[Congressional Record Volume 149, Number 93 (Monday, June 23, 2003)]
[Senate]
[Pages S8323-S8356]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




         PRESCRIPTION DRUG AND MEDICARE IMPROVEMENT ACT OF 2003

  The PRESIDING OFFICER. Under the previous order, the Senate will 
resume consideration of S. 1, which the clerk will report.
  The assistant legislative clerk read as follows:

       A bill (S. 1) to amend title XVIII of the Social Security 
     Act to make improvements in the medicare program, to provide 
     prescription drug coverage under the medicare program, and 
     for other purposes.

  Pending:

       Bingaman amendment No. 933, to eliminate the application of 
     an asset test for purposes of eligibility for premium and 
     cost-sharing subsidies for low-income beneficiaries.
       Graham (FL) amendment No. 956, to provide that an eligible 
     beneficiary is not responsible for paying the applicable 
     percent of the monthly national average premium while the 
     beneficiary is in the coverage gap and to sunset the bill.
       Kerry amendment No. 958, to increase the availability of 
     discounted prescription drugs.
       Lincoln modified amendment No. 934, to ensure coverage for 
     syringes for the administration of insulin, and necessary 
     medical supplies associated with the administration of 
     insulin.
       Lincoln amendment No. 935, to clarify the intent of 
     Congress regarding an exception to the initial residency 
     period for geriatric residency or fellowship programs.
       Lincoln amendment No. 959, to establish a demonstration 
     project for direct access to physical therapy services under 
     the Medicare Program.
       Baucus (for Jeffords) amendment No. 964, to include 
     coverage for tobacco cessation products.
       Baucus (for Jeffords) amendment No. 965, to establish a 
     Council for Technology and Innovation.

[[Page S8324]]

       Nelson (FL) amendment No. 938, to provide for a study and 
     report on the propagation of concierge care.
       Nelson (FL) amendment No. 936, to provide for an extension 
     of the demonstration for ESRD managed care.
       Baucus (for Harkin) amendment No. 967, to provide improved 
     payment for certain mammography services.
       Baucus (for Harkin) amendment No. 968, to restore 
     reimbursement for total body orthotic management for 
     nonambulatory, severely disabled nursing home residents.
       Baucus (for Dodd) amendment No. 969, to permit continuous 
     open enrollment and disenrollment in Medicare Prescription 
     Drug plans and MedicareAdvantage plans until 2008.
       Baucus (for Dodd) amendment No. 970, to provide 50 percent 
     cost-sharing for a beneficiary whose income is at least 160 
     percent but not more than 250 percent of the poverty line 
     after the beneficiary has reached the initial coverage gap 
     and before the beneficiary has reached the annual out-of-
     pocket limit.
       Baucus (for Cantwell) amendment No. 942, to prohibit an 
     eligible entity offering a Medicare Prescription Drug plan, a 
     MedicareAdvantage Organization offering a Medicare Advantage 
     plan, and other health plans from contracting with a pharmacy 
     benefit manager (PBM) unless the PBM satisfies certain 
     requirements.

  The PRESIDING OFFICER. The distinguished Senator from Montana is 
recognized.
  Mr. BAUCUS. Mr. President, I see the Senator from West Virginia is in 
the Chamber.
  Mr. President, 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. BAUCUS. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. BAUCUS. Mr. President, I ask unanimous consent that the pending 
amendments be temporarily laid aside so the Senator from West Virginia 
can offer his amendments.
  The PRESIDING OFFICER. Is there objection?
  Without objection, it is so ordered.
  The distinguished Senator from West Virginia is recognized.


                      Amendments Nos. 975 and 976

  Mr. ROCKEFELLER. Mr. President, before offering my amendments, I am 
going to discuss both of them because they are being reviewed, at this 
point, in the majority cloakroom. But I am going to be offering two 
amendments this afternoon in order.

  The first amendment I will offer is to ensure that all Medicare 
beneficiaries will be eligible for this new drug benefit, including 
low-income Medicare beneficiaries who are currently eligible for 
Medicaid and Medicare. They are known as dual eligibles.
  The underlying bill precludes Medicare beneficiaries--makes it 
impossible for Medicare beneficiaries--who are eligible to receive a 
drug benefit through Medicaid from, in fact, enrolling in the Medicare 
drug benefit program.
  This group is referred to as the dual-eligible group. They are the 
poorest seniors under Medicare. They are below 74 percent of poverty. 
That is their income level. A disproportionate share of them--to wit, 
42 percent--are minorities. Women make up the majority of them all. 
Many are likely to have a poor education, live alone, and have more 
than two chronic illnesses.
  The underlying bill precludes these folks that I have just talked 
about--these duel-eligible beneficiaries--from receiving the Medicare 
drug benefit. As a result, this prescription drug benefit is not, in 
fact, at all a universal bill. Now, that is important in a lot of ways. 
One is philosophical and the other is extremely practical.
  The philosophical one is that in 1965, when we created Medicare, it 
was created as a universal benefit to all who qualify. It was the 
promise that society made to our seniors: That if you work, if you make 
your payroll contributions, then you, at the proper time, qualify for 
Medicare regardless of where you live, regardless of how old you might 
be, or your income.
  As I have noted before, the underlying legislation, for the first 
time in the history of the Medicare Program, would prohibit some 
Medicare beneficiaries from receiving a Medicare benefit.
  My amendment would make the Medicare prescription drug benefit a 
universal benefit by adopting the provisions that were, in fact, 
contained in the tripartisan proposal introduced last summer.
  It would eliminate the exclusion of Medicaid beneficiaries and make 
the new Medicare Part D drug benefit--that is the new part we are 
creating--available to all Medicare beneficiaries regardless of income. 
Medicaid would be the secondary payer for Medicare beneficiaries 
eligible for Medicaid wrapping around this new Part D drug benefit and 
its low-income protections.
  Again, this is exactly the same construction the majority of my 
Republican colleagues supported in the Grassley-Snowe-Hatch-Jeffords-
Breaux Medicare bill that was voted on by the full Senate last summer. 
The National Governors Association sent a letter to Chairman Grassley 
and Senator Baucus which said the following about the exclusion of some 
of these seniors, that is, the dual-eligible seniors, those at 74 
percent or below the poverty level, from Medicare:

       The nation's Governors oppose this approach. It is not good 
     health policy. It is not good precedent. A major reason that 
     States currently have a long-run structural problem in their 
     fiscal outlook is that they have absorbed responsibility for 
     dual eligibles.

  They go on to say:

       This provision will continue to shift appropriate federal 
     costs to the states.

  Governors Patton of Kentucky and Kempthorne of Idaho went on to say:

       If the dual eligible populations continue to be a joint 
     responsibility, states will be forced to cut the optional 
     (Medicaid) benefits and populations--mostly women and 
     children--which are a key investment in the future.

  The President agrees. In a speech he recently gave on Medicare, he 
said:

       And all low-income seniors should receive extra help so 
     that all seniors will have the ability to choose a Medicare 
     option that includes a prescription drug benefit.

  The Medicare prescription drug legislation being considered by the 
House of Representatives would shift the entire drug bill to Medicare. 
It is not on a frequent day that Chairman Thomas and I are in full 
agreement. But he does say such a shift ``ensures that all seniors 
across the country will have access to affordable prescription drugs, 
while alleviating much of the burden that states now confront.'' I say 
to my colleagues, as I indicate, I am not always in agreement, but we 
are going forward directly together on this policy, I hope.
  The current system is uncoordinated and sometimes conflicting in 
terms of coverage policies. It actually creates worse health outcomes 
for people on both Medicaid and Medicare, either one. Fully integrating 
a key benefit for prescription drugs into Medicare is a critical first 
step toward improving the current system's flaws.
  It needs to be clearly understood by my colleagues that Medicaid in 
the hands of Governors, which I had the honor of being at one point, is 
subject to whatever their whims might be. It is subject to budget 
pressures. Remember, they have to balance the budget. We don't; they 
do. And they frequently do it on the backs of Medicaid beneficiaries--
that is, that part of these Medicare-Medicaid dual eligibles--so they 
can increase the number of prescription drugs which are available under 
Medicaid in their State. They can change it in many ways because the 
programs vary widely. Not only is it unfair to exclude the poorest 
seniors from part of the Medicare program, it is a raw deal for some of 
our neediest seniors.

  Prescription drugs are, as I said, an optional benefit under 
Medicaid. States can and do limit the number of prescriptions. Some 
States only cover three drugs or they could charge any copayments they 
want. Remember, what we are looking at here is a group of people who 
are below 74 percent of poverty which is clearly in single-digit gross 
income. So the patchwork of the benefits varies tremendously from State 
to State. For seniors who have worked all their lives, paid into the 
Medicare system, it is not fair for them to be at the mercy of State 
coverage decisions.
  If you look around the country right now, the fastest growing expense 
of any State is Medicaid, part of this dual-eligible conundurm, and 
those programs are being cut. You can see it, read about it, and hear 
about it. So it is highly volatile, and it is not safe health care 
policy.
  Medicare has failed in its efforts to provide comprehensive 
prescription drug coverage to seniors ever since the

[[Page S8325]]

repeal of the Medicare Catastrophic Act in 1988. Virtually all advances 
in drug coverage for seniors since then have been delivered not by us 
but by the States. While at the same time the States have been cutting 
back in recent years, they have also made improvements. We have done 
nothing. They have done whatever has been done.
  Without some long-term restructuring of the State-Federal partnership 
for this population, this dual-eligible, 74-percent-of-poverty-minus 
population, much of the advances the States have made will be lost. All 
Medicare beneficiaries deserve to receive Medicare benefits. There 
should be no exceptions for drugs. It would be very bad precedent to 
make Medicaid pay for items that are clearly the responsibility of 
Medicare except at the present and in this bill for one particular 
discrete population.
  The intention is for this amendment to be budget neutral. I would 
like to say it is budget neutral, but I cannot in that I asked CBO for 
a cost estimate last week and I do not yet have one.
  This is a concern and an agony shared by many. Once we have this 
estimate, we will either conclude that we can go ahead because we will 
know it is budget neutral or I will be happy to work with the chairman 
and ranking member on appropriate offsets.
  I urge my colleagues to provide all the seniors in their States with 
the benefit of real Medicaid drug benefit by supporting this amendment.
  I will at the appropriate time ask that it be acted upon. I am 
awaiting a particular series of sheets of paper but in the meantime, in 
the minute or so that will require, I send to the desk an amendment and 
ask for its immediate consideration.
  The PRESIDING OFFICER. The clerk will report.
  The assistant legislative clerk read as follows:

       The Senator from West Virginia [Mr. Rockefeller], for 
     himself, Ms. Mikulski, and Mrs. Clinton, proposes an 
     amendment numbered 975.

  The amendment is as follows:

  (Purpose: To make all Medicare beneficiaries eligible for Medicare 
                      prescription drug coverage)

       On page 10, lines 12 and 13, strike ``(other than a dual 
     eligible individual, as defined in section 1860D-
     19(a)(4)(E))''.
       On page 21, strike lines 22 through 25, and insert ``title 
     XIX through a waiver under 1115 where covered outpatient 
     drugs are the sole medical assistance benefit.
       On page 107, line 3, strike ``30 percent'' and insert 
     ``27.5 percent''.
       On page 116, line 10, insert ``and'' after the semi-colon.
       On page 116, line 12, strike ``; and'' and insert a period.
       On page 116, strike lines 13 through 17.
       On page 116, line 24, insert ``and'' after the semi-colon.
       On page 117, line 2, strike ``; and'' and insert a period.
       On page 117, strike lines 3 through 7.
       On page 117, line 13, insert ``and'' after the semicolon.
       On page 117, line 17, strike ``; and'' and insert a period.
       On page 117, strike lines 18 through 23.
       On page 118, line 6, insert ``and'' after the semicolon.
       On page 118, in line 13, insert ``or'' after the semi-
     colon.
       On page 118, line 14, strike ``; or'' and insert a period.
       On page 118, strike line 15.
       Beginning on page 118, strike line 16 and all that follows 
     through page 119, line 9.
       On page 119, line 10, strike ``(F)'' and insert ``(E)''.
       On page 119, line 15, strike ``(G)'' and insert ``(F)''.
       On page 119, line 19, strike ``(C), (D), or (E)'' and 
     insert ``(C), or (D)''.
       On page 120, line 3, strike ``(H)'' and insert ``(G)''.
       On page 120, lines 5 and 6, strike ``who is a dual eligible 
     individual or an individual''.
       Beginning on page 121, line 24, strike ``dual eligible'' 
     and all that follows through ``and'' on page 122, line 1.
       On page 146, line 6, insert before the period ``and to the 
     design, development, acquisition or installation of improved 
     data systems necessary to track prescription drug spending 
     for purposes of implementing section 1935(c)''.
       Beginning on page 146, strike line 23 and all that follows 
     through page 149, line 21, and insert the following:
       ``(c) Federal Assumption of Medicaid Prescription Drug 
     Costs for Dually Eligible Beneficiaries.--
       ``(1) In general.--For purpose of section 1903(a)(1) for a 
     State for a calendar quarter in a year (beginning with 2006) 
     the amount computed under this subsection is equal to the 
     product of the following:
       ``(A) Standard prescription drug coverage under medicare.--
     With respect to individuals who are residents of the State, 
     who are entitled to, or enrolled for, benefits under part A 
     of title XVIII, or are enrolled under part B of title XVIII 
     and are receiving medical assistance under subparagraph 
     (A)(i), (A)(ii), or (C) of section 1902(a)(10) (or as the 
     result of the application of section 1902(f)) that includes 
     covered outpatient drugs (as defined for purposes of section 
     1927) under the State plan under this title (including such a 
     plan operated under a waiver under section 1115)--
       ``(i) the total amounts attributable to such individuals in 
     the quarter under section 1860D-19 (relating to premium and 
     cost-sharing subsidies for low-income medicare 
     beneficiaries); and
       ``(ii) the actuarial value of standard prescription drug 
     coverage (as determined under section 1860D-6(f)) provided to 
     such individuals in the quarter.
       ``(B) State matching rate.--A proportion computed by 
     subtracting from 100 percent the Federal medical assistance 
     percentage (as defined in section 1905(b)) applicable to the 
     State and the quarter.
       ``(C) Phase-out proportion.--Subject to subparagraph (D), 
     the phase-out proportion for a quarter in--
       ``(i) 2006 is 95 percent;
       ``(ii) 2007 is 90 percent;
       ``(iii) 2008 is 85 percent;
       ``(iv) 2009 is 80 percent;
       ``(v) 2010 is 75 percent; or
       ``(vi) 2011, 2012 and 2013 is 70 percent.
       ``(d) Medicaid as Secondary Payor.--In the case of an 
     individual who is entitled to a Medicare Prescription Drug 
     plan under part D or drug coverage under a MedicareAdvantage 
     plan, and medical assistance including covered outpatient 
     drugs under this title, medical assistance shall continue to 
     be provided under this title for covered outpatient drugs to 
     the extent payment is not made under the Medicare 
     Prescription Drug plan or a MedicareAdvantage plan.
       Beginning on page 152, strike line 3 and all that follows 
     through page 153, line 15, and insert the following:
       ``(f) Definition.--For purposes of this section, the term 
     `subsidy-eligible individual' has the meaning given that term 
     in subparagraph (D) of section 1860D-19(a)(4).''.
       (C) Conforming amendments.--
       (1) Section 1903(a)(1) (42 U.S.C. 1396a(a)(1)) is amended 
     by inserting before the semicolon the following: ``, reduced 
     by the amount computed under section 1935(c)(1) for the State 
     and the quarter''.
       (2) Section 1108(f) (42 U.S.C. 1308(f)) is amended by 
     inserting ``and section 1935(e)(1)(B)'' after ``Subject to 
     subsection (g)''.
       Beginning on page 157, strike line 21 and all that follows 
     through page 158, line 4.
       On page 173, beginning on line 15, strike ``that is not'' 
     and all that follows through ``includes'' on line 18 on that 
     page, and insert ``that includes but is limited solely to''.
       On page 190, in line 18, strike ``and''.
       On page 190, between lines 18 and 19, insert the following:
       ``(B) is not a dual eligible beneficiary as defined under 
     section 1807(i)(1)(B); and''.
       On page 190, line 19, strike ``(B)'' and insert ``(C)''.

  Mr. ROCKEFELLER. Mr. President, I also have the amendment for which I 
just spoke. I ask unanimous consent that that be brought to the desk 
for its consideration and the pending amendment be set aside.
  The PRESIDING OFFICER. Is there objection to setting aside the 
amendment?
  Mr. GRASSLEY. Reserving the right to object, and I shall not object, 
I would like to remind the Members of my caucus we do have an 
arrangement between the two parties that every other amendment offered 
could be offered by a Republican and then in turn by a Democrat. We 
have several Democrat amendments pending. There is nothing wrong with 
that. It hasn't hurt the process at all. But I think it would be fair 
for me to remind the Members of the Republican caucus if they have 
amendments to propose, come over and do it. It will speed up the 
process and I think be considered a little more fair by everybody here. 
I will not object.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The clerk will report the amendment.
  The assistant legislative clerk read as follows:

       The Senator from West Virginia [Mr. Rockefeller], for 
     himself, Mr. Carper, Mr. Graham of Florida, Ms. Mikulski, 
     Mrs. Clinton, and Mr. Dodd, proposes an amendment numbered 
     976.

  Mr. ROCKEFELLER. Mr. 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 as follows:

 (Purpose: To treat costs for covered drugs as incurred costs without 
 regard to whether the individual or another person, including a State 
    program or other third-party coverage, has paid for such costs)

       On page 51, strike lines 15 through 25 and insert the 
     following:

[[Page S8326]]

       ``(ii) such costs shall be treated as incurred without 
     regard to whether the individual or another person, including 
     a State program or other third-party coverage, has paid for 
     such costs.

  Mr. ROCKEFELLER. Mr. President, I wish to proceed with the amendment 
I was going to offer first but which will be my second amendment. That 
also will await the decision of the leadership.
  Mr. President, I come to the floor again to offer an amendment that 
will ensure that contributions made on a beneficiary's behalf by their 
former employers count toward that beneficiary meeting the catastrophic 
limit. Let me just say, as I begin this, in our Finance Committee 
deliberations, it was this amendment which caused more stir, more 
angst, more sense of, oh, my heavens, we have not really done this, 
have we? We could not have made this mistake involving this many 
people. The amendment was handled in Finance--without success, from my 
point of view. Nevertheless, I was urged by colleagues on both sides of 
the aisle to bring this amendment to the floor because it has enormous 
implications. That will become apparent, hopefully, as I complete my 
statement.
  This amendment is needed to protect the existing coverage of 
literally millions and millions of retirees who have earned drug 
coverage through their employer. That means they have been employed 
much of their lives by their employer and they have now retired and 
they are Medicare beneficiaries and the employer gave retiree benefits. 
We are accustomed to this in chemical, steel, and many other 
industries. But there is a problem that has arisen.
  As much as we want to provide a new drug benefit for these seniors, 
we should not disrupt the basically foundational employer-provided drug 
coverage so many seniors have today. It is the largest source of drug 
coverage in the country and it is an honorable and a good one. It would 
be a very great mistake for my colleagues to walk away from this system 
and one that we would all very much regret.
  Mr. President, in saying that employer-sponsored retiree health 
benefits are the largest single source of coverage for retirees, I 
simply say that one in every three Medicare beneficiaries is affected 
by the amendment I am now discussing. They will either lose their 
coverage or they will not, depending upon how this amendment is 
disposed.
  Drug costs constitute 40 to 60 percent of employers' retiree health 
care costs. That is a lot. And steep price increases are prompting 
employers to, one, eliminate drug benefits in some circumstances; 
secondly, cap their contributions; thirdly, drop retiree coverage 
altogether. We all know this is a phenomenon of American life that has 
been going on in recent years.
  Employers need immediate relief for their retiree prescription drug 
costs. A Medicare prescription drug benefit should relieve some of the 
burden on employers by covering a retiree's cost after a certain 
catastrophic limit. I recognize this gets technical, but it is 
profound. Instead, this benefit extends the amount of time before a 
retiree reaches that catastrophic benefit of about $4,000 by not being 
able to count as the employee's contribution--in fact, the employer's 
contribution toward that end is very substantial. Therefore, the 
employer receives no real relief from this benefit and is forced to 
drop the coverage they currently provide their retirees, leaving 
Medicare to pay the entire cost.
  I think I do not have to explain that that means the Federal 
Government has to pick up even more of the cost of Medicare and 
prescription drugs than would otherwise be the case, for example, if 
this amendment were to pass.
  The bill we are considering on the floor today exacerbates the 
current downward trend in retiree benefits by extending the amount of 
time the beneficiary relies on the employer before reaching the 
catastrophic limit. What does that say? It says if you extend the 
amount of time the employee has to keep paying and paying toward his 
catastrophic limit for a much longer time, there is therefore much more 
out-of-pocket costs to the employee.
  This legislation discriminates against Medicare beneficiaries with 
employer-provided coverage with a trick definition--that is what is 
used--of out-of-pocket costs known, uninterestingly, as the ``true'' 
out-of-pocket costs. This plan would not allow any spending by 
employers to count toward meeting the catastrophic limit. In this way, 
the underlying legislation limits the overall spending by the Medicare 
Program at the expense of employers who offer retiree coverage.
  The result is CBO estimates, as I indicated, that 37 percent of 
beneficiaries currently receiving a drug benefit from their employee 
will lose that coverage. Additionally, it extends the amount of time, 
as I have indicated, a beneficiary has to reach the catastrophic limit, 
exposing them to additional and more and more costs. I think we should 
all agree that one of the goals of this legislation should be to 
encourage employers who are currently providing drug coverage to their 
retirees to continue, in fact, to do so. It should reward and 
strengthen those employers because the benefit they are providing goes 
a long way toward helping American seniors afford prescription drugs. 
The legislation should not force employers to drop their coverage by 
making their contribution on a beneficiary's behalf meaningless or, 
rather, by not concluding that the employer's contribution as part of 
the retiree's expenditures counts toward the catastrophic limit. In 
other words, simply take what the employer contributes to this, include 
that on top of what the employee contributes, and you have a much 
better count toward the money that is spent toward getting to the 
catastrophic limit and the rate at which you get there.
  Without adoption of my amendment, this plan penalizes employers who 
are trying to do the right thing by providing retiree health benefits. 
It is not in anybody's best interest for employers to decide that 
contributions for prescription drug coverage just keep retirees from 
reaching the catastrophic drug limit. Without modifying how employer 
contributions are treated under this legislation, we are ultimately 
threatening retiree coverage and driving millions more seniors to 
obtain Medicare coverage from their employers.
  My amendment removes the so-called true out-of-pocket concept and 
replaces it with a real out-of-pocket concept which better reflects the 
seniors' true drug spending. According to CBO, the true out-of-pocket 
approach is a significant component of why employers drop coverage. 
Again, the underlying bill is the reason why 37 percent of those 
covered by their employers will be dropped. That I am trying to 
eliminate. Therefore, eliminating the true out-of-pocket expenses will 
go a long way toward keeping employers in the business of providing 
drug coverage for their retirees.

