will ensure an appropriate incentive is in 
     place for seniors to consider more cost-effective options 
     when making choices about pharmaceutical therapies. We 
     believe an explicit dollar co-pay will also provide seniors 
     with the comfort of knowing they will pay a fixed cost to 
     have their prescriptions filled.
       With your leadership, the Graham/Miller/Kennedy bill 
     employs a number of private sector best practices that are 
     now widely used to assure access to cost-effective, quality 
     affordable medications. These provisions not only encourage 
     the appropriate and beneficial use of these products, but 
     provide unbiased and greatly needed educational information 
     to the public about the benefits of these medicines.
       The Graham/Miller/Kennedy bill adheres to GPhA's principles 
     for creating a Medicare prescription drug benefit and steers 
     the Medicare reform debate down a prudent public policy path. 
     We look forward to working with you, your cosponsors and with 
     other Members of the House and Senate of both parties to 
     further our common objective of providing our nation's nearly 
     40 million Medicare beneficiaries and the taxpayers who help 
     support them with the most affordable and highest quality 
     prescription drug benefit possible. If the rest of the 
     Congress and the Administration follow your lead in 
     recognizing the role generics must play in reaching this 
     objective, we are confident we will achieve this goal.
       Thank you again for your efforts. If we can be of any 
     assistance to you, please do not hesitate to call.
           Sincerely,
                                                  Kathleen Jaeger,
     President and CEO.
                                  ____

                                The National Council on the Aging,
                                    Washington, DC. June 11, 2002.
     Hon. Bob Graham,
     524 Hart Senate Office Building, Washington, DC.
       Dear Senator Graham: On behalf of the National Council on 
     the Aging (NCOA)--the nation's first organization formed to 
     represent America's seniors and those who serve them--I write 
     to commend and thank you for your proposal to provide 
     meaningful Medicare prescription drug coverage to America's 
     seniors. The Medicare Outpatient Prescription Drug Act of 
     2002 is consistent with the principles supported by the vast 
     majority of organizations representing Medicare 
     beneficiaries. It provides the foundation for a vehicle that 
     we hope can achieve bipartisan consensus on this issue this 
     year.
       NCOA is particularly pleased that your legislation would 
     provide prescription drug coverage that is universal, 
     voluntary, reliable, and continuous. Other proposals being 
     offered include significant coverage gaps and would fail to 
     solve the problem. Under such bills, a significant number of 
     beneficiaries would not want to participate in the program, 
     and many of those who do participate would continue to be 
     forced to choose between buying food and essential medicines.
       We commend many of the modifications you have made to your 
     Medicare bill from last year. These improvements include a 
     significantly lower premium, the option to provide a flat 
     copayment, an earlier effective date, and assistance with the 
     very first prescription. We believe these changes will make 
     the coverage affordable and attractive to the vast majority 
     of beneficiaries, which is so critical to making a voluntary 
     prescription drug program work. While we have concerns about 
     the need to reauthorize the program after 2010, we understand 
     the budget trade-offs needed to provide meaningful and 
     attractive coverage, and fully expect that the Congress would 
     reauthorize the program.
       NCOA is also pleased that your proposal does not include 
     price controls and that the

[[Page S7021]]

     program would promote stability and efficiency through 
     administration by multiple, competing Pharmacy Benefit 
     Managers (PBMs), using management tools available in the 
     private sector in which PBMs would be at risk for their 
     performance, including effective cost containment.
       NCOA deeply appreciates your efforts to move this critical 
     debate in a direction that guarantees access to meaningful 
     coverage--even in rural and frontier areas of the country--
     and responds in a constructive manner to many of the specific 
     concerns that have been raised regarding other Medicare 
     prescription drug proposals.
       It is impossible to have real health security without 
     coverage for prescription drugs. Prescription drug coverage 
     is the number one legislative priority for America's seniors. 
     Virtually every member of Congress has made campaign promises 
     to try to pass a good prescription drug bill. The time has 
     come to get serious and to work together to achieve consensus 
     on the issues in controversy. Your proposal provides us with 
     an excellent starting point.
       NCOA looks forward to working on a bipartisan basis with 
     you and other members of Congress to pass legislation this 
     year that provides meaningful, continuous, affordable 
     prescription drug coverage to all Medicare beneficiaries.
           Sincerely,
                                                     James Firman,
     President and CEO.
                                  ____

                                                     Families USA,
                                    Washington, DC. June 13, 2002.
     Senator Bob Graham,
     524 Hart Senate Office Building, Washington DC.
       Dear Senator Graham: We congratulate you and Senators 
     Miller, Kennedy and Rockefeller on the introduction of your 
     bill, ``The Medicare Outpatient Prescription Drug Act,'' 
     which provides prescription drug benefit for Medicare 
     beneficiaries.
       This is an issue of utmost important to all Americans who 
     need prescription drugs, especially to seniors and people 
     with disabilities. As you well know senors' ability to afford 
     prescription drugs is a particularly difficult problem today. 
     In our 2001 report entitled, ``Enough to Make You Sick: 
     Prescription Drug Prices for the Elderly, ``we concluded that 
     the 50 top drugs used by seniors rose 2.3 times the rate of 
     inflation between 2000 and 2001. We are in the process of 
     updating this report for last year, and our preliminary data 
     shows that this devastating rate of price increases 
     continues. Millions of seniors have limited income and no, or 
     limited, drug coverage and will find themselves deciding 
     whether to buy drugs or pay for other essentials.
       Your bill addressees many important design issue that we 
     care about in a Medicare prescription drug benefit. The 
     benefit is universal, comprehensive, and is delivered through 
     the Medicare program, ensuring that seniors know it will be 
     available to them when it is needed. Low-income people get 
     extra assistance. Also, there are provisions to assure that 
     costs will be contained and quality maintained.
       Please let us know how we can assist you to move this bill 
     toward enactment so that all Medicare beneficiaries can have 
     access to the prescription drugs they need.
           Sincerely,
                                                Ronald F. Pollack,
     Executive Director.
                                  ____

         National Committee to Preserve Social Security and 
           Medicare,
                                    Washington, DC. June 12, 2002.
     Senator Bob Graham,
     Senate Hart Office Building 524, Washington, DC.
       Dear Senator Graham: On behalf of the millions of members 
     and supporters of the National Committee to Preserve Social 
     Security and Medicare, I write in support of your Medicare 
     prescription drug legislation that will provide much needed 
     relief to seniors. Your bill contains all of the elements 
     that seniors need in a comprehensive drug benefit under 
     Medicare, such as universal, voluntary, affordable, not means 
     tested and most importantly, with a defined benefit, so that 
     seniors can plan accordingly. Prescription drugs prices are 
     increasing over 17% per year (faster than inflation) and 
     seniors are spending more on out-of-pocket drug expenditures 
     than ever. The time is now to enact a drug benefit that will 
     provide the Medicare beneficiary with some assistance.
       We are pleased that your plan would be available for 
     seniors, no matter where they live. Our members have 
     expressed to us that a prescription drug benefit must be 
     affordable. We believe that a plan such as yours, with no 
     annual deductible and a $4,000 cap on out of pocket 
     expenditures, is reasonable and one that most seniors would 
     be able to afford.
       We applaud you for your leadership in this area. Please let 
     me know how we can further support your efforts.
           Sincerely,
                                                 Barbara Kennelly,
     President.
                                  ____