  Mr. President, I urge my colleagues to adopt this amendment. I expect 
that the retirees in our States may well end up with a less 
comprehensive or more expensive prescription drug benefit as a result 
of this legislation should we fail to adopt this amendment.
  I thank the Presiding Officer and yield the floor.
  Mr. BAUCUS. Mr. President, 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. GRASSLEY. Mr. President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The distinguished Senator from Iowa is recognized.
  Mr. GRASSLEY. Mr. President, the Senator from West Virginia raises an 
important point in his amendment. In the underlying bill from the 
Senate Finance Committee, beneficiaries who are enrolled in both 
Medicaid and Medicare--and this is the group we call dual eligibles--
would continue to receive drug coverage under the Medicaid Program.
  Some of my colleagues have argued that by having dual eligibles 
remain in the Medicaid Program, Congress is thus treating these 
vulnerable seniors as second-class citizens and subjecting them to 
lower quality benefits. I strongly disagree with that point of view.
  I have worked closely with my Finance Committee colleagues on the 
development of this package, and we had an opportunity during this 
debate to reflect on the concerns that were

[[Page S8327]]

raised by the Senator from West Virginia and also by others during the 
debate last summer of the so-called tripartisan bill, meaning the bill 
that was before the Senate in 2002.
  All of us authoring the underlying bill took these concerns to heart. 
We made the decision that it was most beneficial to these seniors to 
continue to build off the existing Medicare and Medicaid low-income 
assistance programs that they know and understand.
  That said, I remind my colleagues that the intent of this legislation 
is to expand prescription drug coverage to our senior citizens who do 
not have access to the prescription drugs and who are faced with paying 
a large share of their income for their drug coverage.
  About two-thirds of the citizens of the United States today have some 
coverage for prescription drugs. Retirees from major corporations have 
prescription drugs paid for in their retirement plans. We have people 
who are in Medicare plus their Medigap policies that also have some 
coverage, and then we have lower income people who are dual eligibles 
who are covered under both Medicare and Medicaid. This makes up 60-some 
percent of the seniors of America who have some drug coverage.

  We want to fill in the gap for those who do not have drug coverage or 
might have inadequate drug coverage. Quite frankly, for people who 
already have drug coverage, particularly those who have lower incomes, 
who are covered by State Medicaid Programs, we felt it was best not to 
upset their coverage, not to give that group any angst about how they 
might be covered in the future while the debate on this legislation was 
going on and how it might be put in motion, so we decided just to leave 
those as is.
  The Senator from West Virginia believes it would be better if we 
would cover them under our plans that are meant for people who have no 
coverage whatsoever.
  We are in a situation where coverage experienced by those who are 
dual eligible is the issue before us. These seniors currently have drug 
benefits through the Medicaid Program. In fact, many advocates and 
beneficiaries describe these benefits as very generous. Medicaid 
beneficiaries have come to know their drug benefits, along with its 
nominal levels of cost sharing. We should not require seniors to leave 
coverage with which they are comfortable.
  Further, I remind my colleagues that we are discussing populations 
eligible for both Medicare and Medicaid. Medicaid was created to assist 
individuals who do not have the means to pay for their share of health 
care costs. That is a responsibility that is shared by the Federal 
Government and by State governments. Medicaid pays for many benefits 
that Medicare does not.
  Is the purpose of the prescription drug bill before us to grant 
fiscal relief to the States, which would be what the amendment of the 
Senator from West Virginia would do? I do not believe that is what we 
should be doing.
  We all know the purpose of the prescription drug bill is to provide 
prescription drugs to seniors who do not currently have access to drugs 
or otherwise would be paying extremely high drug costs and, hence, the 
provisions of our legislation for catastrophic coverage.
  However, recognizing the costs associated with covering the cost of 
providing prescription drug coverage to dual-eligible populations, the 
bill before us does provide nearly $18 billion in new Federal dollars 
to compensate States for some of these additional costs, mostly because 
it is a fast growing part of the Medicaid budgets of most States.
  The funding we provide in this bill will be channeled to States by 
federalizing the cost of Part B premiums for dual eligibles in a 
subclass called qualified Medicare beneficiaries. This is because the 
prescription drug bill before us provides minimum standards that ensure 
the benefit provided through Medicaid is at the same high quality that 
is being provided through Part D of our Medicare Program.
  As is usually the case, the argument would be made yet that we should 
still do more and perhaps serve this population differently than we do. 
But, in fact, we developed the underlying bill to best utilize the 
availability of $400 billion, an absolute figure that we must be in; 
otherwise, we are subject to a point of order and, in a sense, instead 
of 51 votes it takes to pass this body, one could argue it would take 
60 votes. If we exceeded the $400 billion, we would have to have 60 
votes.
  Our approach helps to deliver care that is consistent with current 
law but, most important, familiar to vulnerable beneficiaries.
  A prime rationale behind our legislation is it really does not make 
seniors do anything they do not want to do. We set up a new Medicare 
Program that is closer to what baby boomers have in the workplace 
today. They can choose that or they can choose to stay in the 1965 
model Medicare.
  People who want to stay in the 1965 model Medicare can choose 
voluntarily to join a prescription drug program. They do not have to. 
We wanted to help those who are in Medicaid to stay in Medicaid if they 
wanted to. They do not have to go into these new programs.
  Finally, I remind my colleagues that the adoption of this amendment 
will not expand coverage at all. It will simply shift the cost to the 
Federal Government and, in time, to other Medicare beneficiaries.
  So after careful thought, because at one time we did debate 
internally the substance of the amendment by the Senator from West 
Virginia to federalize all dual eligibles, we thought maybe we should 
include that in the program, but we figured it raised a lot of 
questions from people who are already adequately covered and who seemed 
to be very satisfied.
  Also, there are some additional costs that would subtract from what 
we could do for those who have no coverage for prescription drugs 
whatsoever, and in order to get the most bang for the dollar within the 
$400 billion that is in the budget for this program, we decided to 
leave the dual-eligible program alone. That is why I suggest we defeat 
Senator Rockefeller's amendment when it comes to a vote.
  I yield the floor.
  Mr. ROCKEFELLER. Will the Senator yield?
  Mr. GRASSLEY. Mr. President, the Senator will try to answer a 
question, yes.
  Mr. ROCKEFELLER. I thank the Senator, and this is in the form of a 
question. I fully understand the constraints of the $400 billion, as 
the chairman of the Finance Committee indicates, and I think we all 
understood that to do a full prescription drug benefit, it was going to 
take substantially more than that, particularly if one included other 
matters. But would the Senator not agree that there are really two ways 
of looking at dual eligibles and their dependence now upon Medicaid 
which is paid by the States?
  Up until the fairly recent past, States were doing very well and 
Medicaid benefits, to some degree, were expanding. I reflected on that 
as to my State. The other way of looking at it is to look at what is 
happening to Medicaid now in the States because of the balanced 
constitutional amendment requirements and because of the fiscal 
condition of the States, which is getting worse every single day, and 
the fact that Medicaid is the fastest rising cost in any State 
government budget, and the fact that the States have complete control 
over what happens to the Medicaid benefit.
  So would the Senator from Iowa not agree that if a State using 
Medicaid, which is a combination of State and Federal funds, 
nevertheless decides to cut--since that is optional within the State, 
under the Government's control, that the Governor can cut that and 
indeed has done so, as we have been reading and hearing about, and 
indeed can limit coverage, cap coverage and therefore cut back 
tremendously on the so-called drug coverage that the chairman of the 
Finance Committee was extolling?
  I agree that if we were in a flush time and the States were able to 
afford a good drug benefit under Medicaid and use it for that 
particular dual-use population, the Senator is right, but I think we 
are looking now at a period of a number of years where we are not going 
to be in that situation. I think that puts the dual eligibles, 74 
percent or less of poverty, at terrible risk, and that is not something 
I associate with my understanding of the values of the Senator from 
Iowa, whom I so much respect.

[[Page S8328]]

  Mr. GRASSLEY. Mr. President, I cannot disagree with the Senator from 
West Virginia, but I think the answer is that there are 50 different 
answers to his question from the standpoint of there being 50 different 
States with 50 different budget situations. So there is not just one 
answer to his question.
  Another way to say it is I would have to understand the situation in 
50 different States and then, in a sense, give 50 different answers. 
But there is a recognition on the part of the Congress of what the 
Senator from West Virginia says and a response by the Federal 
Government to that, albeit a temporary response, when over a 2-year 
period of time we decided to put $20 billion of State aid to the 
States, and we did that through the tax bill recently signed by the 
President of the United States, of which $10 billion was earmarked for 
Medicaid solely because the Congress understood the problems the 
Senator from West Virginia has adequately described, and then another 
$10 billion of other State aid that a State is free to use for Medicaid 
or anything else.
  I assume some States that have very bad Medicaid fiscal problems 
might take some more of that additional $10 billion to use for 
Medicaid.
  In further answer to my colleague's question, what we face is the 
issue of about $16 billion a year just for drug costs. Multiply that 
times the 10 years we have to look ahead. That is about $160 billion, I 
believe, of the $400 billion which would go then for groups who are 
already covered, detracting then from the 30-some percent of people who 
have no prescription drug coverage.
  We would like to fill in the gap of those who have no coverage as 
opposed to some who have very good coverage. I know it varies from 
State to State how Medicaid might cover certain groups of seniors with 
prescription drugs, but I think the Senator would say they have had a 
better program for sure than most people--except maybe those who are on 
a corporate retirement plan, which is only about 30 percent of our 
people--than anybody else, particularly those who have no coverage 
whatsoever.
  In further answer to the question of the Senator from West Virginia, 
it is a case of priorities. We have suggested those who already have 
some coverage, and very good coverage, we would basically leave 
untouched and then would try to use our resources for those who have no 
coverage whatsoever.
  The PRESIDING OFFICER. The Senator from West Virginia.
  Mr. ROCKEFELLER. I apologize for not speaking through the Presiding 
Officer before, but will the Senator from Iowa yield for only one 
additional question?
  Mr. GRASSLEY. I yield for an additional question.
  The PRESIDING OFFICER. The Senator is recognized.
  Mr. ROCKEFELLER. The Senator has responded simply by saying he would 
have to answer it in 50 different ways because there are 50 different 
States. To that I say yes, and all of them are either in the process of 
or will be in the process of cutting Medicaid and, therefore, the dual 
beneficiaries.
  I ask the Senator from Iowa, is there not a further consideration, 
and that is when we are dealing with this maximum poor number of people 
under Medicare, or Medicaid in the case of the dual eligibles, we are 
also dealing with something which has not been discussed on this floor 
or indeed was not discussed in the Finance Committee at any length at 
all, and that is a really frightening problem of assets that, for 
example, one can apply, one can be under this program up to 130 percent 
of poverty. Then there is another one that says you can be under this 
Part B plan up to 160 percent of poverty, but if your assets reach over 
$4,000, assets which you maintain, you are then kicked from the lower 
to the upper bracket without any discussion. There is enormous penalty, 
for example, for owning a car, for owning anything. You would not be 
living in rural Calhoun in West Virginia without a car. Your home is 
exempted but nothing else is.

  At one point I was thinking of offering an amendment--and I may still 
do so--exempting burial plots from the asset test that would be applied 
to poor people.
  I ask the Senator from Iowa if he would say a word on this whole 
question, adding to the dual eligibles and deciding if--as he said, we 
have to pick our priorities--we are going to leave it to the States, 
even though I argue that States will cut that. Is it not also bringing 
up this whole subject of the assets of the poor families and the effect 
on them if they become ineligible for the bracket in which they belong 
and, therefore, cannot afford prescription drugs.
  Mr. GRASSLEY. Mr. President, I will answer the Senator's question by 
giving some detail about the issue of the asset test. It is a 
legitimate point of discussion as we deal with this legislation. Rather 
than just speaking specifically to his question, I answer it more 
generally with how we try to respond to the issues he brought up.
  The asset test in the underlying bill is the same asset test 
currently used for determining eligibilities for the qualified Medicare 
beneficiaries, specified low-income Medicare beneficiaries, and 
qualified individuals. Those are three separate categories of low-
income people that I just described.
  S. 1 provides a generous low-income subsidy for those who are below 
160 percent of the Federal poverty level. Currently, in order for some 
individuals under 160 percent of poverty to receive limited Medicaid 
protections, there must be both an income test and an asset test. In 
the underlying bill, we simply follow the same rules in order for low-
income beneficiaries to see assistance with their prescription drug 
coverage. By including the Medicaid asset test for Medicare 
prescription drug subsidies, we are providing beneficiaries with 
seamless health coverage. We are not confusing beneficiaries, and we 
are not adding additional administrative burdens to the States.
  I will give some background on the current asset test included in the 
Medicaid Program. The group called qualified Medicare beneficiaries are 
individuals below 100 percent of poverty. In 2006, the annual income 
limit is $9,670 for individuals and $13,051 for couples. This qualified 
Medicare beneficiary group is allowed to have assets below $4,000 for 
individuals and $6,000 for couples. That is exactly what the Senator 
from West Virginia asked me about and implied some limitations because 
of that.
  Yes, there are limitations because of that, but they are legitimate 
limitations within the priorities of our $400 billion budget limit.
  Then we have the category of specified low-income Medicare 
beneficiaries, and then the qualified, and those are people with 
incomes between 100 percent of poverty and 135 percent of poverty. In 
2006, the annual income limits of this group, $13,054 for individuals, 
$17,618 for couples, these two groups are allowed to have assets below 
$4,000 for individuals and $6,000 for couples. Beneficiaries between 
136 percent of poverty and 159 percent of poverty will have annual 
income limits of $15,472 for individuals and $20,881 for couples in 
2006. Beneficiaries between 136 and 159 percent of poverty would not be 
subject to those asset rules.

  Current law establishes resource limits for low-income elderly or 
disabled individuals. Let me emphasize, this is not a newly added 
restriction on certain low-income Medicare beneficiaries. However, 
current law also provides States with the flexibility to choose to 
disregard all or part of these resources.
  The issue of changing this asset test is one that would very 
drastically increase the number of eligible beneficiaries. Understand 
that the question the Senator from West Virginia raised about changing 
the asset test would very dramatically increase the number of people 
eligible.
  Now, again, we get back to the priorities of fitting in the $400 
billion in the budget. Give more help to this group of people that 
already have some help from our legislation, then there is less for 
other people, particularly less for people who have no help whatever.
  A study was prepared by the Kaiser Family Foundation estimating this 
group could be as many as 11 million individuals if the asset test were 
eliminated and obviously to a lesser extent if it were increased by 
some amount.
  S. 1 currently includes a provision requiring the General Accounting 
Office to conduct a study and make recommendations to Congress by the 
year 2007 regarding the extent to which drug

[[Page S8329]]

utilization and access to covered drugs differs between qualifying dual 
eligibles who receive subsidies and individuals who do not qualify 
solely because of the application of the asset test. This report 
ensures that there will be opportunities in the future to debate the 
question raised by the Senator from West Virginia.
  There is a limited number of dollars available for the Medicare drug 
benefit. In the writing of this bill, we made a conscious decision to 
devote excess dollars to filling the gap in coverage--which means what 
we commonly refer to around here as the donut hole--rather than 
eliminating or changing to some extent the asset test the Senator from 
West Virginia is asking me about.
  This bill already provides generous coverage to low-income seniors. 
This amendment will not only cost more money, it will add more 
confusion to both States and Medicare beneficiaries.
  I hope I have sufficiently explained the rationale behind our bill. I 
may not have directly answered the question of the Senator from West 
Virginia, but I thought I should take time to explain the rationale 
behind our bill.
  I yield the floor and 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. BAUCUS. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. BAUCUS. Mr. President, I would like to say a couple of words 
about one of the two amendments offered by the distinguished Senator 
from West Virginia regarding the true out-of-pocket expenses, where the 
employers' contributions to retirees' health care plans be considered 
in calculating the out-of-pocket expense that would determine when a 
senior citizen reaches the stop loss provisions of this bill.
  This may sound like a fairly arcane point, but it is a very important 
one.
  Let me just describe the provisions of the bill. Under the bill, 
after a $275 deductible, the provisions of this bill require that 
employees would receive a contribution from the Government of 50 
percent of each prescription he or she filled, up to $4,500 in drug 
expenses. After that amount, $4,500, then seniors would pay 100 percent 
of the costs until the beneficiary's spending reached $3,700. This 
should not be confused with total spending, of which the beneficiary 
spent $3,700 out of his pocket. It would be $5,812.
  Anyway, after the beneficiary spends $3,700 out of pocket, the total 
stop loss coverage kicks in and the Government picks up 90 percent of 
the beneficiary's drug spending and the beneficiary, him or herself, 
pays 10 percent.
  The real question is, What about the employers' contributions? Would 
they count toward the stop loss coverage? Under the underlying bill, 
all spending must be provided by the beneficiary, not on behalf of the 
beneficiary. As a consequence, employers' contributions would not 
count. The CBO estimates up to 37 percent of retiree health coverage 
would therefore be dropped by employers.
  Just to recapitulate, the amendment offered by the Senator from West 
Virginia basically provides that the stop loss amounts in the 
underlying bill should be based on out-of-pocket costs, and the 
employers' contribution towards retiree health benefits could count 
towards that stop loss computation.
  What about this? Frankly, I have a lot of sympathy for the Senator's 
amendment. That is, as it currently stands, the beneficiary, a senior 
citizen, would have to spend $3,700 before the stop loss would be 
calculated. Under the amendment offered by the Senator from West 
Virginia, that amount would be quite a bit lower.
  I mentioned earlier that CBO estimates about 37 percent of retirees 
who now are covered by health plans under their employer health 
coverage would no longer receive drug coverage because those employers 
would drop coverage. Or, to say it differently, CBO estimates that, 
because the employer's contributions do not now count towards stop 
loss, about 11 percent of the seniors generally would lose their 
employer-sponsored health coverage.
  As I mentioned, I share my colleague's desire to prevent the loss of 
employer-sponsored coverage; that is, to the extent possible. We have 
our work cut out for us because retiree coverage is already on the 
decline. According to the Kaiser Family Foundation/Hewitt Study, that 
was released last December, one in five large employers is likely to 
eliminate retiree health coverage for future retirees in the next 3 
years.
  That is a lot. That is irrespective of the provisions of this bill 
with respect to prescription drug coverage. If one out of five large 
employers in fact does eliminate retiree health coverage for their 
retirees within the next 3 years, it is going to have a huge impact, 
clearly, on those retirees, and also on the portion of the health care 
system that is not paid for by larger companies.

  That study also found that nearly 80 percent of large employers are 
likely to increase the amount paid directly by their employees for 
health care. That is, most--four-fifths of all employers--are likely to 
have their employees pay more than they, the employers, are paying. We 
know about the negotiations between General Electric and its employees 
not too long ago, where both agreed to shift more of the rising cost of 
health care to employees. Clearly, we should be doing all we can to 
ensure that a bad situation does not get worse.
  The chairman of the committee, Senator Grassley, and I have been 
looking for ways to address concern about employer-sponsored coverage. 
We are looking at ways to make employers' participation in the new Part 
D benefit more manageable, so employers have flexibility with respect 
to the offering of these benefits. I, certainly, personally am willing 
to entertain proposals that would allow more employer coverage, and 
also help address the out-of-pocket situation the Senator from West 
Virginia would like to cover with his amendment.
  The slight problem we have, as most of us know, is that we are 
working within the confines of $400 billion over 10 years. If the 
amendment offered by the Senator from West Virginia were to be agreed 
to, according to CBO, that would cost approximately $65 billion. That 
is $65 billion, generally, over the $400 billion that has been set 
aside for this bill. Senator Grassley and I are working with various 
groups in and out of the Senate, trying to address the potential loss 
of employer retiree coverage. It is a great concern of ours. There have 
been several proposals offered as to how we might deal with that, in 
addition to the ones contained in the amendment by the Senator from 
West Virginia. I am hopeful that during the next several days, before 
the final passage of this bill--hopefully before the weekend--we will 
be able to significantly address this issue. So far, we do not have it 
nailed down. But as you might expect, this and a lot of other issues 
are kind of hovering about as we try to find ways to fit the pieces 
together so we can get a very good bill passed.
  I also remind my colleagues who are slightly concerned about the 
complexity of this bill--and this bill is somewhat complex--there was 
an interesting piece in, I think it was today's New York Times; it 
might have been yesterday's. In any event, it was about the complexity 
of the bill and how bewildered some people are because of the 
complexity. I think the article did a good job in explaining why major 
social policy, almost by definition, is complex; that is, it is a 
result of compromises.
  In this case, the big compromise is between about half of this body, 
who wants to provide prescription drug benefits under Medicare, and 
about half of this body, who wants prescription drug benefits to be 
provided under private competition. It is difficult to put those two 
pieces together. It is the attempt to put those two pieces together 
that has caused a lot of the complexity that does exist in this bill.
  I might say, however, that Medicare itself is already quite complex. 
They could come back and say: Why make something complex even more 
complex? But it has to be weighed against another factor. That is, do 
we want to provide a prescription drug benefit to seniors or not? The 
choice at the end of this week is going to be, do we want something 
that is a little bit complex but provides prescription drug benefits 
for seniors--and does a good job doing so? Maybe with not as many 
benefits as

[[Page S8330]]

some seniors would like and some Members of this body would like, but 
still does a pretty good job and is a bit complex. Or, on the other 
hand, do we want to do nothing? Do we want to let senior citizens 
today, who do not have prescription drug coverage, remain without 
coverage? That is basically the question we are going to be facing 
later on this week.
  To ask the question, I think, is to answer it. Namely, we should do a 
pretty good job, trying to get a pretty good bill passed, even though 
there is some complexity, even though there are some tradeoffs, rather 
than have nothing.
  I suspect this body is always going to be somewhat split. I do not 
think one party is going to be totally in control at one time or the 
other party is going to be totally in control at another time. I think 
it is the nature of the American body politic that people want to hedge 
their bets, that they want to have both Democrats and Republicans 
working together. Certainly, our Founding Fathers set up our Government 
that way under our Constitution. They absolutely distrusted power. They 
distrusted it almost absolutely. That is why we have power dispersed by 
definition. That means in order to get something of consequence passed, 
there is going to have to be some compromise. In this bill there 
certainly is a lot of compromising.
  A final point contained in that article--and I thought it was a 
pretty good article--is that when we, in this country, have passed 
other major social policy--let's say Medicare and Social Security--it 
has been based somewhat on faith, and we have worked to fix it, to make 
it even better after it has been passed. But you have to start 
somewhere. And I think, certainly, we have to start somewhere with 
respect to prescription drug benefits, and certainly, we should provide 
prescription drug benefits for seniors.
  So I urge my colleagues to keep that in mind as we are working on 
amendments, which are designed to make this bill better. We can accept 
some amendments, but some in this body will not accept others. 
Nevertheless, all of us are generally working together toward the same 
goal.
  In that vein, Mr. President, I ask unanimous consent that the pending 
amendments be temporarily set aside so the Senator from Hawaii may 
offer two amendments in sequence.
  The PRESIDING OFFICER (Mr. Sununu). Is there objection?
  Without objection, it is so ordered.
  The Senator from Hawaii.


                       Amendment Nos. 980 and 979

  Mr. AKAKA. Mr. President, I rise today to offer amendment No. 980 to 
restore Medicaid and State Children's Health Insurance Program 
eligibility for children and pregnant women who are citizens from the 
Freely Associated States and reside in the United States lawfully. The 
United States entered into a Compact of Free Association with the 
Federated States of Micronesia and the Republic of the Marshall Islands 
in 1986, and with the Republic of Palau in 1994.
  The political relationship between the United States and the FAS is 
based on mutual support. In exchange for the United States having 
strategic denial and a defense veto over the FAS, the United States 
provides military and economic assistance to the RMI, FSM and Palau 
with the goal of assisting these countries in achieving economic self-
sufficiency following the termination of their status as U.N. Trust 
territories. Pursuant to the Compact, FAS citizens are allowed to 
freely enter the United States and are not considered immigrants.
  Legal immigrants and FAS citizens lost many of their public benefits 
as a result of the Personal Responsibility and Work Opportunity 
Reconciliation Act of 1996. I appreciate the work done by my colleague 
from Florida, Senator Graham, to restore the eligibility for Medicaid 
and SCHIP for legal immigrants who are children and pregnant women.
  The language that has been included in S. 1, the Prescription Drug 
and Medicare Improvement Act, would give States the option to provide 
this coverage and allow them to use Federal resources to do so.
  However, the current text does not restore these benefits to citizens 
from the FAS lawfully residing in the United States. Arguably, FAS 
citizens have strong ties with the United States as they come from the 
countries that are perpetually bound to the United States in free 
association.
  It is important for Congress to restore these benefits for FAS 
citizens that were taken away from a relatively small but important 
population. The Congressional Research Service estimates that 11,500 
FAS citizens have migrated to the United States since the Compact was 
enacted. They have come to the United States to seek economic 
opportunity, education, and access health care.
  The State of Hawaii, Guam, American Samoa, and the Commonwealth of 
the Northern Mariana Islands have supported FAS citizens with necessary 
health care services, but not without significant and increasing costs. 
The Federal Government must provide matching resources to help States 
meet the health care needs of FAS citizens and to meet the obligations 
of the Federal commitment.
  I urge my colleagues to support this amendment to restore a portion 
of the benefits that were taken away from FAS citizens in 1996.
  Mr. President, I have another amendment, amendment No. 979, to offer 
to S. 1.
  The PRESIDING OFFICER. Does the Senator wish to offer both 
amendments?
  Mr. AKAKA. The amendments are at the desk.
  The PRESIDING OFFICER. The Senator will be advised, neither amendment 
has been reported by the clerk.
  Without objection, the clerk will report both amendments.
  The legislative clerk read as follows:

       The Senator from Hawaii [Mr. Akaka] proposes amendments 
     numbered 980 and 979.

  Mr. AKAKA. Mr. President, I ask unanimous consent that reading of the 
amendments be dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The amendments are as follows:


                             amendment 980

(Purpose: To expand assistance with coverage for legal immigrants under 
   the Medicaid program and SCHIP to include citizens of the Freely 
                           Associated States]

       On page 636, line 16, insert ``and citizens of the Freely 
     Associated States, which include the Federated States of 
     Micronesia, the Republic of the Marshall Islands, and the 
     Republic of Palau, lawfully residing in the United States'' 
     after ``Act''.


                             amendment 979

    (Purpose: To ensure that current prescription drug benefits to 
 medicare-eligible enrollees in the Federal Employees Health Benefits 
                    Program will not be diminished)

       At the appropriate place, insert the following:

     SEC.   . NEGOTIATIONS BY THE OFFICE OF PERSONNEL MANAGEMENT.

       The Office of Personnel Management may not negotiate a 
     prescription drug benefit for any health benefits plan under 
     chapter 89 of title 5, United States Code, that would provide 
     a prescription drug benefit to a medicare eligible enrollee 
     in that plan that is of lesser actuarial value, based on 2003 
     constant dollars, than the prescription drug benefit 
     available to a medicare eligible enrollee of such plan on the 
     date of enactment of this Act.

  Mr. AKAKA. Mr. President, amendment No. 979 would ensure that the 
Federal Employees Health Benefits Program could not reduce the level of 
prescription drug coverage available to Medicare-covered Federal 
civilian annuitants. I thank my colleague from Maryland, Senator 
Mikulski, for cosponsoring the amendment.
  I strongly support the creation of a prescription drug benefit for 
Medicare beneficiaries. Thirty-eight percent of Medicare beneficiaries 
report that they do not have prescription drug coverage. Far too many 
seniors are unable to afford the medications that they need, and the 
establishment of a prescription drug benefit will provide much needed 
access to medications that our seniors desperately need.
  However, the Congressional Budget Office believes that Medicare drug 
coverage authorized by this bill is likely to act as an incentive for 
employers to drop their employer-sponsored drug benefits. An estimated 
37 percent of retired workers with employer-sponsored drug benefits 
could lose their coverage under this bill according to CBO. I am 
troubled that older Americans who already have earned coverage through 
an employer-sponsored plan could lose their existing benefits. We have 
seen over the past few years that there has been a disturbing trend of 
reducing benefits for retirees. Creating this voluntary benefit could 
only accelerate this trend.

[[Page S8331]]

  The intent of the legislation is to expand prescription drug coverage 
for seniors, not merely to shift the financial burden of existing 
coverage to the Federal Government. If Medicare beneficiaries lose 
their employer-based coverage, they may have to pay more for a Medicare 
drug benefit that provides less comprehensive coverage.
  We must encourage employers to maintain their current coverage, and I 
will support efforts to do so. We should not shift the existing costs 
of prescription drug coverage to the Medicare program. If this occurs, 
there will be fewer resources available to pay for the medications of 
those who currently need insurance.
  My amendment will ensure that present and future Federal retirees 
retain their current level of prescription drug coverage. They should 
not face a situation in which they must rely on Medicare. My amendment 
requires the FEHBP to preserve current-level drug coverage for Federal 
retirees and survivors. The Government health care plan stands as a 
model employer-sponsored health care plan, and my amendment protects 
the Nation's Federal annuitants and their survivors. Accepting this 
amendment sends a message to other employer-sponsored plans that the 
Federal Government stands behind its commitment to retired workers.
  I ask unanimous consent that letters from the National Association of 
Retired Federal Employees and the National Treasury Employees Union in 
support of my amendment be printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                                      The National


                                     Treasury Employees Union,

                                                    June 23, 2003.
     RE: S.1, Medicare Drug Proposal
       Dear Senator: On behalf of the more than 150,000 federal 
     employees and retirees represented by the National Treasury 
     Employees Union (NTEU), I am writing concerning S.1, 
     legislation to provide prescription drug coverage under 
     Medicare.
       NTEU believes legislation to provide prescription drug 
     coverage for Medicare beneficiaries is long overdue, however, 
     we have serious reservations concerning the way that this 
     benefit has been structured. The proposed new benefit would 
     provide a substantially less valuable benefit to Medicare 
     beneficiaries than many private sector employers already 
     provide for their retirees. Employers must not be permitted 
     to diminish the prescription drug coverage they provide to 
     former employees as a result of passage of this new Medicare 
     benefit. Although we do not believe that is the intent of 
     this legislation, steps must be taken to prevent this 
     unintended consequence from occurring.
       The federal government provides health insurance benefits, 
     including prescription drug coverage, to its employees and 
     retirees through the Federal Employees Health Benefits 
     Program (FEHBP). Any proposal that would encourage, or result 
     in, the federal government moving away from its commitment to 
     its employees and retirees in this area would be strongly 
     opposed. The fact that the Congressional Budget Office has 
     reported that as many as 37 percent of retired workers would 
     lose their employer-provided drug coverage as a result of 
     passage of S.1 provides serious cause for concern.
       Senator Akaka plans to offer an amendment that seeks to 
     address this issue. His amendment would prohibit the Office 
     of Personnel Management (OPM) from negotiating a prescription 
     drug benefit for Medicare-eligible FEHBP enrollees that is 
     less valuable than the benefit available to those enrollees 
     on the date of enactment of the pending Medicare drug 
     proposal. The Akaka amendment makes sense and is consistent 
     with the intent of the Medicare legislation--that employers 
     already providing prescription drug benefits to their 
     retirees continue to offer their existing benefits packages.
       Our goal is two fold: to provide Medicare beneficiaries 
     with the best possible drug benefit while at the same time 
     ensuring that retirees who enjoy prescription drug coverage 
     through employer-sponsored plans retain that coverage. I urge 
     your support for the Akaka amendment.
           Sincerely,
                                                Colleen M. Kelley,
     National President.
                                  ____

                                           National Association of


                                    Retired Federal Employees,

                                    Alexandria, VA, June 24, 2003.
     Hon. Daniel K. Akaka,
     Senate Office Building,
     Washington, DC.
       Dear Senator Akaka: On behalf of the 400,000 member 
     National Association of Retired Federal Employees (NARFE), I 
     am writing to endorse your amendment to S. 1, the 
     Prescription Drug and Medicare Improvement Act of 2003, that 
     would ensure that the Office of Personnel Management (OPM) 
     could not reduce the level of Federal Employees Health 
     Benefits Program (FEHBP) prescription drug coverage currently 
     available to Medicare-covered Federal civilian annuitants 
     through negotiations with participating carriers.
       NARFE strongly supports the creation of a Medicare drug 
     benefit for our senior citizens who have no drug coverage. 
     But at the same time, we want to ensure that no harm is done 
     to older Americans who already have earned such coverage 
     through an employer-sponsored plan. As you know, the 
     Congressional Budget Office estimates that 37 percent of 
     retired workers with employer sponsored drug benefits could 
     lose it under S. 1.
       The CBO believes that Medicare drug coverage authorized by 
     this bill could act as an incentive to employers to drop 
     their employer-sponsored drug benefits. If that occurred, 
     retirees would be forced to pay an additional monthly premium 
     for a Medicare drug benefit that would be limited and more 
     costly than what is currently available through many 
     employer-sponsored health plans, including the FEHBP. The 
     last thing Medicare reform should do is encourage employers 
     to break promises made to their retirees regarding their 
     earned health security.
       While the Medicare reform bill that is eventually enacted 
     may provide subsidies and tax credits to private employers 
     who retain existing drug benefits for their retirees, such 
     incentives would not apply to the Federal government, and 
     thus provides no guarantee of the FEHBP drug benefit for the 
     government's own annuitants. If FEHBP is the model for this 
     reform, the Federal government itself must not drop or reduce 
     drug benefits for FEHBP enrollees. Your amendment recognizes 
     this principle of fairness and would help to ensure that S. 1 
     does no harm to those men and women who have served and 
     continue to do so much for our nation. NARFE commends you for 
     valuing the importance of the earned health security of the 
     more than 4 million Federal workers and annuitants and we 
     give our strongest endorsement to your amendment.
           Sincerely,
                                                Charles L. Fallis,
                                                        President.

  Mr. AKAKA. Mr. President, I urge my colleagues to support my 
amendment and look forward to working with them to ensure drug coverage 
for retirees under other plans.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Montana.
  Mr. BAUCUS. Mr. President, I ask unanimous consent that all pending 
amendments be temporarily set aside so the Senator from Arkansas may 
offer an amendment.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The Senator from Arkansas.


                           Amendment No. 981

  Mr. PRYOR. Mr. President, I have an amendment at the desk.
  The PRESIDING OFFICER. The clerk will report.
  The legislative clerk read as follows:

       The Senator from Arkansas [Mr. Pryor] proposes an amendment 
     numbered 981.

  Mr. PRYOR. Mr. President, I ask unanimous consent that reading of the 
amendment be dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The amendment is as follows:

 (Purpose: To provide equal access to competitive global prescription 
                medicine prices for American purchasers)

       At the appropriate place, add the following:

     SEC. __. EQUAL ACCESS TO COMPETITIVE GLOBAL PRESCRIPTION 
                   MEDICINE PRICES FOR AMERICAN PURCHASERS.

       (a) Definition of Covered Product.--In this section, the 
     term ``covered product'' has the meaning given the term in 
     section 804 of the Federal Food, Drug, and Cosmetic Act (21 
     U.S.C. 384).
       (b) Prohibition.--It shall be unlawful for the manufacturer 
     of a covered product or any other person that sells a covered 
     product to refuse to sell to any wholesaler or retailer (or 
     other purchaser representing a group of wholesalers or 
     retailers) of covered products in the United States on terms 
     (including such terms as prompt payment, cash payment, volume 
     purchase, single-site delivery, the use of formularies by 
     purchasers, and any other term that effectively reduces the 
     cost to the manufacturer of supplying the drug) that are not 
     substantially the same as the most favorable (to the 
     purchaser) terms on which the person has sold or has agreed 
     to sell the covered product to any purchaser in Canada.
       (c) Enforcement.--The Secretary of Health and Human 
     Services, or any wholesaler or retailer in the United States 
     aggrieved by a violation of subsection (b), may bring a civil 
     action in United States district court against a person that 
     violates subsection (b) for an order--
       (1) enjoining the violation; and
       (2) awarding damages in the amount that is equal to 3 times 
     the amount of the value of the difference between--
       (A) the terms on which the person sold a covered product to 
     the wholesaler or retailer; and
       (B) the terms on which the person sold the covered product 
     to a person in Canada.
       (d) Effectiveness of Section.--This section takes effect on 
     the date that is 2 years

[[Page S8332]]

     after the date of enactment of this Act, except that this 
     section shall not be in effect during any period after that 
     date in which there is in effect a final regulation 
     promulgated by the Secretary of Health and Human Services 
     permitting the importation or reimportation of prescription 
     drugs under section 804 of the Federal Food, Drug, and 
     Cosmetic Act (21 U.S.C. 384).

  Mr. PRYOR. Mr. President, I rise to address the Chamber about my 
proposed amendment that fits very neatly with an amendment that passed 
last week 62 to 28. It is a fallback amendment to that Dorgan-Cochran 
proposal.
  The way I view this amendment--I hope the way my colleagues will 
understand it--it is really an antiprice gouging amendment as we go 
through the process and hopefully add a prescription drug benefit to 
Medicare that so many people in the country want and deserve.
  We all know the stories about drugs that are produced in this country 
that are made at certain plants and certain places. And when they leave 
the plant, one truck will go to one of our home States and the other 
truck will go to Canada. Unfortunately, what happens all too often is 
when the drugs get to Canada, they are about one-half or one-third or 
one-quarter the price that people can buy those drugs in the United 
States. In my opinion, there is no valid reason for that. There is no 
valid justification for those drugs to be priced in that way.
  We also know the Senate has tried to address this problem on at least 
a couple occasions--in the year 2000 and in the year 2002. This very 
Chamber voted to allow the reimportation of pharmaceuticals from other 
countries. Of course, the reimportation of drugs would be FDA-approved 
drugs coming out of FDA-approved facilities. In fact, for the third 
time in 4 years, the Senate voted this past Friday to allow the same 
thing.
  Currently, the law is reimportation can come from a list of 
countries. There is a designated list. That has been somewhat 
cumbersome. And the FDA has not seen fit and has not been able yet to 
approve this process because they can't certify or verify that the 
drugs are safe. One thing I like about the Dorgan-Cochran amendment is 
it limits the scope of reimportation only to Canada. That is a 
significant advancement because we all know that Canada has very high 
medical standards and that they are very concerned about their populous 
and the veracity of medication in their society.
  My proposal also is limited just strictly to Canada. One advantage is 
that they have a very similar, almost identical set of standards for 
handling drugs to make sure that there is a chain of custody, proper 
testing, et cetera. They build in the safeguards just as we do. A lot 
of countries don't do that. But with Canada we have a certain degree of 
confidence--maybe not absolute; I guess you can never have an absolute 
degree of confidence--that drugs are going to be safe. We have a very 
high degree of confidence that the drugs will, in fact, be safe and 
they will meet U.S. standards.
  Let me briefly address my amendment. It is only three pages--very 
simple, very straightforward. In terms of the definition of covered 
product, we adopt the existing law. Therefore, there is no surprises, 
no monkey business or games played with the definition. When it comes 
to the prohibition in section B, which is found on page 2 of the 
amendment, in summary--I will delete all the commas and the 
parenthetical phrases, but in summary it says: It shall be unlawful for 
the manufacturer of a covered product to refuse to sell to any 
wholesaler or retailer--and that is key--on terms that are not 
substantially the same as that of any purchaser in Canada.
  Let me run through that very quickly, if I may. One of the keys is 
that it is for wholesalers and retailers. What that means is that 
wholesalers and retailers in this country can reimport from Canada.
  We all know if our local pharmacist could somehow work out an 
arrangement with wholesalers and retailers in Canada, they could 
actually buy the products in Canada, have them shipped to the United 
States, and sell them cheaper here than they can buy them wholesale in 
this country.
  One of the keys is that American wholesalers and retailers are 
subject to all the FDA rules and regulations and requirements.
  Therefore, this amendment will only allow the reimportation of safe 
FDA-approved products made at FDA-approved facilities. When it comes to 
enforcement, this amendment would allow the Secretary of Health and 
Human Services, as well as any wholesaler or retailer in this country 
that is aggrieved by some unfairness--the thing I like about that and I 
hope my colleagues understand--it allows both the Government sanction, 
the ability to enforce this, but also the free market. We all know the 
free market works very well, and when a free market can regulate 
itself, I think we are all better off. It has the ability for the 
Government to enforce this if necessary.
  In the last bit, on page 3 of the amendment, it deals with the 
timeframe. That is a 2-year provision from the enactment of this act 
that this will take effect. In other words, the way this works is, once 
we pass this legislation, the President signs it, it becomes effective 
2 years after it is enacted. Then it will trigger this act if the FDA 
has not issued its final regulations. Then we will be able to purchase 
these drugs at the same prices they get in Canada. In other words, it 
is an antiprice-gouging mechanism that I think is critical to this 
legislation and to its long-term success.
  I very much applaud the leadership in this Chamber, especially coming 
from Chairman Grassley and Senator Baucus, Senator Frist, Senator 
Kennedy, Senator Daschle, Senator Graham, and, of course, Senators 
Dorgan and Cochran have shown leadership not just on this issue but on 
prescription drugs generally. I thank them for getting this to the 
Senate floor and allowing this very important debate and allowing these 
important amendments to be considered.
  I do believe very strongly that when the bill came to the floor, it 
was a bill definitely worth our consideration. But I also think and 
believe very strongly that the bill has improved since it has been on 
the floor. I think these amendments are making the bill stronger and 
better for the American public.
  For example, the Enzi amendment, which I like quite a bit, makes sure 
that people will still have access to use their local pharmacists. Not 
only are many pharmacists pillars of the community, not only do they do 
great things in their communities, but so often patients getting 
prescription drugs need to talk to their pharmacist about drug 
interactions, expiration dates, and details of how to take it. It is 
very important for the effectiveness of the drug that people talk to a 
local pharmacist and have access thereto. So I thank Senator Enzi for 
doing that.
  The Gregg-Schumer-McCain-Kennedy amendment closes loopholes to allow 
name-brand drug manufacturers to unfairly extend their monopolies and 
overcharge American patients. This has been going on for a long time 
and it is something, when I was Attorney General, we worked on very 
hard to try to stop from the litigation standpoint. But now Congress 
has taken action, and I am so pleased that they are stopping this 
legislatively.
  We have mentioned the Dorgan amendment, with the Cochran second-
degree amendment, and how that has strengthened the bill and how, 
hopefully, that will cause prices to stabilize and, in fact, hopefully, 
come down over time. I think there is still some work to be done on 
this bill, and I think during the course of this week there will be a 
lot of great amendments to consider. I hope I can vote for some of 
those. When I believe it will make this bill better, I will support it.

  Let me run through the chart very quickly. What we see is a graph 
with two lines. You can see that this lower line says ``health.'' If 
you were to look at the consumer price index, or one of the other 
indexes, it would be even lower than this green line, but it would go 
up slightly. That is, of course, the inflation rate, and it goes up 2, 
3 percent a year.
  Right here, we see the health care costs. If you go back to 1994--our 
baseline year--the price, the cost of health care, in just these 7 or 8 
years has gone up 63.6 percent. One thing we all hear from our 
constituents is how much health care costs are increasing. For a lot of 
people, they have increased 10, 15 percent--sometimes more--a year. It 
is strangling people.
  If you look inside the numbers and you look at the No. 1 cause of 
health

[[Page S8333]]

care costs going up, it is the cost of prescription drugs. That is what 
this red line indicates. Again, you can see the rapid growth that is 
outpacing the costs of health care and inflation, and it is pulling 
health care costs up and in a very dramatic fashion. I think pretty 
much everyone who has looked at this nationally agrees that it is the 
high cost of prescription drugs that is the primary reason--there are 
other factors--why health care costs are going up so dramatically.
  In this proposal--not in my amendment but in the actual bill--we are 
talking about having a $250 deductible and a stop loss protection that 
kicks in, paying 90 percent of drug costs after $3,700 of out-of-pocket 
spending. Well, one thing the American public needs to understand, and 
all of us Senators need to remember, is that these are percentages and 
they will go up as the costs of prescription drugs go up. So one thing 
we need to be very mindful of is, as we watch this red line, the top 
numbers on this particular chart, go up--in fact, CBO says about 12 
percent a year, and they are taking average numbers. They have been 
going up more than 12 percent per year in the last few years. If we say 
more than 12 percent a year, after 5 years that deductible of $250 
becomes a deductible of $485. In fact, the stop loss threshold goes 
from $3,700 to $6,521. Both of these adjust based on cost of 
prescription drugs--not based on the cost of health care or on the cost 
of an increase in inflation but based on the cost of prescription 
drugs. What that means is that in 10 years the deductible will go to 
$854, and the stop loss in 10 years will be $11,492.
  Now, what this amendment is designed to do is to try to get ahold of 
these runaway costs of prescription drugs. As long as these numbers go 
up like this, the problems in this bill--things that we as Senators 
don't like about this bill, like the gap in coverage, the deductibles, 
and the stop losses--are going to get worse. It is going to do nothing 
but get worse over time.
  So what this amendment and what the Dorgan-Cochran amendment are 
designed to do is to try to somehow keep prescription drug costs down 
in a very reasonable way. That is why reimportation is so critical 
because reimportation, in the strange world of prescription drugs, 
introduces competition into the marketplace. Suddenly, the drug costs 
here are competing with the drug costs in Canada, and what that will 
result in, necessarily, is lower drug costs if free market principles 
are allowed to apply.
  While I am 100 percent convinced the administration can and should 
implement Senator Dorgan's and Senator Cochran's amendment, I am not 
100 percent sure they will do it. Recently, we received a letter in the 
Senate from the FDA from one of the Commissioners, Mr. McClellan. Let 
me quote, if I may, from Mr. McClellan's letter. I may have to put on 
my reading glasses to do this because that is what happens when you get 
old, Mr. President. I know I am quite a bit older than the occupant of 
the Chair. When you get my age, you need these.
  This is a letter to Senator Thad Cochran, and it is from Mark B. 
McClellan, FDA Commissioner, sent earlier this month, on June 19, 2003. 
It says:

       The overall quality of drug products that consumers 
     purchase from the United States pharmacies is very high, and 
     the American consumer can be confident that the drugs they 
     use are safe and effective.

  That is a key point because we have a very safe marketplace for 
drugs. In fact, one of the things I did when I was attorney general of 
my State--and I left there 6 months ago--I sent out periodical consumer 
alerts to Arkansans about being very careful about buying drugs over 
the Internet, using mail order companies, and toll-free numbers because 
sometimes, under some circumstances, you are not sure what you are 
getting.
  We always advise people to be very careful when they do that. I have 
a bias and a preference for using a local pharmacist.
  Let me continue. I am skipping around:

       In FDA's experience, many drugs obtained from foreign 
     sources that either purport to be or appear to be the same as 
     U.S.-approved prescription drugs are, in fact, of unknown 
     quality.