                                                          AFSCME,


           American Federation of State, County and Municipal 
                                           Employees, AFL-CIO,

                                    Washington, DC, June 12, 2002.
     Senator Edward Kennedy,
     Senator Bob Graham,
     Senator Zell Miller,
     U.S. Senate, Washington, DC.
       Dear Senators: On behalf of the 1.3 million members of the 
     American Federation of State, County and Municipal Employees 
     (AFSCME), I am writing to express our support for the 
     Medicare prescription drug benefit proposal you unveiled 
     today.
       AFSCME has long supported the creation of a Medicare 
     prescription drug benefit that is comprehensive in coverage, 
     affordable and voluntary for all Medicare beneficiaries. We 
     believe that your proposal is a solid step forward in meeting 
     these standards.
       In particular, we applaud your proposal's provisions for 
     continuous coverage. We believe that it is one of the most 
     critical components of a meaningful prescription drug 
     benefit. Beneficiaries must have coverage they can count on, 
     with no gaps in coverage. Doing anything less would force our 
     seniors to pay all prescription costs out of their own pocket 
     when they will need the coverage the most.
       Since Medicare was started over 35 years ago, many 
     illnesses that were once only treatable in a hospital can now 
     be effectively treated with prescription drugs. Adding a drug 
     benefit to the program is the most urgently needed Medicare 
     reform. We applaud you for not holding the prescription drug 
     benefit hostage to force radical privatization proposals that 
     would cut benefits and increase costs for retirees.
       We look forward to working with you and the other sponsors 
     of this important legislation. A Medicare prescription drug 
     benefit is long overdue, and our nation's seniors deserve no 
     less.
           Sincerely,
                                              Charles M. Loveless,
     Director of Legislation.
                                  ____


                           Legislative Alert

         American Federation of Labor and,Congress of Industrial 
           Organizations,
                                    Washington, DC, June 12, 2002.
     Hon. Bob Graham,
     U.S. Senate, 524 Hart Senate Office Building, Washington, DC.
       Dear Senator Graham. On behalf of the 13 million members of 
     the AFL-CIO, I am writing to commend you for your efforts to 
     provide much-needed relief to Medicare beneficiaries. Your 
     proposal to create a voluntary drug benefit within the 
     Medicare program represents an encouraging and solid step 
     toward enacting the one reform most urgently needed for 
     Medicare.
       Seniors need a real benefit that provides comprehensive, 
     continuous and certain coverage. The Graham-Miller-Kennedy 
     bill provides that benefit, giving seniors coverage they can 
     count on. A Medicare drug benefit must also be affordable for 
     beneficiaries. The $25 monthly premium and zero deductible in 
     your proposal means seniors need only pay an affordable 
     premium to begin getting coverage immediately. And no senior 
     will have to pay more than $40 for the drugs they need and 
     often will pay less.
       In addition, your proposal would not put at risk those 
     retires who currently have some prescription drug coverage 
     through an employer. Retiree heath care is the primary source 
     of prescription drug coverage for seniors, and your proposal 
     rightly provides from relief for employers that choose to 
     continue that coverage.
       A proposal widely reported under consideration by House 
     Republican leaders offers only unreliable, expensive and 
     unworkable coverage through private plans, with an enormous 
     gap in coverage that leaves seniors without any coverage at 
     all for drug costs between $2000 and $4500. And the only 
     relief for employers is if they drop the coverage they now 
     offer. Such a proposal will not move us any closer to a real 
     benefit.
       As this debate moves forward, we want to work with you and 
     your co-sponsors to enact the best possible Medicare drug 
     benefit. We appreciate your role in advancing that process.
           Sincerely,
                                         William Samuel, Director,
     Department of Legislation.
                                  ____



                               Alliance for Retired Americans,

                                    Washington, DC, June 12, 2002.
     Senator Edward M. Kennedy,
     U.S. Senate, Washington, DC.
       Dear Senator Kennedy: On behalf of the over 2.7 million 
     members of the Alliance for Retired Americans, I want to 
     thank you for your tireless work on behalf of older and 
     disabled Americans to create a Medicare prescription drug 
     benefit program. I also want to express our views on the 
     Medicare prescription drug legislation proposed by you and 
     Senators Graham and Miller. The Alliance supports this 
     proposal as a positive step forward in the effort to create a 
     Medicare prescription drug benefit program.
       The Alliance for Retired Americans believes that all older 
     and disabled Americans need an affordable, comprehensive, and 
     voluntary Medicare prescription drug benefit now. Such a 
     benefit program should have low monthly premiums, annual 
     deductibles, and be administered as part of the Medicare 
     program. Your proposed legislation meets these Alliance 
     principles. Unlike other proposals that would begin in 2005, 
     your plan would start in 2004, which gives beneficiaries the 
     coverage they need a full year earlier.
       The Alliance will work to enact your legislation. During 
     legislative deliberations, the Alliance will seek to improve 
     benefits because we believe that an 80/20 co-insurance

[[Page S7022]]

     payment system, like the rest of Medicare, will provide the 
     best benefits for older and disabled Americans. The Alliance 
     also supports a $2,000 annual catastrophic cap. We will 
     continue to work to improve any legislation that moves 
     through Congress in order to reach these goals.
       Older Americans will spend $1.8 trillion on prescription 
     drugs during the next decade. The inflation rate for 
     prescription drugs will continue at an annual double digit 
     pace as well. Our members and indeed all Americans simply 
     cannot afford these costs. We look forward to working with 
     you and Senators Graham and Miller to enact a comprehensive 
     Medicare prescription drug benefit as soon as possible.
           Sincerely yours,
                                                   Edward F. Coyle
     Executive Director.
                                  ____