  That is something we found in the attorney general's office in 
Arkansas when I was there.
  The letter goes on to say:

       These outlets may dispense expired, subpotent, 
     contaminated, or counterfeit products, the wrong or 
     contraindicated product in an incorrect dose or medication 
     unaccompanied with adequate direction for use. The labeling 
     of the drug may not be in English and important information 
     regarding doses and side effects may not be available. In 
     addition, the drugs may not have been packaged and stored 
     under proper conditions to avoid degradations.

  That is true. That definitely happens. We have seen that time and 
again around this country. But that is one of the great points about 
the Dorgan amendment. In fact, the Dorgan amendment that was adopted 
last week with 62 votes has a provision--I am not going to read it 
all--on page 3 that makes it very clear that we can only reimport FDA-
approved drugs at FDA-approved facilities. There has to be 
documentation; there has to be testing. The safeguards are there.
  Also what Mr. McClellan is talking about here is a very serious 
problem, but by the very same standards he is referring to in his 
letter, he cannot guarantee that American drugs are safe because we all 
know in the marketplace there are some problems--a very small 
percentage in the United States but there are some problems. He goes on 
to say FDA cannot guarantee the safety of Canadian drugs. As I said, 
really in a true sense, we cannot guarantee the safety of American 
drugs either, but the FDA does a very good job.
  Interestingly enough, my staff, as we were preparing to be here this 
afternoon, went on Lexis-Nexis and did a search to find all the 
reported cases in recent years from Canada related to counterfeit 
drugs. They could not find one case, one newspaper article, one 
incident, anything that was reported about counterfeit drugs in Canada. 
That is using the Lexis-Nexis search. The truth is, we found a number 
of those in the United States, but we did not find any in Canada.
  Lastly, Mr. McClellan's letter to Senator Cochran says:

       At this time, the agency simply cannot assure the American 
     public that drugs imported from foreign countries are the 
     same as products approved by the FDA and that they are safe 
     and effective.

  Again, our bill fixes this problem because my amendment, along with 
Senator Dorgan's and Senator Cochran's amendment, says it only applies 
to FDA-approved drugs and it is only from Canada. We have a much more 
confident sense about the Canadian marketplace for prescription drugs 
than we do about a number of other countries.
  Back when President Bush was running for office in 2000, he had the 
same impression as most of us when we think about this issue for the 
first time. He said ``it made sense'' to allow prescription drugs that 
were sold overseas to come back. I think he was right about that. It 
does make sense, as long as we build in the proper safeguards. Again, I 
think the amendment Friday and my amendment today will do that.

  Some say that doing anything to make prescription drugs more 
affordable will reduce investment in research and development. I 
disagree. There are many factors that go into research and development, 
and two of those--and I hope people understand this--two of the major 
reasons drug companies come here to do their research and development 
are:
  First, we make a huge public investment through the NIH, the National 
Institutes of Health. They do a lot of the basic research that the drug 
companies then build on and actually produce prescription drugs.
  Second, this country provides a research and development tax credit, 
and the drug companies take advantage of that, and they should. It is 
there for them to take advantage. That is why we have it. It is good 
for the country. It is good for the economy. It is good for our health. 
I am supportive of those tax credits.
  But those are two taxpayer-funded--I do not know if you want to call 
them subsidies. Call them what you want but those are two taxpayer 
incentives for these big drug companies to do research and development: 
The huge public investment we make for NIH, and the research and 
development tax credit.
  One item I read recently that is a little disturbing to me is that 
the research and development dollars by the

[[Page S8334]]

big pharmaceutical companies went up by 8 percent. That is good. It is 
good they are increasing their dollars for research and development. 
But did you know that their lobbying budget went up by 23 percent? 
Right now in this country, in this city, there are more lobbyists for 
the pharmaceutical industry than there are Members of Congress, and 
they have increased it another 23 percent. I am a little bit disturbed 
by that. My sense is, the only groups out there, as far as I know--
maybe I am wrong; I have not seen anything to the contrary. As far as I 
know, the only groups out there opposed to reimporting safe drugs from 
Canada, FDA-approved drugs and FDA-approved facilities from Canada, the 
only group I know opposed to that is the pharmaceutical industry.
  I read a recent story in the New York Times that said somewhere 
between $2 million and $2.5 million the pharmaceutical industry is 
giving out to research and policy organizations ``to build intellectual 
capital and generate a higher volume of messages from credible 
sources.''
  We saw this happen many years ago with the tobacco industry. I give a 
little bit of caution here to the pharmaceutical industry. I hope they 
do not repeat some of what tobacco did that got them into so much 
trouble. Tobacco actually went out and funded sham research. They 
funded research that actually said tobacco was not harmful to their 
health when they knew it was and they had the research to say it was. 
They funded research to come out and say to the contrary, even though 
the research could not be validated. I certainly hope that is not what 
the pharmaceutical industry is doing today, but it sounds as if they 
are drifting in that direction.
  It is definitely in the interest of the American public and of 
patients who need medical care in this country that we allow the safe 
importation of drugs from Canada. I think it will help people afford 
drugs, and it will help make drugs more affordable in this country.
  As long as I am talking about the pharmaceutical industry, let me be 
very clear. I am proud of the pharmaceutical industry. I am proud of 
what they do. It is amazing some of the accomplishments we have 
achieved in medicine in the last 100 years. It is even more dramatic 
than the aeronautics industry. One hundred years ago, the Wright 
brothers launched at Kitty Hawk. Now, today, you know what we have been 
able to accomplish in the last 100 years.
  The gains have been even more dramatic in the world of prescription 
drugs. It is amazing. It is critical for the United States to have an 
industry that is high tech, such as that industry, and that is on the 
cutting edge, is innovative, and is the world leader.
  We want to try to be the leader in anything we can. I will continue 
to support NIH funding for research and development of prescription 
drugs. I think that is critical. I think that helps everybody. It is a 
win/win. It is not always cheap, but it is a win/win. It helps the 
industry. It helps the public. It helps medicine.
  I will continue to support the tax credit for research and 
development. In fact, I am a cosponsor of a bill that will do that 
because I believe very strongly American business should have the 
incentive to invest in research and development because it helps the 
economy so much in the long term.
  I see the prescription drug industry as in a little bit different 
category than most industries because they have a patent. The fact is 
that the Federal Government gives them a patent--another word for that 
would be a ``monopoly''--the Federal Government gives them a monopoly 
for a certain number of years to sell their drugs, but implicit in that 
monopoly is a public trust.
  I think it is incumbent upon the people who hold those patents and 
the companies which hold those patents that they understand they have a 
special relationship with the public, because nothing less than the 
public's health is at stake.
  Also, when I am looking at the pharmaceutical industry, I have to 
observe what Fortune Magazine came out with in the last I think it has 
been 3 or 4 years running now, that there are three different ways to 
measure the profitability of an industry. All three ways it is 
measured, the pharmaceutical industry by any standard is the most 
profitable industry in America.
  The other thing about these companies is we talk about them as if 
they are our own companies but in fact many of them--maybe the 
majority, the big guys--are actually foreign corporations doing 
business in America. Most of these big companies are huge conglomerates 
that have different divisions and product lines. We need to remember 
most of these are global companies. They are doing research all over 
the world and they are selling these drugs all over the world, not just 
to the American marketplace. I think it is important we not segment the 
American marketplace at the expense of everything else.
  I will talk about three of my experiences as attorney general for 
Arkansas. I know there are 49 other attorneys general who have had 
similar experiences, but these were important experiences I had with 
the pharmaceutical industry. Again, I am proud of the industry. I am 
very supportive of some of the things they do, but when I was attorney 
general we had one case where we found out they had secured a monopoly 
on certain key ingredients to two or three drugs. Without these key 
ingredients the drugs could not be made, and even the generic companies 
were buying these key ingredients from this one manufacturer. They 
purchased that manufacturer and before long, guess what, generic drugs 
went up because the name-brand company was jacking up the prices to the 
generics. That is not fair. That is not right. That is not allowing the 
marketplace to work in the way it should.
  We had another case where a pharmaceutical company out and out lied 
about research. They told the Government they had tests that showed 
their name-brand product was better than the generic product. Another 
test came in later and showed they were absolutely the same. 
Unfortunately, for a number of years they were able to charge more for 
their product, much more than the generic, because people were 
convinced the generic was not as good.

  When I was attorney general, we found there were a few companies that 
were playing games with the patent laws and with the FDA regulations 
and through various maneuvers they were able to extend the life of 
their patents and monopolies. Again, I did not come to name names and 
embarrass companies for some of the wrongdoings. I will be glad to 
visit with any Senator individually who would like to talk about these 
things. The pharmaceutical industry is a great industry overall. It 
does great things and I am very supportive of most of the things they 
do, but sometimes we have to call it like we see it. They do not always 
come into this debate with the cleanest of hands.
  In my amendment, I am proposing a 2-year period of time in which to 
allow the Health and Human Services Department to establish their 
regulations in final form. I believe that is ample time. In fact, if it 
were up to me I would give them 30 days, but I think realistically they 
need time to verify and certify that the Canadian market is safe. I 
think they have actually been working on this since the year 2000. The 
fact the Dorgan amendment passed last week will really narrow their 
focus. Now that they only have to focus on Canada, I think that will 
help them quite a bit to bring veracity to these tests and to the 
marketplace.
  Again, my proposal would not take effect if the regulations are 
finalized, and even if it does take effect in 2 years and then the 
regulations are finalized at a later time, mine immediately goes out of 
effect. What it would, in effect, do is make sure we are not paying 
more for drugs in America than they are in Canada. That is really not 
too much to ask, considering the U.S. Government will be far and away 
the largest purchaser of prescription drugs in the world.
  The amendment says if the FDA has not implemented reimportation 
within 2 years of implementation of this law, it will become illegal 
for drug manufacturers to discriminate against American purchasers 
compared to our Canadian counterparts. Really, that is what it is all 
about. It is about price discrimination. I said a few moments ago it is 
about price gouging. If the prices are justified in Canada, then they 
are justified here, and we need to

[[Page S8335]]

make sure we get a price we are comfortable with.
  In closing, I say that the consequences of not protecting American 
patients are too high. Uninsured patients cannot afford the 
prescription medicines they need today. Drug prices are fueling health 
care costs in a way we have seen on that previous chart. One thing we 
see time and time again is employers dropping health care coverage 
because they cannot afford prescription drugs. The skyrocketing drug 
costs have a tremendous potential to make the Medicare coverage we are 
considering erode significantly over time. What I mean by that is, as 
these deductibles go up, as the stop losses go up, as the gap in 
coverage widens, this proposed prescription drug benefit is going to 
make less sense over time because it is going to have so many problems.
  Lastly, I want to show my colleagues this chart. We have seen bits 
and pieces of this already in this debate from last week, but in the 
first column this chart lists I believe it is nine of the most popular 
drugs in this country. It lists what they are used for. There are a lot 
of folks who are looking at this list and seeing big name-brand drug 
names. They probably use these drugs. Probably a lot of people in this 
Chamber use these drugs. This column shows what they are used for and 
then this third column is really critical. It is the U.S. price. It is 
what people pay in the U.S.

  We are basing this on some Web sites. We know these are prices that 
can be charged here. This next column shows the price in Canada, what 
we know they can be charged there because we looked at Web sites that 
sell them. We can see the big difference on every single one of these 
nine drugs. The drug in Canada is much cheaper--in fact, 39 percent 
cheaper, 33 percent cheaper, on down the line. This one is 43 percent 
cheaper in Canada.
  Bear in mind that a lot of these drugs are made in the very same 
plants. They are made in the very same places. One drug goes up to 
Canada and the other goes to Arkansas, Texas, Georgia, or wherever it 
may be. These are the very same drugs coming out of the very same 
plants. They meet all the same standards. In Canada, they are a lot 
cheaper.
  What we are trying to do is get these prices in this column to go 
down to be a lot closer to the price in the Canadian column. It is not 
only good for the citizens but good for the taxpayers because as we add 
this prescription drug benefit we want to see these lower prices 
because that means tax dollars will go a lot further, and we, as a 
Nation, will be able to provide many more drugs through Medicare than 
we otherwise could.
  I ask the Senate very respectfully to support this amendment to 
simply ensure Americans are treated fairly.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Montana.
  Mr. BAUCUS. Mr. President, I ask unanimous consent that the pending 
amendments be set aside so the Senator from New Mexico can offer three 
amendments in sequence.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. BINGAMAN. I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The legislative clerk proceeded to call the roll.
  Mr. BINGAMAN. Mr. President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.


                           Amendment No. 984

  Mr. BINGAMAN. Mr. President, I send an amendment to the desk and ask 
for its immediate consideration.
  The PRESIDING OFFICER. The clerk will report.
  The legislative clerk read as follows:

       The Senator from New Mexico [Mr. Bingaman] proposes an 
     amendment numbered 984.

  Mr. BINGAMAN. Mr. President, I ask unanimous consent that the reading 
of the amendment be dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The amendment is as follows:

      (Purpose: To carve out from payments to Medicare+Choice and 
        MedicareAdvantage organizations amounts attributable to 
disproportionate share hospital payments and pay such amounts directly 
  to those disproportionate share hospitals in which their enrollees 
                             receive care)

       At the end of subtitle C of title II, add the following:

     SEC. __. CARVING OUT DSH PAYMENTS FROM PAYMENTS TO 
                   MEDICARE+CHOICE AND MEDICAREADVANTAGE 
                   ORGANIZATIONS AND PAYING THE AMOUNTS DIRECTLY 
                   TO DSH HOSPITALS ENROLLING MEDICARE+ CHOICE AND 
                   MEDICAREADVANTAGE ENROLLEES.

       (a) Removal of DSH Payments From Calculation of Adjusted 
     Average Per Capita Cost.--
       (1) Under medicare+choice.--Section 1853(c)(3) (42 U.S.C. 
     1395w-23(c)(3) and as amended by section 203) is amended--
       (A) in subparagraph (A), by striking ``subparagraph (B)'' 
     and inserting ``subparagraphs (B) and (E)'',
       (B) by adding at the end the following new subparagraph:
       ``(E) Removal of payments attributable to disproportionate 
     share payments from calculation of adjusted average per 
     capita cost.--For each year (beginning with 2004), the area-
     specific Medicare+Choice capitation rate under subparagraph 
     (A)(ii) shall be adjusted to exclude from such rate the 
     portion of such rate that the Secretary estimates is 
     attributable to additional payment amounts described in 
     section 1886(d)(5)(F) (treating hospitals reimbursed under 
     section 1814(b)(3) as if such hospitals were reimbursed under 
     section 1886).''.
       (2) Under medicareadvantage.--Section 1853(a)(5) (as 
     amended by section 203) is amended by adding at the end the 
     following new subparagraph:
       ``(C) Removal of payments attributable to disproportionate 
     share payments from calculation of adjusted average per 
     capita cost.--For each year (beginning with 2004), the area-
     specific Medicare+Choice capitation rate under subparagraph 
     (A)(ii) shall be adjusted to exclude from such rate the 
     portion of such rate that the Secretary estimates is 
     attributable to additional payment amounts described in 
     section 1886(d)(5)(F) (treating hospitals reimbursed under 
     section 1814(b)(3) as if such hospitals were reimbursed under 
     section 1886).''.
       (3) Effective dates.--The amendments made--
       (A) by paragraph (1) shall apply to plan years beginning on 
     and after January 1, 2004 and shall continue to apply to plan 
     years beginning on and after January 1, 2006; and
       (B) by paragraph (2) shall apply to plan years beginning on 
     and after January 1, 2006.
       (b) Additional DSH Payments for Managed Care Enrollees.--
     Section 1886(d)(5)(F) ((42 U.S.C. 1395ww(d)(5)(F)) is 
     amended--
       (1) in clause (ii), by striking ``clause (ix)'' and 
     inserting ``clauses (ix) and (xvi)''; and
       (2) by adding at the end the following new clause:
       ``(xvi)(I) For portions of cost reporting periods occurring 
     on or after January 1, 2004, the Secretary shall provide for 
     an additional payment amount for each applicable discharge of 
     any subsection (d) hospital that is a disproportionate share 
     hospital (as described in clause (i)).
       ``(II) For purposes of this clause the term `applicable 
     discharge' means the discharge of any individual who is 
     enrolled under a risk-sharing contract with a eligible 
     organization under section 1876 and who is entitled to 
     benefits under part A and any individual who is enrolled with 
     a Medicare+Choice organization or a MedicareAdvantage 
     organization under part C.
       ``(III) The amount of the payment under this clause with 
     respect to any applicable discharge shall be equal to the 
     estimated average per discharge amount that would otherwise 
     have been paid under this subparagraph if the individuals had 
     not been enrolled as described in subclause (II).
       ``(IV) The Secretary shall establish rules for paying an 
     additional amount for any hospital reimbursed under a 
     reimbursement system authorized under 1814(b)(3) if such 
     hospital would qualify as a disproportionate share hospital 
     under clause (i) were it not so reimbursed. Such payment 
     shall be determined in the same manner as the amount of 
     payment is determined under this clause for disproportionate 
     share hospitals.''.

  Mr. BINGAMAN. Mr. President, this amendment deals with the issue of 
safety net hospitals. That is a label we have put on what are, in fact, 
called in the law Medicare disproportionate share hospitals, or DSH. 
The payments we make for DSH are intended to support these safety net 
hospitals. By adopting my amendment, we ensure we are not 
unintentionally reducing the payments to these safety net hospitals.
  By ``safety net hospitals,'' in general terms, we are talking about 
hospitals that provide medical services to a great many individuals who 
do not have health care coverage. That is where the phrase 
``disproportionate share'' comes from, saying they have a 
disproportionate share of the uninsured coming to their hospitals 
seeking medical treatment. We have set up a system through Medicare and 
also a separate system through Medicaid to provide additional funds to 
those safety net hospitals.
  Since DSH payments are made as add-on adjustments to fee-for-service

[[Page S8336]]

reimbursements, those payments to hospitals are reduced as Medicare 
beneficiaries choose to enroll in private health plans and the money is 
instead logically wrapped into payments by the Federal Government to 
the private health plans.
  We had some testimony before the Finance Committee. Tom Skully 
testified that he estimates enrollment in private health plans will 
increase from 10 percent, where it is today, up to 43 percent by the 
year 2008. Tom Skully, of course, is in charge of administering these 
programs. His opinion is extremely important in this debate.
  If he is right, that would result in an average reduction in the 
Medicare DSH payments--that is, the payments to the safety net 
hospitals--of about 37 percent. Clearly, this is not the intent of 
Congress in this legislation. We are not setting out in this 
legislation, which is intended to provide a prescription drug benefit 
to seniors, to intentionally reduce the payments to safety net 
hospitals. The bill itself, in fact, increases DSH payments to rural 
safety net hospitals. That is a provision Chairman Grassley and the 
ranking member, Senator Baucus, and I very strongly support.
  The Medicare Payment Advisory Commission, which advises the Congress 
on Medicare policy, has said in their report ``plans are overpaid''--
private plans, they are talking about--``to the extent they do not pass 
on DSH payments to the appropriate hospitals.''
  Congress recognized this program in the past and intentionally carved 
out graduate medical education, or GME, payments from health plans and 
made provisions so those payments would go directly to the teaching 
hospitals. That policy is included in S. 1, but unfortunately the 
disproportionate share payments were not addressed in the underlying 
bill.
  Also, in the case of Medicaid, Congress required a carve-out of DSH 
payments under Medicaid to health plans in 1997 when Congress 
authorized the substantially greater use of managed care in the 
Medicaid Program. The intent was clear, that Congress did not want to 
unintentionally harm the safety net hospitals as they had more people 
move into Medicaid managed care.
  We are essentially trying to do the very same thing here. The same 
recognition and the same policy should apply in the case of Medicare 
DSH payments that we applied in the case of Medicaid DSH payments.

  Our Nation's important public hospitals lost an estimated $527 
million in treating Medicare patients in the year 2001. That was with 
88 percent of those public hospitals reporting losses on Medicare. They 
cannot afford additional Medicare cuts. That would be exactly what we 
would be enacting if we passed the underlying bill without including 
the amendment I provide here. Now is the time to protect and carve out 
the amendments intended to go to safety net hospitals to ensure they 
actually do go to the safety net hospitals even once this program is 
put in place.
  I hope very much my colleagues will support this amendment. I hope it 
can be adopted and included in the legislation before it passes the 
Senate.


                           Amendment No. 972

  Mr. President, I have another amendment numbered 972, and I ask 
unanimous consent that the pending amendment be set aside.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The clerk will report.
  The legislative clerk read as follows:

       The Senator from New Mexico [Mr. Bingaman] proposes an 
     amendment numbered 972.

  Mr. BINGAMAN. Mr. President, I ask unanimous consent that the reading 
of the amendment be dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The amendment is as follows:

   (Purpose: To provide reimbursement for Federally qualified health 
            centers participating in medicare managed care)

       At the end of title VI, insert the following:

     SEC. __. REIMBURSEMENT FOR FEDERALLY QUALIFIED HEALTH CENTERS 
                   PARTICIPATING IN MEDICARE MANAGED CARE.

       (a) Reimbursement.--
       (1) In general.--Section 1833(a)(3) (42 U.S.C. 1395l(a)(3)) 
     is amended to read as follows:
       ``(3) in the case of services described in section 
     1832(a)(2)(D)--
       ``(A) except as provided in subparagraph (B), the costs 
     which are reasonable and related to the cost of furnishing 
     such services or which are based on such other tests of 
     reasonableness as the Secretary may prescribe in regulations, 
     including those authorized under section 1861(v)(1)(A), less 
     the amount a provider may charge as described in clause (ii) 
     of section 1866(a)(2)(A), but in no case may the payment for 
     such services (other than for items and services described in 
     section 1861(s)(10)(A)) exceed 80 percent of such costs; or
       ``(B) with respect to the services described in clause (ii) 
     of section 1832(a)(2)(D) that are furnished to an individual 
     enrolled with a MedicareAdvantage plan under part C pursuant 
     to a written agreement described in section 1853(j), the 
     amount by which--
       ``(i) the amount of payment that would have otherwise been 
     provided under subparagraph (A) (calculated as if `100 
     percent' were substituted for `80 percent' in such 
     subparagraph) for such services if the individual had not 
     been so enrolled; exceeds
       ``(ii) the amount of the payments received under such 
     written agreement for such services (not including any 
     financial incentives provided for in such agreement such as 
     risk pool payments, bonuses, or withholds),
     less the amount the Federally qualified health center may 
     charge as described in section 1857(e)(3)(C);''.
       (b) Continuation of MedicareAdvantage Monthly Payments.--
       (1) In general.--Section 1853 (42 U.S.C. 1395w-23), as 
     amended by this Act, is amended by adding at the end the 
     following new subsection:
       ``(j) Payment Rule for Federally Qualified Health Center 
     Services.--If an individual who is enrolled with a 
     MedicareAdvantage plan under this part receives a service 
     from a Federally qualified health center that has a written 
     agreement with such plan for providing such a service 
     (including any agreement required under section 1857(e)(3))--
       ``(1) the Secretary shall pay the amount determined under 
     section 1833(a)(3)(B) directly to the Federally qualified 
     health center not less frequently than quarterly; and
       ``(2) the Secretary shall not reduce the amount of the 
     monthly payments to the MedicareAdvantage plan made under 
     section 1853(a) as a result of the application of paragraph 
     (1).''.
       (2) Conforming amendments.--
       (A) Paragraphs (1) and (2) of section 1851(i) (42 U.S.C. 
     1395w-21(i)(1)), as amended by this Act, are each amended by 
     inserting ``1853(j),'' after ``1853(i),''.
       (B) Section 1853(c)(5) is amended by striking ``subsections 
     (a)(3)(C)(iii) and (i)'' and inserting ``subsections 
     (a)(3)(C)(iii), (i), and (j)(1)''.
       (c) Additional MedicareAdvantage Contract Requirements.--
     Section 1857(e) (42 U.S.C. 1395w-27(e)) is amended by adding 
     at the end the following new paragraph:
       ``(3) Agreements with federally qualified health centers.--
       ``(A) Payment levels and amounts.--A contract under this 
     part shall require the MedicareAdvantage plan to provide, in 
     any contract between the plan and a Federally qualified 
     health center, for a level and amount of payment to the 
     Federally qualified health center for services provided by 
     such health center that is not less than the level and amount 
     of payment that the plan would make for such services if the 
     services had been furnished by a provider of services that 
     was not a Federally qualified health center.
       ``(B) Cost-sharing.--Under the written agreement described 
     in subparagraph (A), a Federally qualified health center must 
     accept the MedicareAdvantage contract price plus the Federal 
     payment provided for in section 1833(a)(3)(B) as payment in 
     full for services covered by the contract, except that such a 
     health center may collect any amount of cost-sharing 
     permitted under the contract under this part, so long as the 
     amounts of any deductible, coinsurance, or copayment comply 
     with the requirements under section 1854(e).''.
       (d) Safe Harbor From Antikickback Prohibition.--Section 
     1128B(b)(3) (42 U.S.C. 1320a-7b(b)(3)) is amended--
       (1) in subparagraph (E), by striking ``and'' after the 
     semicolon at the end;
       (2) in subparagraph (F), by striking the period at the end 
     and inserting ``; and''; and
       (3) by adding at the end the following new subparagraph:
       ``(G) any remuneration between a Federally qualified health 
     center (or an entity controlled by such a health center) and 
     a MedicareAdvantage plan pursuant to the written agreement 
     described in section 1853(j).''.
       (e) Effective Date.--The amendments made by this section 
     shall apply to services provided on or after January 1, 2006, 
     and contract years beginning on or after such date.

  Mr. BINGAMAN. As we proceed with this consideration of S. 1--and I 
believe firmly that it will be passed through the Senate this week--we 
need to be very careful not to create unintended consequences as a 
result of our legislation.
  The previous amendment I discussed tries to head off some unintended 
and certainly undesirable consequences for safety net hospitals. This 
amendment tries to do the very same thing with regard to community 
health centers. Let me explain what this amendment does.

[[Page S8337]]

  First, I am concerned about the implications that passing this 
underlying legislation as it now is pending in the Senate could have on 
the Nation's community health centers. Community health centers have 
enjoyed broad bipartisan support in Congress. They have enjoyed strong 
support from the President. The President and the Congress have 
committed to doubling the funding for community health centers over a 
5-year period. That is an encouraging development. Health centers 
provide care to over 13 million people annually, nearly 1 million of 
whom are low-income Medicare beneficiaries. They receive section 330 
Federal Public Health Service Act grant funds to support care for the 
uninsured and for low-income patients.
  To ensure that those grant dollars are spent for the purposes 
intended, Congress has specifically taken action to ensure that both 
Medicare and Medicaid are fully reimbursing the health centers for the 
costs associated with the care those health centers provide to Medicare 
and Medicaid beneficiaries.
  Simply put, funding intended for low-income and uninsured people 
should not be diverted and used to subsidize Medicare 
underpayments. Therefore, health centers are reimbursed by Medicare 
under a cost-based system.

  The amendment I am offering, amendment No. 972, would simply extend 
this same requirement to the new Medicare Advantage Programs by 
ensuring that community health centers are provided with a wraparound, 
or a supplemental payment equal to the difference between the payments 
they now receive under Medicare generally and the payments they would 
receive from Medicare Advantage plans.
  This concept is not new. In 1997, when Congress allowed States to 
dramatically increase the number of patients enrolled in Medicaid 
managed care, we recognized the potential impact on community health 
centers, and we required the Medicaid Program to provide this 
wraparound, or supplemental payment, for the difference between the 
managed care organization's payment and the health center's reasonable 
cost. We need to do the same thing here, with my amendment, in the 
Medicare Program.
  According to testimony, again, from Tom Scully, which I referred to 
just a minute ago, the hearing we had in the Finance Committee 
indicated there are widely differing estimates for how many Medicare 
beneficiaries would actually enroll in private health plans. Those 
estimates range from 9 percent to 43 percent, a fivefold difference.
  Dr. Holtz-Eakin's words were that:

       These are honest differences in trying to read a very 
     uncertain future.

  All of us want to reduce that uncertainty. If Mr. Scully is correct, 
then health centers will lose their guarantee of cost-based 
reimbursement to 43 percent of their Medicare patients, and that 
potentially will result in centers having to dip into their Federal 
grant funds, which is money that was intended to provide care to the 
uninsured to make up for losses to their Medicare patients.
  The Nation's safety net is already a fragile one. We should take this 
action. We should adopt this amendment to ensure we are not 
jeopardizing that safety net even further by passing the underlying 
legislation without the amendment.
  Again, this Congress and the President have made a commitment to 
these community health centers to deal with the growing number of 
uninsured in the country. In light of this, the amendment is, in my 
view, vital to the health of these health centers and ensuring the 
health centers are not forced to decide whether to subsidize the 
Medicare Program with their grant dollars or refuse to provide services 
to the 1 million Medicare beneficiaries to whom they currently provide 
those services.
  Just as I indicated with the previous amendment, I think this will 
substantially improve the bill. I urge my colleagues to support this 
amendment, and I hope, when we come to consideration of it and a vote 
on it, that the Senate will endorse this amendment. It will avoid a 
consequence that I know is not intended by any of my colleagues here in 
the Senate.
  I ask this amendment I have just been discussing, amendment No. 972, 
be set aside so I may off another amendment.
  The PRESIDING OFFICER. Without objection, it is so ordered.


                           Amendment No. 973

  Mr. BINGAMAN. Mr. President, I ask amendment No. 973 be called up for 
immediate consideration.
  The PRESIDING OFFICER. The clerk will report.
  The assistant legislative clerk read as follows:

       The Senator from New Mexico [Mr. Bingaman], proposes an 
     amendment numbered 973.

  Mr. BINGAMAN. I ask unanimous consent the reading of the amendment be 
dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The amendment is as follows:

 (Purpose: To amend title XVIII of the Social Security Act to provide 
for the authorization of reimbursement for all medicare part B services 
           furnished by certain Indian hospitals and clinics)

       At the end of subtitle B of title IV, insert the following:

     SEC. __. AUTHORIZATION OF REIMBURSEMENT FOR ALL MEDICARE PART 
                   B SERVICES FURNISHED BY CERTAIN INDIAN 
                   HOSPITALS AND CLINICS.

       (a) In General.--Section 1880(e) (42 U.S.C. 1395qq(e)) is 
     amended--
       (1) in paragraph (1)(A), by striking ``for services 
     described in paragraph (2)'' and inserting ``for all items 
     and services for which payment may be made under such part'';
       (2) by striking paragraph (2); and
       (3) by redesignating paragraph (3) as paragraph (2).
       (b) Effective Date.--The amendments made by this section 
     shall apply to items and services furnished on or after 
     October 1, 2004.

  Mr. BINGAMAN. Mr. President, this amendment deals with Indian 
Medicare Part B services. The Indian Health Service, of course, 
operates hospitals and clinics in various parts of the country, several 
in my State. Those hospitals and clinics provide health care to 
American Indians on or near reservations and to Alaska Natives. In many 
cases, those are hospitals and clinics that currently are unable to 
bill for all of the Medicare Part B services they are providing. In 
effect, the Indian Health Service under current law is subsidizing the 
Medicare Program because those services which would otherwise be paid 
for by Medicare, if it were a different provider other than the Indian 
Health Service--are having to be paid by the Indian Health Service 
itself.
  I think we in the Senate are all aware that the Indian Health 
Service, year after year, has been substantially underfunded. In 2000, 
Indian Health Service hospitals and clinics were made eligible for 
services of physicians and certain other practitioners, but there were 
real limits put on the services that were provided. Specifically, they 
were denied payment, the Indian Health Service hospitals and clinics 
were denied payment for the following important items that I will call 
to the attention of my colleagues so they may realize what the Indian 
Health Service is not permitted to be reimbursed for in the current 
law: Durable medical equipment. This includes such items as 
wheelchairs, as well as blood testing strips, blood monitors for 
diabetes patients--which is a severe problem among Native Americans 
throughout this country.
  The second item is home and some institution dialysis supplies and 
equipment. Since the prevalence of diabetes in the Native-American 
population and among Alaska Natives is three times the rate in the 
general U.S. population, Indian people experience a high rate of renal 
disease, including end-state renal disease. Clearly these are expenses, 
these are supplies, this is equipment that should be reimbursed.
  Third, cancer screening.
  Next, Pap smears, glaucoma screening, clinic and hospital-based 
ambulance services, prosthetic devices, covered vaccines, including 
hepatitis B, pneumococcal and influenza, chemotherapy and antigen 
drugs, and clinical laboratory services.
  The amendment I am offering would simply make these Indian health 
facilities and providers eligible for payment for all of the Part B 
Medicare-covered items, and individuals, to the same extent other 
providers are eligible for payment for those supplies and services.
  The amendment assures that Native Americans would have the same 
access to health services as any other American. If the Indian Health 
Service providers are unable to bill for those services, as they 
currently are, then the Indian Health Service budget shortfalls

[[Page S8338]]

wind up resulting in the rationing or delaying of treatment to many of 
our Native-American citizens. For some of these individuals, it means 
going out of the Indian Health Service system in order to get more 
prompt service because other providers, in fact, do get reimbursed and 
can get reimbursed on Medicare for providing those services.
  Native Americans and Indian Health Service providers should not be 
subject to such barriers to care and to payment. Similarly, they should 
not be subject to such complexity as they are only prohibited from 
billing and receiving payment for certain services and not for others.
  It needs to be noted that the Medicare Advantage payments are based 
in part on fee-for-service expenditures in the defined region. For 
those areas with large numbers of Native Americans--such as my State--
payment rates are skewed downward if the Indian Health Service 
providers are unable to bill appropriately for the full range of 
services. We have lower reimbursement rates for Medicare in my State 
than many of the surrounding areas. One of the factors--not the only 
one, but one of the factors that is causing that is this problem I am 
trying to address with the amendment, the problem that the Indian 
Health Service is unable to be reimbursed. Accordingly, the amount 
Medicare is paying is skewed downward. Accordingly, that affects 
Medicare payments throughout the region.
  There is absolutely no policy rationale for limiting the payment to 
the Indian Health Service hospitals and clinics for only certain of the 
Medicare Part B services.
  I urge the Senate to end this unfortunate discrimination that has 
been built into the statutes under which we currently operate.
  I hope, again, this amendment will be favorably acted upon by the 
Senate when it comes to a vote. I believe it will substantially improve 
the legislation and will correct an inequity that is in current law 
that needs to be corrected.


                           Amendment No. 933

  Mr. President, let me at this point move to another amendment. We do 
not need to move off the current amendment, but I wish to discuss a 
different amendment that is pending that I am not calling up for a vote 
at this time but one I offered sometime earlier.
  The amendment I wish to speak about briefly now relates to the assets 
test. It is a proposal I have made to repeal the assets test.
  First, I compliment Chairman Grassley and the ranking member, Senator 
Baucus, for making significant progress and improvement with respect to 
the low-income benefit as compared to similar legislation that was 
considered last year. The bill, although improving the low-income 
benefit and reducing the impact of the assets test, still leaves in 
place an assets test of just $4,000 for an individual and $6,000 for a 
couple.
  This assets test has two very important consequences. By explaining 
these consequences, I think I will be able to explain what I mean by an 
``assets test.''
  First of all, for those who have incomes below the poverty level, if 
you own as much as $4,100 in a whole range of different assets 
combined--it can be savings accounts, bonds, savings bonds, burial 
plots, insurance policies, a car, the net worth of your car, livestock, 
whatever you happen to own--if the combined value of these categories 
adds up to $4,100, then your cost sharing under the bill increases and 
you do not get the full benefit of this low-income prescription drug 
benefit we are talking about as part of this legislation.
  Your cost sharing under the bill increases by 400 percent if you fail 
this assets test compared to similarly situated low-income people. If 
your income is between 100 and 135 percent of poverty, then the assets 
test increases cost sharing by 200 percent; that is, you have to pay 
twice as much if, in fact, your total assets add up to more than 
$4,100.
  The result is, Congress has effectively established a policy that 
encourages low-income seniors or people with disabilities to further 
impoverish themselves--that is, dispose of their property, sell their 
property off--in order to get the full benefit that is advertised.
  What kind of sense does this really make, to ask low-income and 
vulnerable seniors and people with disabilities to get rid of the very 
minimal savings they have in order to get the full low-income benefit?
  Let me talk about the other aspect of this that I think is 
particularly significant and needs to be discussed here. I think more 
and more, as people have been reading this legislation--this 
legislation goes on for more than 600 pages, so anyone who thinks we 
are doing something simple here by just giving people a prescription 
drug benefit has not spent the time to try to understand this 
legislation and read it.
  One of the aspects of the assets test that is most troublesome is the 
enormously cumbersome and bureaucratic procedure we put in place that 
affects so many of our low-income seniors who want to benefit from this 
prescription drug benefit we are adding. Also, there is a very 
substantial invasion of people's lives involved. Let me explain that in 
a little more detail.

  Any of you who do not think this is a complex, cumbersome, 
bureaucratic process we are setting up for low-income seniors, I urge 
you to just read the Pennsylvania 16-page application for low-income 
Medicare beneficiaries who want to qualify for assistance with premiums 
and copayments and deductibles that will also be the basis for 
qualifying for the low-income benefit in this bill. I question whether 
many of us in Congress would be able to fill out that application.
  What I have on this easel is not the Pennsylvania 16-page 
application. This is a much shorter, so-called streamlined 4-page 
application from the State of Ohio.
  To comply with the assets test requirement, as shown on this chart, 
in the State of Ohio they ask you to detail in this form all that you 
own in an enormous number of categories. Let me just go through this: 
your savings accounts, your checking accounts, anything you have with a 
credit union, any promissory notes, any stocks and bonds, any tax 
shelter accounts, any certificates of deposit, automobiles, 401(k)s, 
trust funds, Christmas clubs, vehicles of any kind other than an 
automobile--if you happen to have a pickup--money market funds, life 
insurance, land contracts, IRAs, Keogh plans, revocable burial 
accounts, irrevocable burial accounts, and other assets.
  So if you own a cow or you own a horse, whatever you own, they want 
to know about it. Then they add up the total value of those assets to 
see whether you have $4,100 there. If you do have $4,100 there, you 
have just failed the assets test.
  There are some 20 items here for low-income seniors or disabled 
Medicare beneficiaries to report just to apply for the prescription 
drug low-income benefit. It is a test, as I indicated, which many of us 
in Congress would have trouble passing without the assistance of a 
lawyer or an accountant. It is a major barrier, it is a burden we are 
imposing on these very individuals whom we say we are trying to help.
  I bring this to the attention of the Senate because I do not think 
many of us know the extent to which these applications are both 
difficult--difficult to complete--and also a terrible invasion of 
privacy.
  The Georgia application reads--and let me put that provision on the 
easel. We have a blowup of the application, which I am sure very few 
can read. But just to make the point, we have tried to blow it up so 
people can see it. I will read from the Georgia application. It says:

       I understand that, by signing this application, I am 
     agreeing to a full investigation or review of my eligibility 
     by state and/or federal officials. This may include inquiries 
     of employers, medical providers, financial institutions, and 
     other business and professional persons and review of any 
     agency records.

  Oklahoma's application goes even further. It reads:

       I authorize the release of any necessary information, 
     documents, or forms to the [Oklahoma department] from 
     individuals, businesses, schools, banking institutions, data 
     brokers, public or private organizations, Oklahoma state 
     agencies, including personal and/or business income tax 
     returns from the Oklahoma Tax Commission, or federal agencies 
     to determine my eligibility for assistance or to determine 
     the accuracy of any payments to vendors on my behalf.


[[Page S8339]]


  The Pennsylvania application--unfortunately, I do not have that blown 
up here; it would take more easels than we have available--requires the 
applicant to consent to:

     . . . fully cooperate in the finger, photo, and signature 
     imaging process.

  It requires the reporting of any changes in the number of people in 
the household, any changes in the resources of the individual, and it 
adds--and this is a quotation from the report; this is the Pennsylvania 
report--``you must report any plans to leave the state, even 
temporarily.'' So if you want to come from Pennsylvania down to 
Washington, DC, to see your Senator, you have to notify the folks in 
Pennsylvania that you are leaving the State if you are, in fact, 
eligible for this benefit.
  The burden of the application ought to be something that would scare 
off a lot of individuals. Here is a line that is in the application of 
many States:

       State and Federal law provides for fine, for imprisonment, 
     or both for any person who withholds or gives false 
     information--

  I note that it does not include anything about intentionally giving 
false information.

     in order to obtain assistance to which he or she is entitled.

  The application from Georgia reads:

       I understand the questions on this application--

which I would attest is virtually impossible for a lot of folks unless 
they do get professional help in understanding all of this--

     and I certify under penalty of perjury that the information 
     given by me on this form is correct and complete to the best 
     of my knowledge.

  The result of this assets test, this barrage of paperwork presented 
to people when they come in and ask for the benefits, is what the 
Congressional Budget Office is telling us. Their estimate is that only 
50 percent of Medicare beneficiaries who are eligible for the low-
income benefit under this bill will actually get the benefit. I find it 
shocking, after reading these applications, that the number could even 
be that high. It is a testament to the Nation's seniors and disabled 
that so many people go through the bureaucratic maze to get the benefit 
we are talking about.
  On the implementation of the Children's Health Insurance Program--a 
different program but one that also had a similar assets test--a number 
of States initially imposed assets tests on the families before they 
allowed children to get health care coverage. Over time most of those 
States have repealed those tests.
  Our experience with the assets test in the case of the Children's 
Health Insurance Program should be instructive. The Denver Post wrote 
at the time:

       It seems the system is penalizing people for trying to 
     build better lives. The message is that you must stay poor. 
     If you have a decent running car that will get you to where 
     you need to go, you will lose your health care coverage.

  The Rocky Mountain News added:

       Jumping through the hoops might be a whole lot easier for 
     some families than filling out the required forms which rival 
     the renowned handiwork of the Internal Revenue Service for 
     clarity and ease of compliance. The logic of erecting such 
     paperwork obstacles escapes us. Government doesn't have to 
     offer insurance to the children of working poor but having 
     made the decision to do so, it is hardly fair then to smother 
     the program beneath layers of red tape.

  These last two quotes relate to the Children's Health Insurance 
Program, not to the Medicare prescription drug benefit. But the same 
problem pointed out when we had the assets test applied in the case of 
the Children's Health Insurance Program is true and exists with respect 
to this prescription drug coverage for our Nation's low-income elderly 
and disabled citizens. We are not only smothering them beneath layers 
of red tape, but the applications threaten their privacy and further 
threaten fines or imprisonment if those individuals who apply provide 
false information even if it is unintentional in some cases.
  I raise these points because very few, if any, Senators have taken 
the time to understand the application process, and they would be 
appalled if they really did take the time to understand the 
difficulties we are placing in the way of a senior getting access to 
this low-income benefit. I urge each of them to attempt to fill out 
their own State's application. Clearly that would be a good way to 
acquaint themselves with the difficulty of the problem we are putting 
in the way of people.
  Before closing, let me point out the assets test was established in 
1988. It has never been updated for inflation. Nor does the bill update 
the assets test for inflation.
  Not only was the assets test established in 1988 at this level of 
$4,000 and $6,000 per couple, and it has never been updated for 
inflation, but it has built in it a marriage penalty. If you get 
married, a couple can only have a combined net worth of $6,000. If you 
remain single, you can have a net worth of $4,000. Everyone who gives 
speeches about the importance of eliminating the marriage penalty will 
want to support the amendment for that reason.
  The bill does update the amount of the deductible. The amount of the 
deductible increases. It does update the catastrophic limit by an 
inflation factor pegged to increases in drug spending which the 
Congressional Budget Office estimates will increase on average 12 
percent a year over the next 10 years. But we do nothing to index or 
update the amount of this assets test.
  While I completely respect the position of the chairman that he would 
place a priority on using any additional funds to close the coverage 
gap in the bill--I certainly favor closing that coverage gap myself--we 
need to protect our Nation's most vulnerable, the poorest and the 
sickest among us first. If we provide a low-income benefit, as the bill 
does, it should be unacceptable to us to have only half of those who 
are eligible for that benefit actually access the benefit. This is 
similar to the Children's Health Insurance Program in that we are not 
required to provide this benefit, but now that we are choosing to do so 
and we are choosing to do so on a bipartisan basis, we need to be sure 
those who are intended to benefit from it can in fact do so. We are 
about to impose on these individuals an avalanche of bureaucratic red 
tape when they try to access the benefit.
  The underlying legislation has contained in it 69 pages of language 
that is designed to give health care providers a whole range of 
regulatory relief. Here we have some of that detail on this chart. The 
appeals process is being reformed--expedited review procedures, 
provider ombudsman, a variety of things to try to help providers. But 
we have nothing to give beneficiaries any relief from the burden I have 
described.
  One Senator said last week that the amendment I have offered to 
eliminate the assets test would cost money. It would increase State 
administrative costs. Frankly, that statement could not be more 
inaccurate. In fact, if we dramatically reduce the paperwork burden, 
the bureaucratic paperwork, States would not have to increase 
administrative costs. They would actually be able to reduce those 
costs. It is not the amendment that is increasing these costs. It is 
the underlying bill. It is not the amendment that is imposing the 
burden upon States. It is the underlying bill itself.
  All the amendment does is significantly reduce the amount of 
bureaucratic paperwork that must be dealt with in order for this 
benefit to be provided. Some States have actually found that it costs 
more to administer the assets test than they save by disqualifying 
people who fail the test.
  In addition, Senator Hatch's comments on the amendment were right in 
saying it would increase costs. But the estimate is that it would 
increase costs by $4 billion over the 10-year period for which the 
Congressional Budget Office calculates.
  This is well within the budget limitations Congress established for 
this drug benefit. There are $19.3 billion remaining in the budget for 
fiscal years 2009 through 2013. My amendment provides those are the 
years that this assets test would be eliminated.
  The amendment also does so by eliminating the false advertising we 
are engaged in as we tout a low-income benefit when, in fact, only 50 
percent of eligible beneficiaries are going to receive it. In fact, CBO 
estimates that another 1 million low-income seniors who are eligible 
for this low-income benefit will in fact be able to access it if this 
amendment is adopted.
  If we eliminate the bureaucratic redtape, who are the 1 million 
people who would benefit from this assets test? The Commonwealth Fund 
has studied that. They have said in a recent report:

       Compared to other Medicare beneficiaries, low-income 
     Medicare beneficiaries are older,

[[Page S8340]]

     they are more likely to be women, they are more likely to be 
     single, and more than twice as likely to be widowed or 
     divorced or separated. Low-income Medicare beneficiaries are 
     almost twice as likely to report that their health is either 
     fair or poor.