  Mr. GRAHAM. Madam President, what does our plan provide? Our plan 
will require of seniors who voluntarily elect to participate a $25 
monthly premium to do so. There will be no deductible. There is an 
easy-to-understand copayment system, which is $10 per prescription for 
generic medication and $40 per brand name, medically necessary drug.
  I will pause at this point and point out the connectedness of this 
plan and this structure of benefits to the underlying legislation we 
have been discussing throughout the week to make it easier for all 
Americans to gain access to generic drugs.
  Our legislation has a strong incentive for the use of generic drugs 
by having the $10 copayment for generics, $40 for brand names. To the 
extent that more generics are available, which, of course, is the 
purpose of the underlying bill, we will reduce the cost of this program 
and make it even more affordable to senior Americans.
  We set a maximum out-of-pocket expense of $4,000 per year. Above 
that, all of the senior's drug cost, including copayments, will be 
covered. This is the so-called catastrophic coverage.
  Seniors with incomes below 135 percent of the poverty level will pay 
no premiums, and beneficiaries with incomes between 135 and 150 percent 
of poverty will pay reduced premiums. We want all senior Americans to 
be able to participate in this program.
  Our plan uses the same delivery model that America's private 
insurance companies utilize. It happens to also be the same model used 
by the Federal Employees Health Benefits Plan, a plan that covers 
virtually everybody in this Chamber.
  We use pharmacy benefit managers, or PBMs, to deliver and manage 
prescription drug benefits, just as they do in virtually every major 
private and public sector employee health insurance plan. PBMs are 
companies that negotiate with pharmaceutical companies to get 
discounted prices based on their volume purchase.
  We would allow all seniors a choice of which PBM to join. This would 
give choice to seniors, and it would give them the opportunity to shop 
among the PBMs that are competing for their business so that they, the 
senior, can decide which PBM best meets their particular needs, 
including factors such as the availability of mail order delivery and 
access to local pharmacies.
  PBMs would be accountable to the Medicare Program and to all 
taxpayers. They would be required to demonstrate their ability to keep 
costs down through effective purchasing practices and provide quality 
service in order to win and keep a Government contract.
  CBO has given us an estimate of our plan today. CBO estimates that 
our plan through the year 2010 would cost $421 billion. Taking into 
account, in addition to the base cost, the benefits that would flow by 
the adoption of the underlying generic bill, that figure is reduced to 
$407 billion through the year 2010.
  That date is important because part of our legislation is a required 
reauthorization by the Congress in 2010. In much the same way as we are 
now reauthorizing Welfare to Work after it has been in place for 6 
years, we would require the reauthorization of this prescription drug 
benefit so we can take into account the experience we will have gained 
and make an assessment as to what kind of prescription drug benefit we 
want to carry into the future.
  If the program is extended, then the 10-year cost of the plan through 
the year 2012 would be an additional $173 billion.
  Because this prescription drug benefit would represent the largest 
expansion of the Medicare Program in its 37-year history, we believe it 
is important for Congress to review the program to see how well it is 
working and whether it has given seniors the coverage they need.
  Madam President, our good friend and colleague from Utah has 
introduced legislation which has a similar objective to the one we are 
proposing; that is, to assure that seniors would have access to a 
comprehensive, universal, affordable prescription drug benefit.
  I have comments to make about the plan which has been introduced. I 
will defer those comments, however, until Monday.
  To conclude tonight, I want to say we are still hearing the 
background noise that all of this is theater, that there is no real 
commitment to passing a prescription drug benefit in the year 2002, as 
there was not in 2001, 2000, and on for the many years which seniors 
have been promised by different people seeking office that if elected 
they would deliver on a prescription drug benefit.
  What we are committed to today--and I believe this feeling also 
carries to my good friend from Utah and those who have joined him in 
his legislation--is we are not interested in election year posturing. 
We want to actually accomplish a result. We want to be able to say to 
our senior Americans, we have turned the corner. No longer are you 
participating in a sickness program, but you are now participating in a 
program which has as its primary commitment assuring that all senior 
Americans can live in the highest state of good health.
  Our Nation's seniors have waited too long for the help they need to 
purchase their prescription drugs. An unconscionable number of these 
people are forced every day to choose between filling a doctor's 
prescription for a needed medication and paying for other basic needs. 
These people are not numbers in a statistical database. They are not 
strangers. These people who have been waiting and waiting are our 
parents and our grandparents. They are our neighbors. They are the 
people we used to work with. They are our friends. They are the 
Americans of the great generation.
  We now have a challenge, an opportunity, a responsibility to respond 
to this great need that they have of some assistance in paying for what 
has become the fastest growing segment of our health care costs--
prescription drugs. If we do not act on the prescription drug benefit 
this year, I fear the American people will lose confidence in the 
Congress and our ability to make the tough choices necessary to address 
our country's priority domestic issues.
  Certainly, I do not claim that our bill is perfect, but I do suggest 
that it is as good as our collective efforts have been able to make it 
at this point. I believe this amendment justifies the support of our 
colleagues, as it has already received the support of virtually every 
major organization which represents the interests of America's seniors.
  So I look forward to a full discussion and debate in the best 
tradition of this great deliberative body. I hope at the end of that 
debate we not only will have a better understanding of the options 
before us, but we will have reached a conclusion that will command the 
votes of a sufficient number of Members of this Senate that we can tell 
our senior constituents we have heard their long call for assistance in 
paying the costs of increasingly expensive prescription drugs; that we 
understand the importance of that call, and that we are now responding 
to that call. That is the challenge and that is my hope of what will be 
the conclusion of this debate.
  The PRESIDING OFFICER (Mr. Dayton). The Senator from Utah.
  Mr. HATCH. I want to express my appreciation to my colleague from 
Florida. He is an eminent member of the Senate Finance Committee. He is 
a very serious, reflective Member. He has worked hard to come up with 
his bill. I respect him for it, and I wish him well with it. However, I 
will say a few things about Senator Graham's bill before I finish.
  Tonight, I introduced an amendment that is called the tripartisan 
bill. I introduced it on behalf of Senator Grassley for himself, 
Senators Snowe, Jeffords, Breaux, Collins, Landrieu,

[[Page S7023]]