  I think it is these people who need to be our first priority. The 
amendment I have to eliminate the assets test will help us to provide a 
genuine benefit to these people. I hope my colleagues will support this 
effort. It will substantially improve the underlying bill and 
substantially simplify the providing of this benefit we are all hoping 
occurs.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Montana is recognized.
  Mr. BAUCUS. Mr. President, I thank the Senator from New Mexico. I 
think he has a very good point. The current assets test is degrading, 
unworkable. It is just not good policy. It is also extremely 
complicated. Currently, assets tests apply to various kinds of 
benefits--sometimes Medicaid or Medicare, or certain categories of 
Medicare. It defies logic, it is so complicated. Frankly, if this 
Senator had his way, we would repeal a lot of the assets tests which 
have not been updated for a good number of years--since 1987 or 1989. 
We are talking about $9,000 a year or something like that. On the other 
hand, we are dealing with $400 billion in this bill. A total repeal of 
the assets test on drugs only would be--I don't know the cost, but it 
would be expensive.
  The Senator from New Mexico, in his good-faith effort to try to deal 
with unnecessary complications--which is bad public policy--is trying 
to modify a repeal of the assets test to a smaller category. Frankly, 
it has a lot of appeal. But as the Senator knows very well, probably as 
well if not better than most Members of this body, that would only go 
part way toward correcting some of the inequities caused by the assets 
test. Even if the Senator's amendment to totally repeal the asset test 
applying to drugs would go into effect, nevertheless, the asset test 
with respect to the rest of the categories would still apply under 
Medicare. That is low-income categories that are mandatory.
  It is incredibly complex, which is to say I am very sympathetic with 
the Senator and I am hopeful we get this score back from CBO on the 
Senator's asset test amendment, that it is one that certainly can work 
within the $400 billion limit we are operating under. I, for one, 
believe it should pass. I thank the Senator very much for persistently 
and very forthrightly, with a lot of good information, bringing this up 
to be dealt with.

  Mr. President, I ask unanimous consent that all pending amendments be 
temporarily laid aside.
  The PRESIDING OFFICER. Without objection, it is so ordered.


                           Amendment No. 985

  Mr. BAUCUS. On behalf of Senator Edwards, I send an amendment to the 
desk with respect to consumer advertising.
  The PRESIDING OFFICER. The clerk will report the amendment.
  The assistant legislative clerk read as follows:

       The Senator from Montana [Mr. Baucus], for Mr. Edwards, 
     himself, and Mr. Harkin, proposes an amendment numbered 985.

  Mr. BAUCUS. Mr. 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 as follows:

 (Purpose: To strengthen protections for consumers against misleading 
                  direct-to-consumer drug advertising)

       At the end, add the following:

       TITLE __--DIRECT-TO-CONSUMER PRESCRIPTION DRUG ADVERTISING

     SEC. __01. HEAD-TO-HEAD TESTING AND DIRECT-TO-CONSUMER 
                   ADVERTISING.

       (a) New Drug Application.--Section 505 of the Federal Food, 
     Drug, and Cosmetic Act (21 U.S.C. 355) is amended--
       (1) in subparagraph (A) of the second sentence of 
     subsection (b)(1), by inserting before the semicolon at the 
     end the following ``(including whether the drug is safe and 
     effective for use in comparison with other drugs available 
     for substantially the same indications for use prescribed, 
     recommended, or suggested in the labeling proposed for the 
     drug)''; and
       (2) in subsection (d)(5)--
       (A) by inserting ``(A)'' after ``will''; and
       (B) by inserting after ``thereof'' the following: `` or (B) 
     offer a benefit with respect to safety, effectiveness, or 
     cost (including effectiveness with respect to a subpopulation 
     or condition) that is greater than the benefit offered by 
     other drugs available for substantially the same indications 
     for use prescribed, recommended, or suggested in the labeling 
     proposed for the drug''.
       (b) Misbranding.--Section 502(n)(3) of the Federal Food, 
     Drug, and Cosmetic Act (21 U.S.C. 352(n)(3)) is amended by 
     inserting after ``effectiveness'' the following: ``(including 
     effectiveness in comparison to other drugs for substantially 
     the same condition or conditions)''.
       (c) Regulations.--
       (1) In general.--Not later than 180 days after the date of 
     enactment of this Act, the Secretary of Health and Human 
     Services shall promulgate amended regulations governing 
     prescription drug advertisements.
       (2) Contents.--In addition to any other requirements, the 
     regulations under paragraph (1) shall require that--
       (A) any advertisement present a fair balance, comparable in 
     depth and detail, between--
       (i) information relating to side effects and 
     contraindications; and
       (ii) information relating to effectiveness of the drug 
     (including effectiveness in comparison to similar drugs for 
     substantially the same condition or conditions);
       (B) any advertisement present a fair balance between--
       (i) aural representations and visual representations (such 
     as large-print or full-screen text) relating to side effects 
     and contraindications; and
       (ii) aural representations and visual representations 
     relating to effectiveness of the drug (including 
     effectiveness in comparison to similar drugs for 
     substantially the same condition or conditions);
       (C) prohibit false or misleading advertising that would 
     encourage a consumer to take the prescription drug for a use 
     other than a use for which the prescription drug is approved 
     under section 505 of the Federal Food, Drug, and Cosmetic Act 
     (21 U.S.C. 355); and
       (D) require that any prescription drug that is the subject 
     of a direct-to-consumer advertisement include in the package 
     in which the prescription drug is sold to consumers a 
     medication guide explaining the benefits and risks of use of 
     the prescription drug in terms designed to be understandable 
     to the general public.

     SEC. __02. CIVIL PENALTY.

       Section 303 of the Federal Food, Drug, and Cosmetic Act (21 
     U.S.C. 333) is amended by adding at the end the following:
       ``(h) Direct-to-Consumer Prescription Drug Advertising.--
       ``(1) In general.--A person that commits a violation of 
     section 301 involving the misbranding of a prescription drug 
     (within the meaning of section 502(n)) in a direct-to-
     consumer advertisement shall be assessed a civil penalty if--
       ``(A) the Secretary provides the person written notice of 
     the violation; and
       ``(B) the person fails to correct or cease the 
     advertisement so as to eliminate the violation not later than 
     180 days after the date of the notice.
       ``(2) Amount.--The amount of a civil penalty under 
     paragraph (1)--
       ``(A) shall not exceed $500,000 in the case of an 
     individual and $5,000,000 in the case of any other person; 
     and
       ``(B) shall not exceed $10,000,000 for all such violations 
     adjudicated in a single proceeding.
       ``(3) Procedure.--Paragraphs (3) through (5) of subsection 
     (g) apply with respect to a civil penalty under paragraph (1) 
     of this subsection to the same extent and in the same manner 
     as those paragraphs apply with respect to a civil penalty 
     under paragraph (1) or (2) of subsection (g).''.

     SEC. __03. REPORTS.

       The Secretary of Health and Human Services shall annually 
     submit to the Committee on Health, Education, Labor, and 
     Pensions of the Senate and the Committee on Energy and 
     Commerce of the House of Representatives a report that, for 
     the most recent 1-year period for which data are available--
       (1) provides the total number of direct-to-consumer 
     prescription drug advertisements made by television, radio, 
     the Internet, written publication, or other media;
       (2) identifies, for each such advertisement--
       (A) the dates on which, the times at which, and the markets 
     in which the advertisement was made; and
       (B) the type of advertisement (reminder, help-seeking, or 
     product-claim); and
       (3)(A) identifies the advertisements that violated or 
     appeared to violate section 502(n) of the Federal Food, Drug, 
     and Cosmetic Act (21 U.S.C. 352(n)); and
       (B) describes the actions taken by the Secretary in 
     response to the violations.

     SEC. __04. REVIEW OF DIRECT-TO-CONSUMER DRUG ADVERTISEMENTS.

       (a) In General.--The Secretary of Health and Human Services 
     shall expedite, to the maximum extent practicable, reviews of 
     the legality of direct-to-consumer drug advertisements.
       (b) Policy.--The Secretary of Health and Human Services 
     shall not adopt or follow any policy that would have the 
     purpose or effect of delaying reviews of the legality of 
     direct-to-consumer drug advertisements except--
       (1) as a result of notice-and-comment rulemaking; or
       (2) as the Secretary determines to be necessary to protect 
     public health and safety.


[[Page S8341]]


  Mr. BAUCUS. Mr. President, I ask unanimous consent that the amendment 
be temporarily laid aside.
  The PRESIDING OFFICER. Without objection, it is so ordered.


                           Amendment No. 986

  Mr. BAUCUS. Mr. President, I send to the desk an amendment on behalf 
of Senator Lautenberg with respect to moving the effective date of this 
legislation 1 year forward.
  The PRESIDING OFFICER. The clerk will report.
  The assistant legislative clerk read as follows:

       The Senator from Montana [Mr. Baucus], for Mr. Lautenberg, 
     for himself, Mr. Reed, Mrs. Clinton, and Mr. Corzine, 
     proposes an amendment numbered 986.

  Mr. BAUCUS. Mr. 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 as follows:

  (Purpose: To make prescription drug coverage available beginning on 
                             July 1, 2004)

       At the end of title I, insert the following:

     SEC.  _. IMPLEMENTATION OF TITLE.

       Notwithstanding any other provision of this Act, the 
     amendments made by this title shall be implemented and 
     administered so that prescription drug coverage is first 
     provided under D of title XVIII beginning on July 1, 2004.

  Mr. BAUCUS. Mr. President, those are two amendments which Senators 
have offered. That means, as a practical consequence, that they are 
more likely to be considered than amendments that have not been 
offered. These are amendments that I will now call CBO and get scores 
on. It is difficult to get scores from CBO on amendments if they are 
not pending. If Senators have not told me they are going to offer 
amendments, I cannot put them on the list. This is a roundabout way of 
saying to Senators who wish to offer amendments, it behooves them to do 
it now and get them into the queue. Then I can call CBO and tell them 
we need a score on this or that amendment. CBO cannot score all 
amendments that will be potentially filed, because it has limited 
resources. It can only do it as they become real. I urge Senators to 
come forward with amendments so we can deal with them.
  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. SANTORUM. Mr. President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The PRESIDING OFFICER (Mr. Burns). Without objection, it is so 
ordered.


                           Amendment No. 981

  Mr. SANTORUM. Mr. President, I rise in opposition to the Pryor 
amendment which I understand was debated just a few minutes ago. I do 
so in strongest terms. We had a debate last week on the issue of 
reimportation of drugs from Canada. The Senate spoke and said that if 
the Secretary of Health and Human Services would declare that such 
reimportation was safe, we could then bring these drugs across the 
border at a reimported price.
  Many on this side of the aisle, and I am sure a few on the other side 
of the aisle, voted for that amendment, as amended, by Senator Cochran 
for that safety measure basically concluding that the Health and Human 
Services Secretary would never determine that these drugs would be 
considered safe, since the Canadian Government itself said they could 
not guarantee they were safe. We have all sorts of problems today with 
counterfeit drugs, drugs getting shipped in from other countries, 
leading to a variety of health problems. There was a great amount of 
comfort.
  The Pryor amendment goes one step further, according to my 
understanding, saying if the Secretary does not say the drugs are safe 
within a period of time--I believe it is 2 years--then prices of drugs 
in this country will be set by the Canadian Government, which I find a 
startling concession of authority of this Government to a foreign 
country; that we are going to have a foreign country and a board in a 
foreign country set prices for drugs in the United States of America.
  It is a remarkable concession for the Senate. I know we have a great 
desire to control many things in the United States. We would like to 
set prices, I am sure, on lots of different items. We do it in the 
Agriculture bill all the time. Now we are going one step further. If 
you cannot win price controls by having the Senate pass a price control 
bill, delegate the Canadian Government to control the prices for you.
  Maybe we should choose different countries. Why Canada? Maybe there 
are other countries that set even lower prices than Canada. I suspect 
there are countries that would set lower prices than Canada. Why not 
choose them if we really want to save consumers money?
  If this amendment is adopted, I would probably offer amendments that 
we should have chicken prices set by the Canadian Government, wheat 
prices set by the Canadian Government, and lumber and timber prices set 
by the Canadian Government. Maybe it would just be good to have the 
Canadian Government set all our prices in this country for those items 
we think are important. Obviously, they are very thoughtful in Canada, 
and they know what is best for us here, and we should just go ahead and 
let them set our prices for us.
  We are not talking about the Canadian marketplace setting prices. We 
are talking about the Canadian Government. Let me explain how the 
Canadian Government operates. The Canadian Government operates as 
follows: You want to sell your drug in Canada? Fine, you have to get it 
approved, get it on the formulary.
  By the way, you have no other place to sell drugs other than drugs 
approved by the Canadian Government. Remember, they have a Government-
run health care system up there. My understanding is that the Canadian 
Government actually sets their own drug prices. I do not think they go 
to another country to get drug prices set and use those. I think they 
set their own.

  Assuming they are setting their own drug prices, what they do is say 
to the drug company, take Pfizer: OK, you want to sell your drug here? 
Great. We will pay you $1 a pill.
  Pfizer says: This costs us $1 billion to research. It is a great 
drug. It solves all sorts of problems. We sell it in America for $10 
because of the enormous cost of the research and testing to make sure 
it is safe and efficacious, and it cost us a lot of money, and we only 
have a short patent by which to recoup the investment dollars. We have 
a lot of drugs we tested along the way to find a cure for this problem, 
and we have to recoup those costs; otherwise, we cannot stay in 
business, we cannot continue to research. The Canadian Government says: 
That is nice; a dollar.
  Pfizer says: No, we can't sell it for a dollar.
  The Canadian Government says: Fine, you can't sell your drug here.
  So Pfizer loses out on a market of 16 million people--I do not know 
how many people are in Canada--16 million people, something like that.
  Pfizer says: No, we won't sell.
  Or what they say is: You know what. It only costs us 50 cents to make 
this pill. Yes, we are not going to make any money on it, but this is a 
drug that is an important drug so we will make it available in Canada 
for a dollar.
  The other alternative is they just say, no, we are not going to sell 
it in Canada. Under Canadian law, the Canadian Government has the right 
to steal Pfizer's patent, issue that patent, that formulary or formula, 
whatever the drug is, to a generic drug manufacturer in Canada for them 
to produce at the dollar price that Canada is willing to pay for it. So 
they can steal a patent that a company in this country spent millions 
of dollars, potentially a billion dollars, to come up with and set a 
price in Canada at the level they so choose.
  The Senator from Arkansas wants to condone that behavior and say we 
have to charge the same price in this country.
  I cannot imagine anything that would be more damaging to an industry 
that does more than any industry in America to solve our health 
problems. They spend more on research and development than any group of 
companies that exist, and they bring through drug after drug and 
therapy after therapy to extend lives, to increase the quality of life, 
and to cure diseases.
  So the reward in the Senate is that we are going to have a foreign 
government set prices for an industry that

[[Page S8342]]

does not exist in Canada but it does exist in the United States. The 
majority of the new drugs in the world are researched and developed in 
the United States.
  Yes, we do pay more for drugs in this country. I will concede that to 
the Senator from Arkansas. We pay more for drugs here, and the reason 
we pay more for drugs here is that we do not regulate prices, as most 
other countries around the world do.
  I think the Senator from Arkansas is on to something. We need to do 
something about those prices around the world, but it is not to adopt 
them in this country; it is to get the trade administrator to start 
putting these issues on the table when it comes to negotiating free 
trade deals. They have to put on the table the pirating of our patents, 
with our free trade partners such as Canada and Mexico. They have to 
put on the table the prices they pay for drugs that are researched in 
this country that our people in this country subsidize. Yes, we do.
  In fact, we subsidize the world's research in pharmaceuticals, 
admitted.
  So the Senator from Arkansas says we are going to stop doing that. We 
are going to do what Canada does, which is not subsidize one nickel of 
the cost of researching these new drugs--what Germany does, what 
England does, what most of the developed world does. Yes, they 
piggyback on America, and so the Senator from Arkansas is saying let's 
just piggyback on Canada.
  Well, what are the consequences? I do not think it takes an expert in 
pharmaceuticals to figure out exactly what happens. We will squeeze the 
research dollars out of the drugmaking industry because we will be 
reimbursing them based on their cost of manufacturing. So the dollars 
for research to attract investment dollars to spend on research and 
development for that next generation of drugs will be gone.
  Maybe that is a good idea. Maybe it is more important to have people 
get their drugs inexpensively today than to find that cure for cancer, 
diabetes, or Parkinson's, or develop a new drug to ease symptoms of 
HIV. Maybe it is more important for someone to have their drugs a 
little cheaper today. But there are millions of Americans, and there 
are even more millions of people around the world, waiting for that 
little pill that is yet to be discovered that will extend their life so 
they can see their daughter or grandchild being born, waiting for 
someone to cure that disease they are saddled with today, to give them 
just a few more months or a few more years, and we will say to them, 
anyone who votes for this amendment, when that person walks in their 
office and says, I am here for NIH research dollars for diabetes, or, I 
am here for NIH research dollars for AIDS, Parkinson's, cancer, or 
heart disease, I want that Senator to say to them, I voted for this 
amendment and, yes, we are going to have lots of research dollars, but 
no one is going to take that research and do much with it because we 
have just squeezed every dollar we can for research and development out 
of the pharmaceutical industry, which would take that research and do 
something with it to put it to commercial practice and make that drug 
available.

  We will say to them that even though we are passing a prescription 
drug benefit that is going to extend pharmaceutical benefits to make 
drugs less expensive, that was not good enough. No, it was not good 
enough to cover people's drug benefits. We have to take a bite out of 
the hide of those nasty pharmaceutical companies that get beaten up 
with frequency, I understand. They get beaten up a lot, until they are 
needed, until they extend your wife's life or they save your child's 
life; then the rhetoric tones down quite a bit.
  We are shooting with real bullets. This is a Medicare pharmaceutical 
package that will pass and turn into law, and anybody who thinks this 
is a free vote, that we can go back home and campaign and say, gee, I 
am going to get you cheap drugs, understand what this vote means. When 
that 7-year-old diabetic walks in your office, understand what you have 
done. It is as real as denying them the cure that is sure to come.
  I know this is not a popular issue, to stand up for pharmaceutical 
companies. Maybe we should do to them what we have done to a lot of 
industries that have been successful in America: Beat them up, tax 
them, take their profits away, until they become dependent upon us, and 
then we will give them loan guarantees and bail them out. Then it will 
be a really popular thing because they will be losing money and we will 
have to help them. I think that is a very bad approach.
  The right approach is to provide coverage for those who are in need 
of insurance to help them with their prescription drug bills while at 
the same time allowing one of the most vibrant industries we have in 
this country to survive and thrive. That is the balanced approach. It 
is not attacking the very organizations, the companies, that are 
providing lifesaving drugs for millions of Americans and millions 
around the world.
  Mr. PRYOR. Will the Senator yield for a question?
  Mr. SANTORUM. I am happy to yield for a question.
  Mr. PRYOR. Mr. President, I have a lot of respect for my colleague 
from Pennsylvania, but I would like to ask if he is familiar with this 
statement by Gerald J. Mossinghoff, president of Pharmaceutical 
Manufacturers Association. He says:

       Canada, in a move away from the system that hindered 
     innovation, improved the patent law for medicines in 1988. 
     Two weeks ago, it further strengthened the law by eliminating 
     compulsory licenses for drugs approved after December 20, 
     1991. Drug research in Canada has increased sharply since 
     1988.

  This is his testimony to Congress dated February 22, 1993.
  What I ask the Senator is, in view of this statement, is he still 
maintaining that Canada can steal drug companies' patents?
  Mr. SANTORUM. Yes, I do. I say that because there has been a lot of 
work that has been done since then. According to many legal scholars I 
have talked with, they still believe Canada has that ability to 
continue to steal licenses and give those patents away to drug 
companies in Canada. I will be happy to provide that documentation, but 
I do not have it with me. I had it last week, but the issue did not 
come up. I will be happy to share that.
  Mr. PRYOR. If the Senator will yield for another question, Canada 
does take the position, as any nation would, that under its national 
sovereignty, it can in extreme situations take over a patent. I am sure 
the United States has the same provision in its law. I have not looked 
at the law books recently, but I know after September 11 and the 
anthrax scare, Canada did make the statement that it reserved the right 
to produce its own vaccines using existing patents.
  I am guessing without knowing all the details of your statement, the 
policy and their intentions--by the way they did not do this--I am 
guessing they would have paid the pharmaceutical industry something 
based on manufacturing its patent, but they were doing it in their own 
national interest to protect their citizens.
  So my question is, you pretty much imply that they routinely have the 
ability to steal patents; they routinely threaten that, but as best we 
know there has only been one example, extreme example after September 
11, where they talk about the possibility of doing this.
  Mr. SANTORUM. What I said in several speeches is as follows: Where 
there is competition, there are like classes of drugs. They use the 
exclusion, they use a formulary to exclude or drive down prices. If you 
have 10 arthritis drugs, they pick two or three, which is what a 
formulary is all about, and they will pick those based on the cheapest 
price available and patent medicines. And they will exclude others so 
they do not have access to the market.
  I have never said in those cases the Canadian Government would use 
their authority to steal a patent. In fact, I have been very clear. I 
have said in the cases they would use it is where this is a unique 
drug. And if this is a unique drug, a breakthrough drug, or something 
that has no other competition, if you do not go along--we used the 
example of, I think, Cipro they were using as an example that is 
relevant to the case I made in the past--where there is a drug that 
does not have competition, that is, in fact, what they do. Leverage. In 
the other cases where there is competition, they have other leverage 
and they will not use the licensing of a patent or the stealing of a 
patent as a recourse.
  There are two different competitive or anticompetitive maneuvers by 
the

[[Page S8343]]

Government of Canada: One having to do with drugs of which there are a 
variety in that class and a separate, the patent issue having to do 
where there is a drug with no real competitor.
  This is the case I have made repeatedly, not just last week but in 
years past. If I was not clear on that today, I may not have been in my 
explanation. I apologize but that is what I have said.
  Mr. PRYOR. Mr. President, I ask one additional question. A few 
moments ago--I know the Senator was being facetious--you talked about 
the nasty pharmaceutical companies and how easy it is for some to come 
in and impugn them and pick on them and try to punish them in some way. 
I don't know if you heard my comments earlier in the day, but I talked 
about how proud I was of a lot of what the pharmaceutical industry does 
in this country and around the world. In fact, I compared the advances 
in medicine to the advances in aeronautics in the last 100 years. The 
advances in medicine have been more remarkable than those of 
aeronautics. It is critical to have a robust industry on the cutting 
edge but at the same time two of the reasons the pharmaceuticals like 
to do their research in this country is because of the large amounts of 
money we fund to NIH. They do very valuable research that the 
pharmaceutical companies operating here can take advantage of, and we 
give them a very hefty research and development tax credit. I am for 
that credit. I am a cosponsor to continue that credit. I think it is 
critical for the industry.

  I hope the Senator was not implying that I am a big critic of 
pharmaceutical companies. Bear in mind, I don't think they always have 
clean hands. I have seen in my work as attorney general and reading the 
newspapers some business practices I wish they would change. We dealt 
with those at the State level when I was attorney general. The Senate 
is starting to deal with some of those.
  Mr. SANTORUM. I was not in any way suggesting you, individually, with 
respect to pharmaceutical companies. I was suggesting the amendment is 
very damaging to that research.
  The Senator mentioned we subsidized through NIH research, as we do a 
variety of other fields, not just pharmaceuticals, as well as providing 
research and development tax credit, which, of course, we do not just 
for pharmaceuticals but for a variety of different industries. What we 
also do is have the FDA process which is the most expensive and 
cumbersome existing in the world. It takes months, and in most cases 
years, longer to get a drug to market, and that cap starts from the 
time you file, not from the time of FDA approval. The fact we had a 
year or 2 or 3 or more, when drugs are available in other countries and 
not available here, it makes the time to recoup the investment shorter. 
That is one of the reasons our prices are high, because of the shorter 
time drug companies have as an opportunity to recoup their investment. 
They have a longer period of time in places such as Canada, which does 
not require the testing we do and the trials we do.
  The other reason is we also have a very expensive litigation system 
in this country. Pharmaceutical companies, not surprisingly, because 
they deal in the area of health care, are in court a lot for adverse 
reactions to their pharmaceutical products. Other countries do not have 
nearly the lucrative civil justice system, medical liability system, 
that we have in this country. Therefore, the costs associated with 
selling pharmaceuticals in this country because of our litigation 
system are disproportionately higher than they are in places such as 
Germany, Canada, and others that do not have the same kind of rewards 
we see in this country for harm done to people that ingest the drugs.
  It is not just what we do to subsidize. Canada would say they 
probably provide a percentage of money in there to help research, and I 
am sure the other countries would say they do the same; that they 
contribute a share toward research, too.
  As much as we subsidize, we probably cost them when it comes to the 
existing structure of the FDA and the legal system in this country. I 
argue that, yes, we may help, but we probably give with one hand and 
take with the other.

  The bottom line is, this amendment delegates to the country of Canada 
the authority to set drug prices in this country. I don't know whether 
the Senator from Arkansas has considered whether drugs that are not set 
by formulary in Canada, whether those prices would not be set in this 
country, or only those on the formulary are set. In the end, if this 
would pass, you would have a lot of drug companies probably not selling 
drugs in Canada because by doing that, they give up this market.
  My guess is the folks who are probably against this more than any 
other U.S. Senator, including myself, are probably the people in Canada 
who, if this were to pass, we probably would not find one 
pharmaceutical company willing to sell the drug in Canada if they would 
lose their market here. That may not be your intention, but I suspect 
that would be the consequence because it is a pretty small market up 
there compared to here. It is not profitable up there compared to here. 
My guess is you would have the undesirable effect of affecting the 
health care of millions of Canadians when it comes to the ability to 
get new drugs; or conversely you would be requiring the Canadian 
Government, and maybe this would be good, to raise the reimbursements 
for their drugs. That may be the desirable impact. That is not 
something I would be willing to take a chance with, as to whether the 
Canadian Government would respond in a favorable fashion, at least to 
my understanding, to this amendment by actually increasing drug prices 
over there so they could keep some level of new pharmaceuticals within 
their country.

  I understand we are not going to be voting on this immediately, this 
is going to be voted on tomorrow at some point. But I did want to come 
to the floor and just urge my colleagues, even if you are for 
reimportation, this is a fundamentally different thing. This is just 
completely changing the drug pricing structure of the United States of 
America and delegating it to a foreign entity. I strongly suggest if 
you want to do that, if you want to set drug prices, let's have an 
amendment to set drug prices. My goodness, let's not delegate it to the 
people of Canada to set our drug prices. Even if you are for 
reimportation, even if you are for cheaper drug prices, don't let the 
Canadian Government do it. Get the glory of setting it ourselves, if we 
want to do something.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Iowa.


                           Amendment No. 933

  Mr. GRASSLEY. Mr. President, I ask for the regular order with respect 
to the Bingaman amendment, No. 933.
  The PRESIDING OFFICER. The regular order is amendment No. 933.
  Mr. GRASSLEY. Mr. President, I move to table the amendment, and ask 
for the yeas and nays, to have the vote occur at 5:30 and that the time 
between now and 5:30 be evenly divided.
  The PRESIDING OFFICER. Is there objection? Without objection, it is 
so ordered.
  Mr. GRASSLEY. I ask for the yeas and nays.
  The PRESIDING OFFICER. Is there a sufficient second? There is a 
sufficient second.
  The yeas and nays were ordered.
  Mr. KENNEDY. Mr. President, could I ask, now do we have 3 minutes or 
so on each side?
  Mr. BAUCUS. Yes, we do.
  Mr. KENNEDY. Could I have one of the 3 minutes?
  Mr. BAUCUS. Absolutely. How many minutes does the Senator want?
  Mr. KENNEDY. Can I have a minute and a half? I see others who want to 
address this issue.
  Mr. BAUCUS. I yield the Senator 2 minutes.
  The PRESIDING OFFICER. The Senator is recognized for 2 minutes.
  Mr. KENNEDY. Mr. President, I hope this amendment will not be tabled. 
First, I commend the chairman of the committee and the ranking minority 
member of the committee. They have made a major step forward in 
reducing what we call the asset test.
  Under the assets test, any senior who managed to scrape together more 
than $4,000 in a savings account wouldn't qualify for the most generous 
benefit. Those elderly persons with a minimum amount of possessions, 
even if they are just above the very minimum wouldn't qualify. We are 
even talking about limits to the amounts that can be set

[[Page S8344]]

aside for a burial plot or the value of personal items like jewelry or 
a car.
  This bill we have before us has reduced the asset test in a very 
significant and dramatic way for seniors who have income above 135 
percent of poverty. But it still remains for those who are poorest of 
the poor. The Bingaman amendment costs only about $3 billion, but would 
substantially benefit the neediest of our seniors.
  In addition, the paperwork for the assets test is demeaning and an 
additional burden on senior citizens. I looked over the form in 
Georgia, for example, and it is about 10 pages long. In another State 
it is 16 pages long. We are talking about a test which will effectively 
reduce the availability of absolutely needed prescription drugs for the 
seniors who are the poorest of the poor.
  The bill before us has made very substantial progress in helping our 
neediest seniors. The Bingaman amendment would just finalize it and 
effectively say we are not going to use an asset test as a condition to 
be able to participate in the prescription drug program.
  I do not see my friend and colleague, the Senator from New Mexico, 
here on the floor. But I want the Senator to know that it is a 
thoughtful amendment and it will assure that low income seniors have 
access to the special assistance they need without pauperizing 
themselves or undergoing this demeaning procedure. A senior with income 
below the poverty line and who didn't pass the assets test under the 
current bill would pay 10 percent of the cost of the drugs, whereas 
under the Bingaman amendment she will have to pay only 5 percent. That 
doesn't sound like a lot of money around here but it is a lot of money 
for some of the most needy senior citizens.
  I commend the committee for what they have done. I hope we will 
continue to make progress in this area and not table the Bingaman 
amendment.
  Mr. GRASSLEY. Before I yield 3 minutes to the Senator from 
Pennsylvania, I ask unanimous consent Senator Murray's amendment be the 
first in order after the vote, and that any other amendment in order be 
laid aside.
  The PRESIDING OFFICER. Is there objection? Without objection, it is 
so ordered.
  Mr. GRASSLEY. I yield 3 minutes to the Senator from Pennsylvania.
  The PRESIDING OFFICER. The Senator from Pennsylvania.
  Mr. SANTORUM. Mr. President, I understand the point which the Senator 
from New Mexico is trying to accomplish. We do this in Pennsylvania. We 
do not have an asset test for our PACE Program. If you asked anybody up 
there now, Pennsylvanians dealing with this PACE Program, with the 
budget shortfall, one thing they would like to have put back in the box 
is this asset test.
  You could have, conceivably, somebody who has a $1 million house and 
has all their investments in a house or has other assets that are not 
income producing and they could qualify for a very rich drug benefit 
under this amendment. It really does encourage people to put their 
money into nonproducing assets to qualify, particularly those who are 
sick, to qualify for a drug benefit. I just think these asset tests are 
a way of recognizing that income is not the only measure of what you 
can afford to pay when it comes to drugs. We have to look at what 
people own and the assets they have.

  You can have someone who has very high asset value and very low 
income. We run into that all the time. That is the reason we have a 
variety of different taxes, to make sure we get at different ways in 
which people accumulate wealth and hold assets or live off income.
  So I just say while this is well intentioned, it opens up a Pandora's 
box to have people who have, frankly, lots of resources--potentially 
lots of resources to be able to provide for themselves and also would 
lead, I would argue, to unwise public policy to encourage people toward 
planning when they retire to put their assets in nonperforming or 
nonincome-producing assets at a time when they probably should do 
otherwise.
  While it is well intentioned, it could lead to a variety of problems. 
It is also a very expensive amendment and opens it up to millions more 
people, and this is already a bill that many believe is very generous 
to people who have a substantial amount of money. We should not be 
expanding this program in the subsidies to people who have a lot of 
assets that may not be income producing.
  I reserve the remainder of my time.
  Mr. KENNEDY. Mr. President, if there is no one else on our side I 
would like to speak for another minute, if I could. Do we have the 
time?
  The PRESIDING OFFICER. The Senator from Montana.
  Mr. BAUCUS. Mr. President, the author of the amendment is not here. I 
think he was caught a bit off guard when it was announced the vote 
would be on his amendment at 5:30. I understand he is on his way over 
here. I think it is only fair he be allowed to speak for a couple or 3 
minutes at least on his amendment.
  I ask consent the vote on the Bingaman amendment not be at 5:30 but 
at 5:40, and the remaining 10 minutes be equally divided.
  The PRESIDING OFFICER. Is there objection?
  Mr. HARKIN. Reserving the right to object, might I inquire of the 
Chair what is the procedure after the vote?
  The PRESIDING OFFICER. Under a previous order, the first amendment 
will be that of the Senator from Washington, Senator Murray.
  Mr. KENNEDY. Mr. President, could I ask the floor manager, if Senator 
Bingaman is not here, could I have the remaining minute?
  Mr. BAUCUS. I yield to the Senator from Massachusetts, but inform 
Senators when the time has expired I am going to suggest the absence of 
a quorum.
  Mr. KENNEDY. Mr. President, we are not talking about individuals who 
have $1 million homesteads. We are talking about seniors who have 
$10,000 in income. We are talking about poorest of the poor of our 
senior citizens. This idea people are going to be able to circumvent it 
because they have $1 million and $10,000 in income is ridiculous on its 
face. Perhaps that individual is saving $5,000 in order to fix the roof 
in 2 or 3 years. They will not be eligible to be able to qualify under 
the program here.

  This is really the poorest of the poor, and we are talking about 
incomes of $10,000 or less. That is what this amendment is about. At 
least I hope it would not be tabled. And if there is some kind of 
condition in terms of the value of their home, as the Senator from 
Pennsylvania has outlined, we can work that out. But we are talking 
about the poorest of the poor. If that is the kind of protection the 
Senator from Pennsylvania is interested in, Senator Bingaman is 
interested in, we are interested in, let's work it out, but let's not 
table the amendment.
  The PRESIDING OFFICER. The Senator from Pennsylvania.
  Mr. SANTORUM. Mr. President, do I have time remaining?
  The PRESIDING OFFICER. The Senator from Pennsylvania.
  Mr. SANTORUM. Mr. President, if the Senator wants to focus on the 
poorest of the poor, he should leave the assets test in place because 
that is exactly what it does. It says that you have low income and low 
assets. So we have, in fact, covered exactly what the Senator from 
Massachusetts is attempting to do.
  What the Bingaman amendment does is leave open the possibility of the 
poorest of the poor not being the most heavily subsidized, that people 
who do have a big house, or other property, or amassed antiquities of 
some sort that may be very valuable--a coin collection, who knows that 
they would be focused in on as much as people who simply have nothing, 
have no place else to turn. So the assets test is very important for 
these scarce resources to be focused on those who need them most.
  If you really do care about focusing on the poorest of the poor, and 
not just opening this up to people who may not need the assistance as 
badly, you would vote against the Bingaman amendment.
  The PRESIDING OFFICER. The Chair advises the time has expired.
  The Senator from Montana.
  Mr. BAUCUS. Mr. President, I ask unanimous consent that Senator 
Bingaman be allowed to speak for 2 minutes.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The Senator from New Mexico is recognized for 2 minutes.

[[Page S8345]]

  Mr. BINGAMAN. Thank you very much, Mr. President. And I thank the 
Senator from Montana.
  First, Mr. President, I understand there is an intent to try to table 
this amendment at this point. Obviously, I would object to that. And I 
believe there are others who want to speak. I would like to try to 
accommodate any real concerns the majority has. So at this point, I ask 
unanimous consent that I be allowed to withdraw the amendment until it 
can be perfected in a way the majority would support.
  The PRESIDING OFFICER. Is there objection?
  Mr. GRASSLEY. I object.
  The PRESIDING OFFICER. Objection is heard.
  The Senator from Nevada.
  Mr. REID. I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The 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.
  Mr. REID. Mr. President, I ask unanimous consent to speak for 30 
seconds.
  The PRESIDING OFFICER. Is there objection?
  Without objection, it is so ordered.
  Mr. REID. Mr. President, I do not know if the motion is going to be 
to table this. I assume so. If it is, it is our recommendation we all 
move to table this, and Senator Bingaman will just offer this again 
tomorrow.
  Mr. BINGAMAN. Mr. President, do I still have any time?
  The PRESIDING OFFICER. The time has expired.
  Mr. BINGAMAN. Mr. President, I ask for 30 seconds to explain my vote.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The Senator from New Mexico.
  Mr. BINGAMAN. Mr. President, I am going to go ahead and vote with the 
manager of the bill to table my own amendment now in order that we can 
bring this back here tomorrow. I will plan to reoffer the amendment, 
and hope that if there are real problems with it, those can be brought 
to my attention before we reoffer the amendment tomorrow. It is a very 
important issue. It is one we need to deal with in a responsible way. I 
urge all colleagues to go ahead and vote to table at this time.
  Mr. GRASSLEY. Mr. President, I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll to ascertain the 
presence of a quorum.
  The legislative clerk proceeded to call the roll.
  Mr. BINGAMAN. Mr. President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.


                      Amendment No. 933 Withdrawn

  Mr. BINGAMAN. Mr. President, I renew my request that I be allowed to 
withdraw the amendment that I have related to the assets test at this 
time and reoffer it tomorrow after I have had a chance to consult with 
more of my colleagues.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The amendment is withdrawn.
  Mr. BINGAMAN. I ask unanimous consent to add Senator Domenici as a 
cosponsor of the amendment.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The majority leader.
  Mr. FRIST. Mr. President, for information of our colleagues, because 
we initially set a vote for 5:30 tonight, for clarification, we will 
not have any votes tonight. We will not be voting because the amendment 
was just withdrawn. That decision was just made in the last 15 minutes. 
I know a lot of people had planned the course of the day to be voting 
tonight. Right now, other amendments have been introduced in the last 
few hours, and suggestions have been made, well, let's go to those 
amendments. In truth, a lot of people are showing up right at 5:30. I 
am uncomfortable having Senators come in and all of a sudden voting on 
those amendments.
  I think the best thing, after talking to the managers, is not to have 
a vote tonight at this juncture but to have people continue to offer 
their amendments. We will continue the debate, and we will begin the 
orderly voting on amendments under the direction of the two managers 
tomorrow.
  The PRESIDING OFFICER. Who yields time? The Senator from Montana.
  Mr. BAUCUS. Mr. President, it is my understanding that under the 
unanimous consent request, it is in order for the Senator from 
Washington, Mrs. Murray, to offer an amendment. Accordingly, I ask 
unanimous consent that all pending amendments be temporarily laid aside 
so she may offer her amendment.
  The PRESIDING OFFICER. Is there objection?
  Mr. HARKIN. Reserving the right to object, I did not hear the 
request.
  Mr. BAUCUS. Mr. President, if I might repeat the request, that all 
pending amendments be temporarily set aside so the Senator from 
Washington may offer her amendment.
  Mr. HARKIN. Mr. President, I have no objection. I ask unanimous 
consent that I be permitted to offer my amendment which will only take 
a few minutes after the Senator from Washington finishes her amendment.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The Senator from Washington.


                           Amendment No. 990

  Mrs. MURRAY. Mr. President, I send an amendment to the desk and ask 
for its immediate consideration.
  The PRESIDING OFFICER. The clerk will report.
  The legislative clerk read as follows:

       The Senator from Washington [Mrs. MURRAY] proposes an 
     amendment numbered 990.

  Mrs. MURRAY. Mr. President, I ask unanimous consent that reading of 
the amendment be dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The amendment is as follows:

   (Purpose: To make improvements in the MedicareAdvantage benchmark 
                            determinations)

       At the end of subtitle A of title II, add the following:

     SEC. __. IMPROVEMENTS IN MEDICAREADVANTAGE BENCHMARK 
                   DETERMINATIONS.

       (a) Revision of National Average Used in Calculation of 
     Blend.--Section 1853(c)(4)(B)(i)(II) (42 U.S.C. 1395w-
     23(c)(4)(B)(i)(II)), as amended by section 203, is amended by 
     inserting ``who are enrolled in a MedicareAdvantage plan'' 
     after ``the average number of medicare beneficiaries''.
       (b) Change in Budget Neutrality.--Section 1853(c) (42 
     U.S.C. 1395w-23(c)), as amended by section 203, is amended--
       (1) in paragraph (1)(A)--
       (A) in clause (ii), by striking the comma at the end and 
     inserting a period; and
       (B) by striking the flush matter following clause (ii); and
       (2) by striking paragraph (5).
       (c) Inclusion of Costs of DOD and VA Military Facility 
     Services to Medicare-eligible Beneficiaries in Calculation of 
     MedicareAdvantage Payment Rates.--
       (1) For purposes of calculating medicare+choice payment 
     rates.--Section 1853(c)(3) (42 U.S.C. 1395w-23(c)(3)), as 
     amended by section 203, is amended--
       (A) in subparagraph (A), by striking ``subparagraph (B)'' 
     and inserting ``subparagraphs (B) and (E)''; and
       (B) by adding at the end the following new subparagraph:
       ``(E) Inclusion of costs of dod and va military facility 
     services to medicare-eligible beneficiaries.--In determining 
     the area-specific Medicare+Choice capitation rate under 
     subparagraph (A) for a year (beginning with 2006), the annual 
     per capita rate of payment for 1997 determined under section 
     1876(a)(1)(C) shall be adjusted to include in the rate the 
     Secretary's estimate, on a per capita basis, of the amount of 
     additional payments that would have been made in the area 
     involved under this title if individuals entitled to benefits 
     under this title had not received services from facilities of 
     the Department of Defense or the Department of Veterans 
     Affairs.''.
       (2) For purposes of calculating local fee-for-service 
     rates.--Section 1853(d)(5) (42 U.S.C. 1395w-23(d)(5)), as 
     amended by section 203, is amended--
       (A) in subparagraph (A), by striking ``subparagraph (B)'' 
     and inserting ``subparagraphs (B) and (C)''; and
       (B) by adding at the end the following new subparagraph:
       ``(C) Inclusion of costs of dod and va military facility 
     services to medicare-eligible beneficiaries.--In determining 
     the local fee-for-service rate under subparagraph (A) for a 
     year (beginning with 2006), the annual per capita rate of 
     payment for 1997 determined under section 1876(a)(1)(C) shall 
     be adjusted to include in the rate the Secretary's estimate, 
     on a per capita basis, of the amount of additional payments 
     that would have been made in the area involved

[[Page S8346]]

     under this title if individuals entitled to benefits under 
     this title had not received services from facilities of the 
     Department of Defense or the Department of Veterans 
     Affairs.''.
       (d) Effective Date.--The amendments made by this section 
     shall apply with respect to plan years beginning on and after 
     January 1, 2006.

  Mrs. MURRAY. Mr. President, Congress is about to update Medicare to 
finally help seniors with prescription drugs, and while I have some 
real concerns about the way this bill would provide drug coverage, I am 
convinced that after 5 years of stalemate, it is time to pass a drug 
benefit now to begin to get seniors the help they need.
  Mr. President, I have been working to improve this bill by providing 
additional funding in the Budget Committee, by supporting various 
amendments, and by offering my own amendment.
  I want to make sure that the drug benefit we create will help as many 
seniors as possible. Before we add a new benefit to Medicare, we have 
to remember that there's a serious problem with Medicare today that 
penalizes seniors based on where they live. The problem is in the 
payment formula that Medicare uses, and it hurts many seniors.
  Today under Medicare, some seniors can get fewer services--and pay 
higher premiums--just based on where they live. Every senior pays the 
same amount into Medicare, but some seniors get much fewer benefits 
based on geography. That's not fair to seniors in my State and in other 
States.
  For the past few years, I've been working to fix that problem. Last 
year, I introduced the MediFair Act to bring all States up to the 
national average in Medicare payments. We are still working to fix this 
disparity in Medicare today. The problem is that this new drug benefit 
would follow that same old, unfair formula. It means that seniors in 
States such as Washington will have few choices and pay higher 
premiums.
  That's why I'm offering my amendment today--to give seniors more 
choices and lower premiums as they get healthcare and prescription 
drugs.
  As we improve Medicare, we shouldn't build on the unfair polices of 
the past. While I am still working to fix the underlying formula that's 
hurting seniors in my State, we can at least avoid perpetuating an 
unfair system in this new benefit. I am proud to report that we have 
made some progress recently to fix the regional disparity that 
penalizes many Medicare patients. I am pleased to have joined with 
Senators Grassley and Baucus in closing the rural versus urban gap in 
reimbursements.
  And, earlier this year, the Budget Committee unanimously adopted the 
Feingold-Murray-Johnson amendment, which modified the Medicare reserve 
fund to allow legislation to promote geographic equity in Medicare 
payments.
  Back in 1997, when we expanded Medicare+Choice, we took some steps to 
make it fairer. Since the Medicare+Choice rate was based on the fee-
for-service rate, it was important to provide some guaranteed level for 
states with low reimbursements. We did two things. First, we set a 
minimum payment--known as a floor--so that no county would fall below a 
certain level. Second, we tweaked the funding formula to provide 
greater equity across the country for everyone on Medicare. That 
approach is known as a ``blend'' because it takes the regional formula 
and blends it with the national average. Those were both good steps. 
There was only one problem: Congress never provided the funding to 
revise the formula. So we put a fix in the law, but we never funded it. 
We have not been able to fund it until now because it has to be budget 
neutral.
  Today, my amendment would finally fund that technical correction and 
give seniors better access to care. Specifically, my amendment fully 
funds the Medicare+Choice blend formula starting in 2006 for 
determining the Medicare Advantage benchmark. If we don't fix this 
problem, we will deny many seniors access to coordinated care.
  PPO's and HMO's will only go into those regions already at the higher 
end of per beneficiary reimbursement. We should--at the very least--try 
to create a level playing field for all regions of the country. It is 
unfair to talk about competition when some regions will receive 
hundreds of dollars more per beneficiary than others.
  During this debate, I have listened to my colleagues talk about the 
benefits of PPO's and HMO's as part of their new Medicare Advantage. 
Senator Frist has spoken several times on the benefit of a coordinated 
care approach for improving disease management and keeping seniors 
healthier longer. While I still have some concerns about how these new 
plans will operate, I want to be sure that seniors in Washington State 
and other States with low Medicare reimbursement can take advantage of 
Medicare Advantage. I also want to point out that is not about 
increasing payments to insurance plans. It's about ensuring that 
seniors in all regions of the country have access to competitive 
Medicare Advantage plans.
  My amendment is similar to language adopted in the House Ways & Means 
Committee mark. However, I do not fully fund the blend in my amendment 
until 2006. The House proposes the change starting in 2004. I also 
point out that my amendment doesn't force plans in any State or region 
to do anything. If they want to base Medicare Advantage on either the 
current fee-for-service rate--or the Medicare +Choice rate--they are 
free to do so. My amendment gives plans a third option that could be 
more fair and could help more seniors.
  Finally--in an effort to truly measure the cost of providing care to 
all seniors--my amendment directs the Department of Health and Human 
Services to determine the costs of care provided to Medicare 
beneficiaries at DoD or VA facilities. Since Medicare assumes the 
reimbursement, these beneficiaries should be counted in the equation.
  Failing to account for the cost of this care has resulted in lower 
fee for service per beneficiary costs. Those lower fee-for-service 
rates means significant inequities in Medicare reimbursement. We should 
correct this existing flaw before we build a new drug benefit around 
it.
  I have been trying to get HHS to take this step since 1997 and 
supported language in BIP A2000 directing HHS to report to Congress on 
recommendations for correcting this inequity. Unfortunately, HHS 
remains unwilling or unable to properly determine the actual cost of 
care in any given region or State.