Hutchinson, Domenici, and myself. We believe this tripartisan bill is 
the only nonpartisan bill being considered by the Senate at this time. 
It is a very important effort by people of goodwill on both sides and, 
of course, the only Independent in the Senate.
  I want to take this opportunity to talk a little bit about the 
tripartisan bill. Many of these points were raised two nights ago, when 
I spoke on the Senate floor about our tripartisan proposal. Tonight, I 
will raise them again because I believe that all of them are extremely 
important and worth listening to again.
  While drafting this legislation, we tried to reach out to everyone 
who has an interest in this issue. We have taken this very seriously, 
and we have worked on it for well over a year. This has required many 
hours of meetings, among all of the sponsors of the bill and our staffs 
along with other interested parties. Let me assure everyone that this 
has been a unified effort, one which has required some give and take 
from all of us.
  We have worked with CBO to come up with a cost-efficient solution. 
The Congressional Budget Office has told us that our bill will cost 
$370 billion over 10 years. As far as I know, the Daschle-Graham-Miller 
bill, S. 2625, does not have a CBO score, but I suspect that it is 
extremely expensive. The distinguished Senator may have some idea of 
what that score is because he has indicated that the amendment that he 
just introduced will cost around $600 billion, if I understand it, over 
10 years. The prescription drug program in the Graham legislation would 
include a sunset at the end of 2010, which is one of the problems with 
this legislation.
  On the other hand, there are no sunsets within our bill. Our 
tripartisan bill is a permanent solution, not a temporary solution. CBO 
informs us that once our bill is implemented, 99 percent of all seniors 
will have drug coverage. That would be truly remarkable. And that is 
CBO, not us.
  Again, this is a nonpartisan approach to providing prescription drugs 
to Medicare beneficiaries. On the other hand, the Daschle-Graham-Miller 
bill sunsets after 2010. So in my opinion, that bill is only a 
temporary solution.
  Does a temporary solution truly help seniors in the long run? I do 
not think it does. Our tripartisan bill provides all Medicare 
beneficiaries with affordable prescription drug coverage because we let 
competition determine the prices, not Government bureaucrats. That is 
how we keep prices of drugs down. It is not a good idea to let the 
Government set the price, which is what I predict will happen if the 
Daschle-Graham bill becomes law.
  We also provide additional subsidies to low-income seniors so they, 
too, can afford to pay for their drugs. I find it absolutely appalling 
that there are people in our country who have to choose between buying 
food and eating, and having prescription drugs. The tripartisan group's 
goal is to put an end to that. Through our bill, we will provide 
additional assistance to those seniors who need it. For example, the 10 
million beneficiaries with incomes below 135 percent of poverty will 
have 95 percent of their prescription drug costs covered by this plan 
with no monthly premium. They will not have to pay a monthly premium. 
In addition, these seniors are exempt from the deductible and will pay 
well under $5 for their brand name and generic prescriptions. Finally, 
these beneficiaries who reach the catastrophic coverage limit will have 
full protection against all drug costs, with no coinsurance.
  The 11.7 million lower income beneficiaries with incomes below 150 
percent of the poverty level are also exempt from the $3,450 benefit 
limit. Enrollees between 135 percent and the 150 percent of the Federal 
poverty level will also receive a generous Federal subsidy that on 
average lowers their monthly premium to anywhere between 0 and $24 a 
month. The beneficiary's monthly premium will be based on a sliding 
scale, according to his or her level of income.
  It also cuts in half their annual drug bills. All other enrollees 
will have access to discounted prescriptions after reaching the $3,450 
benefit limit and a critically important $3,700 catastrophic limit 
which protects seniors from high out-of-pocket costs. It is also 
important to note that 80 percent of Medicare beneficiaries will never 
experience a gap in coverage.
  Let me take a few minutes before we finish this evening to talk about 
my views on S. 2625, the Daschle-Graham-Miller Medicare Outpatient 
Prescription Drug Act of 2002. I understand that a new Graham bill has 
been filed and we are currently reviewing the details. We have not been 
able to review it very thoroughly, but we have a quick preview of it, 
and perhaps I can express my thoughts this evening just so people will 
have something to consider over the weekend.
  Again, I commend my good friend, a person I admire greatly, Senator 
Bob Graham, for his bill. I know he has worked hard. I know he has 
tried his best. I know he is representing his people in Florida very 
well and he has worked long and hard on this issue. I respect him for 
that. I respect him personally. He knows that. He, like those in the 
Senate in the tripartisan group, has the same goal: To provide Medicare 
beneficiaries with prescription drug benefits. But that is where the 
similarities end.
  My biggest concern with the new version of the Daschle-Graham bill is 
still the cost. My understanding is that this bill costs close to $600 
billion, over a 10-year period. We all agree a Medicare drug proposal 
will cost a lot of money, but the Daschle-Graham-Miller bill is, in my 
opinion, too expensive to both current and future generations because 
of the magnitude of its costs.
  And bear in mind, this bill is still not a permanent program. It 
sunsets. It sunsets after 2010, which makes it a less than 10 year 
benefit for approximately $600 billion. That is if I am right on the 
scoring. I believe having the sunset on such an important bill just to 
get a decent score from CBO is not being as fiscally responsible as I 
would like to be. I understand there is some window-dressing language 
that attempts to address the sunset, but to me that is all it is--
window dressing.
  Having said that, I am absolutely astounded that the AARP has come 
out and ask its members to support a bill that does not have a 
permanent benefit. That is just irresponsible on the part of the AARP. 
They are, in my opinion, not looking out for the best interests of 
seniors by asking their members to support this type of a bill. I am 
very disappointed in the AARP for making what I believe is a poor 
judgment call.
  Again, one of my top concerns with the both versions of the Graham 
bill is the cost. It is not going to get better as drugs become more 
expensive and more and more baby boomers retire. I remind my 
colleagues, our Government is in a Federal deficit. Figures from last 
week reveal that the Federal deficit could be as high as $150 billion 
for fiscal year 2002. Passing a bill that I believe could cost well 
over $600 billion over 10 years is going to increase our deficit. That 
is, in my opinion, a step in the wrong direction.
  The new Graham bill is still a one-size-fits-all bill that very well 
could lead to having the Federal Government set drug prices, although I 
know that is not the intention of my dear friend and colleague from 
Florida. That is, in my opinion, the wrong direction, as well. And why 
on earth should the Federal Government be making coverage decisions for 
seniors? I trust senior citizens to make their own decisions about 
their health coverage. Apparently, the authors of the Daschle-Graham-
Miller bill do not agree and that is why they continue to put the 
Government in charge.
  I look forward to the debate on Monday where we can discuss these 
issues more fully. If I am wrong on some of these suggested 
interpretations of my friend's bill, I would like him to set me 
straight on Monday when we debate this bill even further. I would like 
to know why anybody believes a sunset is necessary. That means the drug 
benefit ends. I hope we will have a CBO cost estimate we may review 
regarding the Graham legislation.
  Again, I wish to point out that I continue to be concerned that under 
both versions of the Daschle-Graham legislation, the drug benefit is 
run by the Federal Government. I don't think that is a good idea, to 
let the Government run a drug benefit because the Government will end 
up setting prices for drugs. Keep in mind, Canada sets prices for 
drugs, and where is their pharmaceutical industry today? They have to 
look to us because we do not set prices for drugs and we have a 
competitive

[[Page S7024]]

system. Yes, some say it has flaws, but it is the best in the world, 
bar none. Frankly, with whatever flaws there are, we should be very 
proud of the system we have in our country.
  In the tripartisan Medicare drug bill, we allow Medicare 
beneficiaries to make choices for themselves. They decide whether or 
not they want drug coverage. As I mentioned earlier, we allow Medicare 
beneficiaries to choose from at least two drug plans, and it maybe 
more, but at least two, competing plans, allowing them to select a plan 
that best suits their own personal needs.
  Another difference between the Daschle-Graham bill and our 
Tripartisan bill is that we include reforms to the Medicare program and 
they do not. The current Medicare benefit package was established in 
1965. While the benefits package has been modified occasionally, it now 
differs significantly from the benefits offered to those in private 
health plans. Our plan gives seniors a choice in their Medicare 
coverage seniors may remain in traditional Medicare or they may opt for 
the enhanced Medicare fee for service option which is similar to 
private health insurance. We do not force seniors to enter into the new 
enhanced fee for service plan. It is just an option. If beneficiaries 
want to stay in traditional Medicare that is fine.
  We need to give seniors choices concerning their health care 
coverage. Seniors must be given improved health care choices through 
the Medicare program. It is extremely unfortunate that the Daschle-
Graham-Miller bill does not recognize that the Medicare program needs 
to be improved so seniors can take advantage of the benefits that are 
offered by private health insurance. Keep in mind, our bill only costs 
$370 billion as scored by the Congressional Budget Office. Yet we still 
reform Medicare in addition to providing high quality prescription 
drugs to our people. There is nothing in the Daschle-Graham-Miller bill 
to improve the Medicare program. It just tacks on a prescription drug 
program and ignores the larger problem. Medicare beneficiaries deserve 
better.
  Senator Breaux deserves an awful lot of credit for our bill in this 
area. He has wanted to reform Medicare for a long time and has come 
close from time to time. This is the best opportunity to do it. I think 
he sees the value of what we have tried to do. He not only sees it, he 
helped implement it.
  The larger problem is the overall Medicare benefits package which is 
outdated, inefficient and it does not provide seniors with decent 
health care options. Let me give you an example. Today, Medicare 
beneficiaries do not have any serious illness protection. Beneficiaries 
who are seriously ill end up paying a lot of money out of pocket for 
their health care coverage each year. In our Tripartisan legislation, 
if a beneficiary is covered under the new enhanced fee for service 
program, once that beneficiary reaches a catastrophic limit of $6000, 
the Medicare program pays 100 percent of any costs incurred by the 
Medicare beneficiary. I feel that is only fair. Those Medicare 
beneficiaries with serious health conditions should be offered a choice 
in benefit coverage so if they want serious, illness protection, they 
may have it. The Graham-Daschle-Miller bill does nothing to assist 
Medicare beneficiaries in these types of situations. The Daschle-
Graham-Miller bill's answer is to provide seniors with a government-run 
prescription drug benefit that is extremely expensive, and, isn't 
even permanent. That just is not enough.

  These issues that I have raised about the Daschle-Graham-Miller 
should have been debated by the Finance Committee. I admit the issues 
we have raised by the Tripartisan bill should have been debated by the 
Finance Committee. Who knows, maybe we could have come to some 
resolution. Maybe the authors of the Tripartisan bill and the Daschle-
Graham-Miller bill could have come to some agreement through the 
Committee mark-up process. Maybe not. Sadly, we will never know because 
the majority leader wouldn't even give us an opportunity to mark-up a 
prescription drug bill in the Finance Committee.
  I have been here for 26 years and, trust me, it is rare for the full 
Senate to be considering such an important bill before it is even 
considered by the Committee of jurisdiction. I am bitterly disappointed 
at how much the Senate has changed.
  At the beginning of the 107th Congress, we all talked about working 
together in a bipartisan spirit because that is truly what the American 
people want from us. What happened to that bipartisan spirit? Why are 
we on the floor debating a bill that will affect the lives of over 33 
million Medicare beneficiaries and millions of future beneficiaries 
without a Finance Committee mark-up? I just do not understand why 
members of the Finance Committee were not even given that opportunity 
and, in fact, completely excluded from the process, other than that we 
can file whatever bill we want to, which we have done.
  I want to do everything I can to pass a Medicare prescription drug 
bill into law this year. But it appears that election year politics are 
more important than passing a well-thought out prescription drug bill 
which is extremely unfortunate.
  I stand ready to work with my colleagues so that we can provide 
affordable prescription drug coverage to our Medicare beneficiaries 
this year. We need to have Medicare available for today's seniors, our 
children and our grandchildren. So let's stop playing politics and 
start working on getting a Medicare prescription drug bill signed into 
law this year. I have no doubt if the distinguished Senator from 
Florida and I could sit down together we could just work it out--I have 
no doubt about that. Unfortunately, it has gotten embroiled in some 
political aspects.

  Again, I call attention to the tripartisan bill which has Democrats, 
Republicans, and the sole Independent. I believe that bill literally 
could provide an affordable drug benefit for Medicare beneficiaries, 
although it is still expensive. It could do what we really need to have 
done--not only on the prescription drug benefit aspect of this matter 
but also on the Medicare reform as well--and Medicare+Choice as well. 
To me, that is very important.
  I look forward to working with my colleague from Florida and others 
on the floor and hope we can come to a resolution this year, so the 
millions of American citizens will have the benefits that we really 
should be delivering to them and which they need and which are right 
and just.
  Mr. President, I yield the floor.
  The PRESIDING OFFICER. The Senator from Florida.
  Mr. GRAHAM. Mr. President, as I indicated, I restricted myself this 
evening to discussing the essence of our proposal and what I think are 
the six principles against which every proposal should be evaluated. I 
defer until Monday a close evaluation of the legislation that has been 
introduced by our good friend from Utah and others. One of the things I 
do not want to do is to create a poisoned environment which will make 
it difficult, if not impossible, to do what I think seniors want, which 
is to arrive at a reasonable compromise that will provide them with a 
prescription drug benefit.
  They have heard us too many times, as candidates, place in their 
living rooms on their television screens ads that pronounce our 
commitment to a prescription drug benefit for senior Americans.
  Now is the time to deliver. I recognize that in a democracy that 
means we have to have at least a majority, and probably under the rules 
of the Senate not just a majority but three out of every five Senators 
be prepared to vote for a single piece of legislation.
  Therefore, I reach my hand out across the aisle to two of my favorite 
colleagues, the Senator from Utah, who is now being joined by the 
Senator from Iowa, with whom I worked on many issues in the past, to 
say we look forward to engaging in that compromise.
  I do want to have printed in the Record, and I ask unanimous consent 
to do so, the CBO estimate of our bill.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:


            Democratic Drug Bill--Preliminary CBO Estimates

                        [In billions of dollars]

                          Full Score (2005-12)

Gross estimate......................................................594
  Score with % drug reduction from GAAP \1\.........................584
  Score with Federal GAAP savings \2\...............................576

                    Score with Contingency (2005-10)

Gross estimate......................................................421

[[Page S7025]]

  Score with % drug reduction from GAAP \1\.........................415
  Score with Federal GAAP savings \2\...............................407

\1\ CBO estimate of Democratic drug bill assuming lower drug prices for 
Medicare beneficiaries that would result from enactment of the GAAP 
bill (S. 812).
\2\ Estimate of Democratic drug bill assuming lower drug prices for 
Medicare beneficiaries that would result from enactment of the GAAP 
bill (S. 812) and savings from lower costs associated with prescription 
drugs that the government current pays for under the Medicaid, 
veterans, and other programs.

  Mr. GRAHAM. Mr. President, the estimate of our bill is that, in 
conjunction with the underlying generic drug bill, if that passes and 
makes generic drugs more available, our bill, which would only charge a 
$10 copayment for generic drugs as opposed to a $40 copayment for brand 
name drugs--our bill would have a cost over the next 8 years of $407 
billion--not $600 billion, or $800 billion, or, as some have even said, 
$1 trillion--and over the next 10 years would have a cost of $576 
billion.

  I might point out that this is the same program for 8 years that will 
cost $407 billion, and for 10 years will cost $576 billion.
  That differential is a reflection of how significant two factors are: 
One, inflation of prescription drug costs; and, second, the change in 
the demographics of Medicare beneficiaries.
  I happened to have been born in 1936. I was 65 years old on November 
9 of last year. I belong to the second lowest birth rate year in the 
20th century. Only 1933 had a lower birth rate than 1936. Therefore, 
there are not very many people my age. We are not putting a particular 
demand on Medicare or on the Social Security Program. But, in 10 years, 
it will be the people who were born in 1946--not 1936--which was the 
beginning of one of the greatest demographic revolutions in America 
history.
  We are going to begin to feel the impact of that revolution at the 
outer years of the 10 years. We are now calculating the cost of this 
program. It is my judgment that it is critically important that we now 
get started on this prescription drug benefit so that we can learn as 
much as we possibly can about what the implications are of delivery 
systems, of methods of providing benefits, and how to attract healthy, 
older citizens to participate in a prescription drug benefit--all the 
things that will be critical to the long-term stability of a 
prescription drug benefit. We need to start that process today when the 
demand is relatively low--not 5 or 10 years from now when the demand 
will begin to rapidly escalate.
  We have before us two different visions of how to get to the same 
destination. The Senator from Utah has outlined a number of issues of 
concern to him. I look forward to having a full debate on Monday. 
Hopefully, we can frame each one of these issues, such as the relative 
benefits of using the Medicare system as a means of delivering 
prescription drugs, or delivering it through subsidized private 
insurance policies--the relative benefits of having what I call a 
``defined benefit plan'' where seniors would know what they are buying 
as opposed to a defined contribution plan where there would not be that 
assurance.
  Those are all legitimate issues for us to debate.
  I suggest to my colleagues that they might take the time over the 
weekend to read the letters of endorsement from groups such as the 
AARP, which clearly has no interest other than representing the best 
interests of their millions of members--most of whom are part of this 
39 million Americans who are Medicare participants because they are 
over the age of 65. There is no reason to suspect their motives, or 
that they have some hidden agenda other than what they think is in the 
interest of senior Americans.
  I recommend reading their rationale for reaching the conclusion of 
their support for our proposal.
  I conclude tonight with a sense of optimism. We have gotten further 
this week than we have gotten in a decade in terms of closure on 
providing our older Americans with a key but missing part of their 
health care coverage; that is, assistance with their prescription drug 
costs.
  I hope next week we can complete this by the passage of a 
prescription drug bill recognizing that we have to negotiate with the 
House, and then secure final passage, and hopefully gather in the Rose 
Garden where I suspect that the President will, with great enthusiasm, 
be there to sign this bill into law and provide what America's older 
citizens have so long sought, an affordable, comprehensive, and 
universally available prescription drug benefit.
  The PRESIDING OFFICER. The Senator from Iowa.
  Mr. GRASSLEY. Mr. President, I am surely glad that this debate has 
begun. It is too bad we could not have started the debate on this bill 
on Monday or Tuesday of this week when the majority leader led us to 
believe that we would be doing nothing but prescription drugs until we 
got it done.
  I am glad that we now have Senator Graham's alternative before us.
  I thank Senator Hatch, who took the position as manager, while I was 
on the CNN program just a few minutes ago, to introduce the tripartisan 
bill on my behalf. That bill is a comprehensive prescription drug bill 
that represents a year of hard work by dedicated members of the Finance 
Committee, the committee that has jurisdiction over Medicare.
  We have Senator Graham's bill that you have heard about tonight. Then 
we have this tripartisan bill. People wonder what the term 
``tripartisan'' means. It means three Republicans, one Democrat, and 
one Independent in the Senate, but it also implies bipartisanship, or 
across-party cooperation that must be done to get any bill passed in 
the Senate.
  Our legislation is called the 21st Century Medicare Act. It makes 
essential improvements to Medicare by adding the comprehensive 
prescription drug benefits, and a new Medicare fee-for-service option 
to the 1965 program. These are all first improvements in Medicare since 
it was introduced in 1965.
  As I indicated to you, I have been honored to work with a top-notch 
group of Senators on this bill. That tripartisan group is Olympia 
Snowe, a Republican; John Breaux, a Democrat; Jim Jeffords, an 
Independent; and Orrin Hatch, a Republican. The group has dedicated 
countless hours to this effort.
  I must express my disappointment that the Senate Finance Committee 
has not had an opportunity to consider legislation as part of the 
committee process. I trust that Senator Graham of Florida will feel the 
same way. However, the bottom line is America's seniors have waited too 
long--and too long already--for Medicare prescription drug coverage.
  The House has acted in their fashion. The Senate must act as well. We 
cannot afford to waste a single day.
  I look forward to debating this important issue over the next few 
days and hope that the same bipartisan spirit of cooperation and 
compromise that guided the tripartisan group over the last year to 
write this bill will guide all Senators in this Chamber to an agreement 
that will give long overdue help to our seniors.
  Since the tripartisan bill is now introduced, since we have the 
Democrat version, and Senator Graham's bill is introduced, and since 
there is some misunderstanding of the differences between the two, I 
will take just a little bit of time to go over those. I also will take 
just a little bit of time to express some differences between the bill 
that passed the House of Representatives because some people have 
alluded to that bill as something just exactly like the tripartisan 
bill, which it is not.
  In regard to differences between Senator Graham's proposal and the 
tripartisan proposal that I have offered, the first would be cost.
  The sheer magnitude of Federal spending in the Senate Democrat bill--
an amount that is obscured by a sunset provision that kills the benefit 
in 2010--threatens Medicare's long-term stability. As such, the Senate 
Democrat bill gives seniors temporary help, not a permanent 
entitlement.
  By contrast, the Congressional Budget Office official estimate 
concluded that the tripartisan 21st Century Medicare Act totals $370 
billion over 10 years, a figure that guarantees permanent, affordable 
drug coverage without breaking the Medicare bank.
  There is also the issue of choice that separates the tripartisan plan 
from the Democrat plan. The Democrat plan relies on the Government to 
pick one standard prescription drug plan for over 40 million seniors 
with Medicare. The one-size-fits-all approach means seniors cannot shop 
for a prescription drug plan that best suits their needs.

[[Page S7026]]

  Under the tripartisan 21st Century Medicare Act, seniors are 
guaranteed to have at least two competing prescription drug plans in 
their community, even in rural areas, using local pharmacies as well. 
Seniors will have the choice of picking plans on the basis of cost, 
benefits, and quality. All plans will be required to meet Federal 
quality standards and to provide a standard benefit package, or its 
actuarial equivalent, including a $3,700 cap on out-of-pocket drug 
expenses for seniors.
  There is a difference in drug pricing. Because the Democrat plan is 
overly bureaucratic and excessively generous, that plan does nothing to 
curtail or even slow skyrocketing prescription drug costs. That is why 
it is essential that any new prescription drug benefit contain cost 
management controls that moderate growth in price.
  While guaranteeing a comprehensive drug coverage for all citizens, 
the tripartisan 21st Century Medicare Act imposes reasonable cost-
sharing obligations on beneficiaries and promotes competition among 
prescription drug plans. And with competition being promoted in the 
bill, that then leads to a better overall effect on drug prices. And 
that, again, is according to the nonpartisan Congressional Budget 
Office that does policy analysis and scoring for the Senate.
  The other issue is affordability, affordability for seniors. Under 
the Senate Democrat plan, seniors face fixed copayment amounts that, in 
many instances, mean they will actually pay more for many of the most 
commonly prescribed drugs than they would under a system that gives 
prescription drug plans more flexibility to offer lower cost 
copayments.
  That flexibility is a feature of the tripartisan 21st Century 
Medicare Act because it gives plans the freedom to offer copayments and 
deductibles that save seniors more money. Moreover, the tripartisan 
proposal has a lower average premium than the Democrat plan, and that 
would be $24. Again, this is according to a Congressional Budget Office 
estimate.
  We have Medicare enhancements in the tripartisan bill that the Senate 
Democrat plan does not have because that plan leaves current Medicare 
as it is and simply dumps a massive entitlement expansion, which would 
be the prescription drug plan, into the old 1965 model.
  The tripartisan 21st Century Medicare Act takes long overdue steps to 
strengthen and improve Medicare's basic benefit package. In addition to 
adding prescription drug coverage, the bill offers seniors a new 
enhanced option, including catastrophic protection and free--let me 
emphasize, free--preventive care; in other words, adopting the 
principle that an ounce of prevention is worth a pound of cure.

  This entire enhanced option is voluntary. If seniors like what they 
have had since 1965, they do not have to sweat it. They do not have to 
do it. They can keep what they have. Even 50 years from now they will 
still have that same choice, but they can also have the enhanced 
coverage as well. So it is voluntary. And Medicare, as we know it 
today, will always remain available to seniors who prefer to keep what 
they have, if they like it.
  Improvements are made to yet another coverage option. That coverage 
option exists today. Medicare+Choice plans are also included. 
Beneficiaries need not elect the enhanced option in order to have 
access to the drug benefit plan.
  I will finish, then, with a short description of why what the House 
of Representatives passed has nothing to do with the tripartisan plan.
  The tripartisan plan was adopted on principles and pricing and costs, 
the way the five of us decided to do it. For instance, the House bill 
has a higher average premium. This is according to the CBO estimate. 
The average premium under the House bill is $34 per month. The average 
premium under the tripartisan 21st Century Medicare Act is 
substantially more affordable, at just $24 per month.
  We have a much better benefit. The House bill limits the initial 
prescription drug benefit to $2,000 before exposing seniors to a gap in 
coverage. The tripartisan 21st Century Medicare Act basic drug benefit 
is better and is richer than that in the House bill. Seniors will have 
drug coverage under the tripartisan plan worth 50 percent of their drug 
spending up to $3,450 after the deductible is met, and that is $1,450 
more than what the House bill offers, even in its initial benefit.
  We have greater protection for low-income seniors in this Senate 
version. The tripartisan 21st Century Medicare Act steps in to give 
more help to low-income seniors where the House bill does not. It 
provides full assistance with premiums and substantial assistance with 
cost sharing for seniors below 135 percent of poverty with no gaps in 
coverage. For seniors between 135 percent and 150 percent of poverty, 
assistance with premiums and cost sharing is provided on a sliding 
scale, also with no gaps in coverage. This critical additional coverage 
for our most vulnerable seniors is an important distinction that 
reflects the tripartisan commitment to universal, affordable drug 
coverage for all.
  And then, lastly, I will speak about our enhanced option to which I 
have already referred. The House bill leaves the 1960s-style Medicare 
largely as it is today. It does provide $30 billion in additional funds 
to Medicare providers, but it does little to strengthen or improve 
Medicare's basic benefit package.
  Rather than addressing provider payment issues, the tripartisan 21st 
Century Medicare Act addresses Medicare's benefit flaws. It offers 
seniors a voluntary enhanced option, including catastrophic protection, 
free preventive care, and better Medigap plans.
  The new option would be offered alongside current fee-for-service 
Medicare and a strengthened Medicare+Choice. Seniors can keep what they 
have if they like it or choose the new option. In all three settings, 
access to affordable prescription drug coverage would be guaranteed.
  I just mention the difference, that the House bill does not have a 
new and improved and modernized Medicare option that we have in the 
tripartisan bill.
  (Mr. Jeffords assumed the Chair.)
  Mr. GRASSLEY. Since the distinguished Senator from Vermont has now 
come to the chair to be the Presiding Officer of the Senate, it gives 
me an opportunity to say that this provision in the tripartisan bill, 
of improving Medicare, bringing Medicare from a 1965 model to a 21st 
century model, improving it beyond the prescription drug provisions, 
was very much a concern of the Senator from Vermont, the Independent 
member of the Senate, Mr. Jeffords. I thank him very much for his 
contribution to that.
  It really has probably done as much for Medicare as the prescription 
drug provisions will, as we look to the day when we have baby boomers 
going into transition from their employer's health plans to Medicare. 
There will be a smooth transition if they choose the enhanced option; 
whereas all the other plans, including the Republican plan in the House 
of Representatives, including even the President's plan, Medicare will 
still be a 1965 model. And for baby boomers going from their modernized 
employer's health plan to the 1965 model of Medicare, if that is the 
only choice they had, it would not be a very good day for those baby 
boomers going into retirement.
  It has been such a pleasure to work with Senator Jeffords on this 
whole package, but most importantly, to have his leadership on this 
part that deals with the enhanced option, the new and improved and 
strengthened Medicare.
  Mr. KENNEDY. Mr. President, I ask unanimous consent to have printed 
in the Record this letter to Mr. Carl Feldbaum of the Biotechnology 
Industry Organization.
  There being no objection, the letter was ordered to be printed in the 
Record, as follows:



                                                  U.S. Senate,

                                    Washington, DC, July 18, 2002.
     Mr. Carl B. Feldbaum,
     President, Biotechnology Industry Organization, Washington, 
         DC.
       Dear Mr. Feldbaum: I was surprised to receive you letter of 
     July 15, 2002, opposing S. 812. The Greater Access to 
     Affordable Pharmaceuticals Act (the GAAP Act or Schumer-
     McCain). The record is abundantly clear that the 
     pharmaceutical industry is exploiting loopholes in our Hatch-
     Waxman drug patent laws to block less costly generic drugs 
     from coming to market. As our hearings revealed, these 
     actions hurt millions of American patients who are burdened 
     with rising health care costs.
       The exciting new cures brought forward each day by 
     America's biotech companies are paving the way for what I 
     believe is the new

[[Page S7027]]

     century of the life sciences, and I remain a proud champion 
     of the biotechnology industry in Massachusetts and across the 
     nation. It is important, therefore, as an industry concerned 
     about the health of all Americans, for BIO to acknowledge the 
     harm to American patients and consumers caused by today's 
     Hatch-Waxman abuses. Clearly, collusive agreements between 
     brand-name companies and generic companies to block cheaper 
     generic drugs from coming to market do not serve the public 
     interest. Similarly, patients are harmed when generic drugs 
     are stymied year after year by unfounded patent evergreening 
     for brand name drugs. I would strongly encourage BIO to be 
     part of the solution to these challenges.
       The Schumer-McCain legislation addresses these abuses and 
     restores the balance intended under the Drug Price 
     Competition and Patent Term Restoration Act of 1984 (the 
     Hatch-Waxman Act). As your letter expresses concerns about 
     the legislation, this letter describes in further detail the 
     Committee's intent in addressing them,. The issues you raised 
     include incorrectly listed patents or patent information with 
     the Food and Drug Administration (FDA), use of patents to 
     trigger multiple thirty month stays that delay effective 
     approval of generic drugs, collusive agreements between brand 
     and generic pharmaceutical companies to block subsequent 
     generic applicants from gaining effective approval of their 
     drug products and litigation attacking FDA's bioequivalence 
     regulations that have delayed entry of generic versions of 
     drugs.


               the 45 day period to assert patent rights

       You express concern that a patent owner's rights will be 
     forfeited under Schumer-McCain. I want to reassure BIO that 
     this is not the case.
       Section 4 of Schumer-McCain says that a patent owner that 
     does not sue within 45 days of receiving notice that a 
     generic drug applicant has challenged its patent will be 
     barred from suing that generic drug later.
       This provision provides the patent owner with the 
     opportunity to protect its patent rights. It also clarifies 
     those rights in relation to the generic drug product at issue 
     if the patent is not defended, thereby enabling the generic 
     drug product to be marketed immediately. The 45 day period 
     may be thought of as a statute of limitations, and Congress 
     has plenary authority to establish statutes of limitations 
     for federally created rights such as patents. In addition, 
     comparable periods of time for claiming or defending property 
     rights have been upheld by the Supreme Court.
       This provision does not eliminate the patent owner's rights 
     against the generic drug applicant and its generic drug 
     product. Rather, it specifies the time within which the 
     patent owner must assert those rights against that applicant 
     and its drug product.
       I cannot overemphasize that the bar on enforcing the patent 
     right under this 45 day rule applies only to the particular 
     generic product of the particular generic company that has 
     challenged the patent in its generic drug application. It 
     does not affect the ability of the patent owner to enforce 
     its rights with respect to any other generic company, or with 
     respect to a licensee who strays beyond the bounds of a 
     licensing agreement under which the patent owner has licensed 
     use of the patent.
       That being said, I also point out that the bar does protect 
     downstream distributors of the particular generic drug 
     product, such as wholesalers and pharmacies, as well as 
     doctors and patients who will use the generic drug product 
     for treatment.


             enforcement of the patent listing requirement

       Seciton 3 of Schumer-McCain says that a patent owner cannot 
     enforce its patent against a generic drug company, or a 
     person who manufactures, develops, uses, offsets to sell, or 
     sells a generic drug, if the patent owner has failed to list 
     the patent information at FDA. This provision provides an 
     effective enforcement tool for a current requirement.
       Drug companies are required currently to list patents at 
     FDA, and I am not aware of any complaints about this 
     requirement from the brand pharmaceutical industry. We 
     understand that now companies generally comply with this 
     requirement because patents can trigger 30 month stays of the 
     effective approval of generic drugs.
       As you know, however, Section 4 of Schumer-McCain limits 30 
     month stays to one per generic application, and on only 
     certain patents. The Committee's concern was that limiting 30 
     month stays in this way reduces the incentive to list 
     patents. We therefore concluded that we needed to provide an 
     effective incentive for compliance with the current 
     requirement to list patents at FDA. Otherwise, we were 
     concerned about increased abuses of the listing requirement.
       Currently, under section 505(e)(4) of the Federal Food, 
     Drug, and Cosmetic Act (the FFDCA), FDA can withdraw a drug 
     from the market if the patent information is not filed after 
     the agency gives written notice of failure to file the 
     information. FDA has never used this enforcement tool, and it 
     would not withdraw a drug from the market for this reason 
     when the drug presumptively is being used safely for 
     treatment of patients by health care providers. I believe 
     that Section 3 of Schumer-McCain provides effective 
     enforcement of the FDA listing requirement.
       Your letter raises the real concern about situations in 
     which a patent is not listed, or the information is 
     incorrect, because of an oversight or a clerical error. But 
     Schumer-McCain addresses this problem as well.
       Section 3 of Schumer-McCain allows FDA to extend the date 
     for listing patents if there are extraordinary or unusual 
     circumstances. An honest administrative or clerical error is 
     clearly such a circumstance. Because FDA publishes patent 
     information immediately upon receipt, the drug company and 
     the patent owner can promptly check that patent information 
     is published and that it is correct. If there is an error, or 
     a patent was not listed, the error can be spotted quickly and 
     immediately corrected. Accordingly, Schumer-McCain allows 
     patent owners to avoid the consequences of the inadvertent 
     failure to list a patent with the FDA.


           the cause of action to delist or correct a patent

       Your letter also raised questions about the cause of action 
     in Section 3 of Schumer-McCain to delist patents from FDA's 
     Orange Book or to correct patent information. In particular, 
     BIO is concerned that generic companies will bring these 
     cases unnecessarily, to harass a drug company or patent 
     owner. I do not believe that this will be the case.
       A generic drug company must certify to the patents listed 
     on a drug when it files a generic drug application. A generic 
     company must do so even if it intends to seek the correction 
     or delisting of a patent.
       If a generic wants to delist a patent or correct 
     information, it will likely chose to make a paragraph III 
     certification to the patent, saying that the applicant does 
     not contest the patent and requesting that its drug approval 
     be made effective when the patent expires. The generic 
     applicant will then sue to have the patent delisted or 
     corrected.
       If it wins, the patent is delisted, or the patent 
     information is corrected so that the generic applicant may 
     make a statement that the applicant is not seeking approval 
     for a use claimed in the patent. In either case, no 
     certification is necessary and the paragraph III 
     certification essentially goes away.
       Should the generic applicant lose a delisting case, 
     however, it will have to recertify and challenge the patent 
     under paragraph IV. This could trigger a 30 month stay, and 
     at a minimum would delay the resolution of the patent issues 
     involved. It is therefore my view that there are strong 
     incentives for generic applicants to bring these delisting 
     cases only when there is strong merit to the case. Because 
     this is the case, it is difficult to argue that delisting 
     cases will be either unnecessary or harassing.
       To the contrary, in such cases, the delisting of a patent, 
     or correction of patent information, serves a public good. 
     This is because a patent to which other generic drugs would 
     otherwise have to certify is instead either delisted or 
     corrected so that no certification is necessary. In such 
     cases, generic drugs may get more quickly to market, to the 
     great benefit of consumers.


                             bioequivalence

       BIO requests that section 7 of Schumer-McCain be stricken 
     in its entirety. I do not believe this provision raises the 
     concerns that BIO thinks it does.
       Section 7 allows FDA to amend its regulations, but it does 
     not say that those amended regulations are legitimate 
     exercises of authorities under the FFDCA. Only the current 
     regulations are identified as continuing in effect as an 
     exercise of authority under the FFDCA. Should FDA ever amend 
     its bioequivalence regulations, they would be subject to 
     judicial review under the Administrative Procedure Act.
       Indeed, earlier drafts of section 7(a) covered the FDA's 
     current regulations and successor regulations. But we did not 
     intend to protect amended regulations from judicial review, 
     so the language on successor regulations was removed.
       Also, under section 7(a), the application of the current 
     regulations in any particular case would be legitimate issues 
     for judicial review under the Administrative Procedure Act. 
     So FDA can be challenged if its application of those 
     regulations will pose potential risks to patients or to 
     public health.
       Finally, BIO believes that section 7(c) is inadequate. This 
     language, which we added in part in response to concerns from 
     BIO, says that section 7 shall not be construed to alter the 
     authority of the Secretary of Health and Human Services to 
     regulate biological products under the Federal Food, Drug, 
     and Cosmetic Act. Any such authority shall be exercised under 
     that Act as in effect on the day before the date of enactment 
     of this Act.
       This language is very similar to a statement that Senator 
     Jeffords and I made on December 3, 1997, in a letter to 
     Michael Friedman, then Lead Deputy Commissioner at FDA. It 
     makes it clear that we are not changing FDA's authority under 
     the FFDCA over biological products--in particular that we are 
     not making changes to newly authorize the approval of generic 
     biologics under the FFDCA. That was good enough in 1997 and 
     should be good enough today.
       I remain committed to the reforms of the Hatch-Waxman Act 
     provided for in Schumer-McCain, just as I remain committed to 
     a strong and vibrant biotechnology industry, both in 
     Massachusetts and throughout the nation. I believe that the 
     adjustments to the Hatch-Waxman Act found in Schumer-McCain 
     correct imbalances in and will stop abuses of the generic 
     drug approval process that have arisen in recent years. I do 
     not believe that these reforms will adversely impact in any 
     way a company or patent owner

[[Page S7028]]

     that diligently sees to its legal rights and obligations 
     under Federal law.
       I hope that this letter addresses your concerns, and I 
     remain willing to work closely with my many friends in the 
     biotechnology industry in Massachusetts and elsewhere as this 
     legislation moves forward.
           Sincerely,
                                                Edward M. Kennedy.

  Mr. REID. I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The assistant legislative clerk proceeded to call the roll.
  Mr. REID. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.

                          ____________________