                            self-injectables

  Mr. President, I want to take just a moment to update my colleagues 
on another amendment that I will be offering soon with Senator Conrad 
and Senator Smith. It relates to a new, exciting group of drugs known 
as self-injected biologics, and it's a chance to give Medicare patients 
access to the benefits these new drugs offer. Senator Conrad offered a 
similar amendment during the Senate Finance Committee mark up and 
received a commitment from the Chair to work with us on this effort. As 
a result of this commitment, Senator Conrad withdrew the amendment. We 
have been working with CBO and Senator Baucus' staff to address any 
concerns.
  Currently, Medicare will only cover biologics if they are 
administered in a physician's office or clinical setting. That means 
patients must travel to the physician's office to receive treatment. 
That's not easy for many patients who have Rheumatoid Arthritis or MS--
two diseases that can severely limit a person's mobility.
  Fortunately, there are versions of these drugs that a patient can 
take in their own home. It's a great innovation that will improve a 
patient's access. Unfortunately, Medicare won't cover biologics that 
are administered in the home. That just doesn't make sense. I have been 
working to correct this inequity for the past two Congresses. The 
Murray-Conrad-Smith amendment would provide two years of coverage, 
under Part B, for those self injected biologics that replace treatments 
currently available only in a physician's office. We allow for two-year 
coverage to bridge the gap to implementation of a Medicare prescription 
drug benefit.
  We have received a CBO score for the two years and believe that we 
can find room in 2004 and 2005 to provide this important coverage for 
MS and RA patients. This legislation is strongly endorsed by the 
Arthritis Foundation and will provide additional coverage to all four 
MS self-injected or self-administered treatments. For MS, only one

[[Page S8347]]

treatment is covered under Medicare, provided in a physician's office.
  I am hopeful that the managers of this legislation will be able to 
accept our amendment and end this discriminatory practice in Medicare.
  Let me close by returning to the amendment currently before the 
Senate. For those Senators concerned about the inequities in the 
current Medicare reimbursement rates, I urge you to support this 
amendment. Fully funding the blend--as a third option in determining 
the Medicare Advantage benchmark--will provide greater equity and 
ensure that all seniors in all regions have access to a competitive, 
managed and coordinated care approach. Let's finally stop an unfair 
system and give seniors the access they deserve. It's the right thing 
to do, and I urge its immediate passage.
  I yield the floor.
  The PRESIDING OFFICER. Who seeks time?
  The Senator from Iowa.
  Mr. GRASSLEY. Mr. President, I ask unanimous consent that we set 
aside the pending amendment so Senator Harkin can offer his amendment.
  The PRESIDING OFFICER. Without objection, it is so ordered.


                           Amendment No. 991

   (Purpose: To establish a demonstration project under the Medicaid 
   program to encourage the provision of community-based services to 
                     individuals with disabilities)

  Mr. HARKIN. Mr. President, I have an amendment at the desk and ask 
for its consideration.
  The PRESIDING OFFICER. The clerk will report.
  The legislative clerk read as follows:

       The Senator from Iowa [Mr. Harkin] proposes an amendment 
     numbered 991.

  Mr. HARKIN. Mr. President, I ask unanimous consent that further 
reading of the amendment be dispensed with.
  The PRESIDING OFFICER (Mr. Chambliss). Without objection, it is so 
ordered.
  (The amendment is printed in the Record under ``Text of 
Amendments.'')
  Mr. HARKIN. Mr. President, I am proposing this amendment, which would 
enact into law the ``Money Follows the Person'' rebalancing 
demonstration project. This project was part of President Bush's 2004 
budget request. It is a critical component of President Bush's new 
freedom initiative.
  This really is about freedom. It is about the freedom of people with 
disabilities to enjoy the same opportunities for employment and 
community living that are available to all Americans.
  A number of years ago after the passage of the Americans with 
Disabilities Act, a number of us began working on what we considered to 
be the next step in trying to provide for a more open environment for 
people with disabilities. And that was to get more people out of 
confined living--nursing homes and institutions--and put them into 
community-based living arrangements.
  The bill we have been working on to do that is called MiCASSA, which 
is the shorthand for the Medicaid Community Attendant Services and 
Support Act. I have been working on the bill for 10 years. In fact, I 
note for the record that the first introduction of this bill took place 
in the House in 1997 and was introduced by none other than the Speaker 
of the House Newt Gingrich. It was first introduced in the Senate in 
1999, and I was the chief sponsor of it at that time.
  My amendment basically would take what the President suggested in his 
budget and make it operable. My amendment would take the President's 
proposal for giving grants to States to transition individuals into 
community-based living under the existing Medicaid program.
  Under the President's proposal, the Centers for Medicaid and Medicare 
would give out to States $350 million per year for 5 years. This money 
would pay 100 percent of the cost for community-based services for the 
first year after individuals with disabilities move out of an 
institution or a nursing home. After that time, the Federal Government 
would pay its regular Medicaid rate.
  This amendment and the President's proposal was for a demonstration 
program for 5 years. So the total cost of this will be $1.75 billion 
over 5 years, and it will end because then the States would go back to 
their normal process and procedure. The idea behind this is to give 
States the upfront money they needed to get people with disabilities 
out of nursing homes and get them into community-based living.
  I believe the President proposed this initiative because he 
recognized that, unfortunately, under current Federal Medicaid policy, 
the deck is stacked in favor of living in an institution. For example, 
right now under Medicaid, States are required to provide nursing home 
care, but they are not required to provide home and community-based 
services.
  Data from 2001 indicates that 70 percent of Medicaid funds are now 
being spent on institutional care and only 30 percent for community-
based care. That is a shameful statistic that needs to change. As the 
administration's documents state, this initiative would ``level the 
playing field.''
  Some might argue this is a Medicare bill and we should not include a 
Medicaid initiative. However, there are other Medicaid provisions in 
this Medicare bill, presumably because they are important to some of 
our colleagues.
  This amendment, I believe, is just as worthy, and I would argue more 
so because it helps fulfill our goals in passing the Americans with 
Disabilities Act 13 years ago. In fact, the 13th anniversary of the 
Americans with Disabilities Act is coming up on this July 26. Thirteen 
years ago we made specific findings about institutionalization and the 
continued segregation of individuals with disabilities.
  I was one of the leading sponsors of the Americans with Disabilities 
Act, and I know firsthand the effects of segregation of people with 
disabilities. I told the story often about my brother Frank. When he 
was a young boy, he became deaf because he had spinal meningitis. He 
became totally deaf. They picked him up, took him away from home, and 
sent him halfway across the State to a segregated school for the deaf. 
The people referred to it as a school for the deaf and dumb. As my 
brother always said, I may be deaf, but I am not dumb. That is what it 
was like in those days. It continues on today, that people with 
disabilities are segregated and sent to live in institutions.

  A couple of years ago, 1999, a very famous case made its way to the 
Supreme Court. It is referred to as the Olmstead case. The Supreme 
Court ruled in 1999 that confinement in an institution is 
discrimination. The Supreme Court stated that when you segregate 
someone, as was being done in Georgia--and this case just happened to 
originate in Georgia. I am not picking on that State, but it happens in 
all other States. This Olmstead case just happened to originate in 
Georgia. When the Supreme Court looked at the case, they said when you 
segregate someone, you are telling them they are ``unworthy to 
participate in community life.'' That is the Supreme Court decision.
  That Supreme Court decision said that States must offer the least 
restrictive environment to people with disabilities. The problem is, 4 
years later after the Supreme Court ruling, there are still countless 
Americans with disabilities institutionalized, needlessly 
institutionalized.
  This amendment is a win-win program. It would not only help offer 
more choices to people with disabilities, it would provide the 
resources to States during a very difficult fiscal time. Studies have 
shown States that rebalance their long-term services system can realize 
substantial savings. The Lewin Group did a study of three States that 
increased their use of home and community-based waivers instead of 
nursing homes in the early nineties. In one year, Colorado saved $42 
million, Oregon saved $49 million, and Washington saved $74.5 million.
  The researchers explained these States were able to get such high 
cost savings by targeting people with disabilities who were very likely 
to go into a nursing home. In our amendment, we are targeting those who 
are already in an institution or nursing home. So States are already 
spending large sums of money on these people.
  Based on data provided by the Congressional Research Service, nursing 
homes cost approximately $57,000 per year per person. Institutions for 
individuals with mental retardation cost $88,000 per person per year. 
Home and community-based waivers are roughly $30,000 to $50,000 cheaper 
per person than these institutional cases.

[[Page S8348]]

  The problem is States cannot afford the upfront costs that are needed 
to move people out of institutions and into community-based living. For 
example, housing may need to be modified to be accessible. That costs 
money. An individual may need some education and services to get ready 
to move out of an institution, especially if they have been there a 
long time, say, 20 years or more. The State may need resources to 
develop sufficient community providers and rebalance its long-term 
service program.
  There are a lot of upfront costs a State would have to do to get 
someone with a disability out of a nursing home, out of a State 
institution, and into a community-based living environment.
  The amendment I am offering implements President Bush's own budget 
request for 2004. It will be an upfront investment to help these States 
do that transition. It is a demonstration program for 5 years to those 
States that need the help.
  I applaud the President for proposing this program as part of his new 
freedom initiative because it really is about freedom: The freedom to 
live with family and friends, not with strangers; the freedom to take a 
walk in one's own neighborhood, not just on their ward; the freedom to 
be a person and not a patient.
  No one should have to sacrifice their freedom to participate in 
society because they need help getting out of the house in the morning 
or assistance with personal care or some other basic service. Think 
about it. That is what happens to people with disabilities. They 
sacrifice their freedom to participate in society because they may need 
a little help in the morning, a little bit of help at night, or a 
little bit of attendant services.
  As taxpayers, we know it is cheaper for us to provide that kind of 
home-based, community-based service rather than putting people in 
institutions. But back when we built the institutions, when we started 
the nursing home care for people with disabilities that is what we 
believed, that people ought to be segregated.
  We have changed as a society, and I think we have changed for the 
better. It is not unusual now to see people with disabilities in all 
walks of life, working on the Senate floor, in our court systems, on 
the shop floor, running businesses, shopping in the store, eating in a 
restaurant, going to an amusement park. I argue what is unusual is that 
in the year 2003, to say we are going to take taxpayer money and we are 
going to institutionalize someone with a disability who does not want 
to be institutionalized, who would rather live in the community, who 
would like to go out for a walk in the daytime, who might want to go 
down to the corner store and purchase some things, who might want to go 
to a movie now and then.
  Recently, I received a letter from someone who had been moved to 
community-based living. She said she went to a movie for the first time 
in 3 years. Think about that. It was the first time in 3 years because 
she had been in an institution and she could not go to the theater. Now 
she can go to the movie theater.
  I hope Senators will think about this. As I said, it is in the 
President's budget. He has requested it. I have offset it. So I can see 
no reason we should not take this step to make sure people with 
disabilities can get back into the community where they belong and 
where they want to be, with their family and friends, and not shut up 
with strangers, with people they may not know, segregated from society.
  I urge my colleagues to act now. Freedom does not need a lot of 
debate and discussion. The freedom for people with disabilities ought 
to be happening right now.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Montana.
  Mr. BAUCUS. Mr. President, I ask unanimous consent that the pending 
amendments be temporarily laid aside so the Senator from Minnesota may 
offer up to three amendments in succession.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The Senator from Minnesota.


                           Amendment No. 957

  Mr. DAYTON. I thank the Senator from Montana, and I will call three 
amendments up at this time. The first is amendment No. 957.
  The PRESIDING OFFICER. The clerk will report.
  The legislative clerk read as follows:

       The Senator from Minnesota [Mr. Dayton] proposes an 
     amendment numbered 957.

  Mr. DAYTON. Mr. President, I ask unanimous consent that the reading 
of the amendment be dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The amendment is as follows:

(Purpose: To provide that prescription drug benefits for any Member of 
Congress who is enrolled in a health benefits plan under chapter 89 of 
 title 5, United States Code, may not exceed the level of prescription 
drug benefits passed in the 1st session of the 108th Congress, and for 
                            other purposes)

       At the appropriate place insert the following:

     SEC. __. LIMITATION ON PRESCRIPTION DRUG BENEFITS OF MEMBERS 
                   OF CONGRESS.

       (a) Limitation on Benefits.--Notwithstanding any other 
     provision of law, during calendar year 2004, the actuarial 
     value of the prescription drug benefit of any Member of 
     Congress enrolled in a health benefits plan under chapter 89 
     of title 5, United States Code, may not exceed the actuarial 
     value of any prescription drug benefit under title XVIII of 
     the Social Security Act passed by the 1st session of the 
     108th Congress and enacted in law.
       (b) Regulations.--The Office of Personnel Management shall 
     promulgate regulations to carry out this section.

  Mr. DAYTON. I ask unanimous consent that amendment be set aside and 
we proceed to the next amendment.
  The PRESIDING OFFICER. Without objection, it is so ordered.


                           Amendment No. 960

  Mr. DAYTON. I call up amendment No. 960.
  The PRESIDING OFFICER. The clerk will report.
  The legislative clerk read as follows:

       The Senator from Minnesota [Mr. Dayton] proposes an 
     amendment numbered 960.

  Mr. DAYTON. Mr. President, I ask unanimous consent that the reading 
of the amendment be dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The amendment is as follows:

    (Purpose: To require a streamlining of the medicare regulations)

       At the end of subtitle A of title V, add the following:

     SEC. __. STREAMLINING AND SIMPLIFICATION OF MEDICARE 
                   REGULATIONS.

       (a) In General.--The Secretary of Health and Human Services 
     shall conduct an analysis of the regulations issued under 
     title XVIII of the Social Security Act and related laws in 
     order to determine how such regulations may be streamlined 
     and simplified to increase the efficiency and effectiveness 
     of the medicare program without harming beneficiaries or 
     providers and to decrease the burdens the medicare payment 
     systems impose on both beneficiaries and providers.
       (b) Reduction in Regulations.--The Secretary, after 
     completion of the analysis under subsection (a), shall direct 
     the rewriting of the regulations described in subsection (a) 
     in such a manner as to--
       (1) reduce the number of words comprising all regulations 
     by at least two-thirds by October 1, 2004, and
       (2) ensure the simple, effective, and efficient operation 
     of the medicare program.
       (c) Application of the Paperwork Reduction Act.--The 
     Secretary shall apply the provisions of chapter 35 of title 
     44, United States Code (commonly known as the ``Paperwork 
     Reduction Act'') to the provisions of this Act to ensure that 
     any regulations issued to implement this Act are written in 
     plain language, are streamlined, promote the maximum 
     efficiency and effectiveness of the medicare and medicaid 
     programs without harming beneficiaries or providers, and 
     minimize the burdens the payment systems affected by this Act 
     impose on both beneficiaries and providers.

  Mr. DAYTON. Mr. President, I ask unanimous consent that the amendment 
be set aside in order to bring up the third amendment.
  The PRESIDING OFFICER. Without objection, it is so ordered.


                           Amendment No. 977

  Mr. DAYTON. Mr. President, I call up amendment No. 977.
  The PRESIDING OFFICER. The clerk will report.
  The legislative clerk read as follows:

       The Senator from Minnesota [Mr. Dayton] proposes an 
     amendment numbered 977.

  Mr. DAYTON. Mr. President, I ask unanimous consent that the reading 
of the amendment be dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The amendment is as follows:

 (Purpose: To require that benefits be made available under part D on 
                            January 1, 2004)

       On page 134, strike line 9 and insert the following:

[[Page S8349]]

     under paragraph (1).
       ``(d) Implementation of Part D.--Notwithstanding section 
     1860D-1(a)(4) or any other provision of this part or part C, 
     the Secretary shall implement, and make benefits available 
     under, this part on January 1, 2004. The Secretary shall 
     carry out this part until the Administrator is appointed and 
     able to carry out this part. The Secretary shall not 
     implement sections 1807 and 1807A.

  Mr. DAYTON. I thank my colleagues for the opportunity to discuss 
these three amendments this evening. They will be voted on later this 
week, and we will be calling them up for that purpose at that time.
  During my campaign for the Senate in 2000, I promised a good 
prescription drug coverage program for senior citizens would be one of 
my very first priorities. In December of 2000, after my election but 
just before I took office, I went up to Duluth, MN, up in the 
northeastern part of our State, and met with a group of senior 
citizens. At the end of the meeting, an elderly woman, who was about 
half my size and twice my age, stood up and said: Mr. Dayton, if you do 
not keep your promises, I am going to take you out behind the woodshed 
for an old-fashioned thrashing.
  It has been then with some trepidation that I have visited Duluth in 
the months that followed, and it is not just Duluth. Everywhere in 
Minnesota our elderly citizens, and actually all of our other Medicare 
beneficiaries who stand to benefit from this legislation, have been 
waiting. They have been waiting patiently and they have been waiting 
impatiently for the Senate, the House, and the White House to reach an 
agreement on a bill, pass it, and then have the President sign it into 
law.
  During the last several years, our seniors have watched the Senate 
pass a bill but not the House; the House act but not the Senate; both 
bodies fail to pass anything; both the House and the Senate pass a bill 
yet be unable to agree on one and nothing passed. Meanwhile, every year 
that Congress and the President did nothing, our senior citizens paid 
the price, and then they paid another price and then another.
  Prescription drug prices have risen higher and higher in this country 
while nothing was being done to help. The financial burdens then fell 
harder on people with limited and fixed incomes. People who worked hard 
all of their lives, saved up a bit, retired, and did not have many 
other earning opportunities, were literally destroyed by the rapid 
escalation of prescription drug medicine, medicines they cannot afford 
not to have, medicines they cannot afford to have.
  People's peace of mind was shattered. Hopes and plans had to be 
abandoned, ones that had been months and years in the making. Even 
modest comforts and simple enjoyments had to be sacrificed to pay this 
ravaging beast of the pharmaceutical industry that wanted more profits 
out of pockets, out of the sweat and blood of senior citizens and other 
Americans.
  The financial security and the protections from destitution and 
despair, which Social Security and Medicare have provided our elderly 
for several decades and which was one of the great accomplishments of 
this society, was being rapidly eradicated by drug companies' greed and 
Congress's and the administration's inaction.
  I thought on the day when we finally acted and passed a prescription 
drug coverage bill for senior citizens and other beneficiaries it would 
be cause for real celebration and satisfaction, and I could go back to 
Duluth. Well, it appears that this Friday may very well be that day 
where we will pass in the Senate prescription drug legislation, but the 
way it looks now I will not be celebrating the passage of the bill that 
is before us right now.
  It is usually true that something is better than nothing, and the 
bill that is before us now is barely enough of something to be better 
than nothing. I will probably vote for it for that reason, but I will 
not be celebrating because there is not enough in this bill to be 
worthy of celebration. For starters, it does not even begin until 
January 1 of the year 2006. It is unbelievable there would be a 2\1/2\ 
year delay from the time this bill is signed into law before it is 
operational.

  To let that stand is a violation of the Constitution which prohibits 
cruel and unusual punishment for American citizens. It is cruel and 
unusual punishment for the senior citizens of Minnesota and their 
counterparts of this country who have waited this long, year after 
year, waiting for this legislation, bills mounting. Finally something 
is passed and they are told they have to wait another 2\1/2\ years for 
the Federal Government and the insurance industry to set up this 
program. Shame on us if we do not move the development of this program 
from the sleepwalking mode into overdrive.
  Proponents of this bill say the approach using subsidized insurance 
plans to provide this coverage is one of the advantages--they have 
postulated in the Senate and committee--because it is more efficient. 
The insurance companies are in the business of designing and selling 
insurance policies. How could they need 2\1/2\ years to develop this? 
If they do, it seems to me that is a very compelling reason to look for 
a different delivery system. Some believe that would be good for other 
reasons, as well.
  My first amendment is named the bureaucracy booster to require 
whatever program we pass and whatever the President signs into law to 
be fully operational by January 1 of 2004, 2 years earlier than the 
President's schedule calls for. It would be 6 months after we pass our 
bill later this week. It took 6 months for our armed services to 
assemble their forces and prepare for the war against Iraq. They were 
ready to go when General Franks gave his order. If this country can get 
ready to win a war in 6 months--and actually the war against the 
Taliban in Afghanistan was assembled in about 6 weeks--it certainly can 
start to save our senior citizens in that same amount of time.
  I am also troubled by the quality of the program which will hopefully 
be available to everyone on Medicare, if my amendment passes, next 
January 1. The coverage in the bill before the Senate is not very good. 
I don't fault the leaders of this bill who took it through the 
committee process. It was a very difficult task, with Members from all 
over the country. They were constrained by the budget this body passed 
earlier this year. You can slice and dice the programs and the delivery 
and the structuring but the bottom line is you will get what you pay 
for. Maybe it is better one way or the other but the bottom line is you 
get what you pay for. The Finance Committee had $400 billion over 10 
years and they did the best they could, but the fact is that is not 
enough to provide the kind of coverage the senior citizens of this 
country have a right to expect. It provides only half the coverage we 
Members of the Senate and our colleagues in the House get through the 
Federal employees plan.
  The bill before the Senate requires a $35 a month premium and a $275 
deductible, so an enrollee pays $695 each year before receiving a 
single dollar of assistance. From that point, for all of his or her 
nonreimbursement prescription drugs above the $275 deductible, up to 
$4,500 in 1 year, the program would pay half. At that point, 
incredibly, the program pays nothing then for drug costs that exceed 
$4,500 for one person in one year, all the way up to $5,800. I 
understand that was done for the purpose of fitting within this budget 
cap. But it seems unfair to have a 50 percent program up to one point, 
then have the program disappear entirely for $1,300 of expenditures, 
but come back after $5,800, for the balance of the year, when the 
program pays 90 percent. The next year it starts all over again. For 
the first $5,800 in annual prescription drug costs out-of-pocket 
payments, nonreimbursed, a senior citizen of Minnesota or America has 
to pay $3,688 plus they have to pay $4,200 in monthly premiums. So the 
total payment for the senior citizen is $4,108 and the program will pay 
$2,012. The senior pays almost twice as much as the program assistance. 
So hundreds and thousands of dollars of expenses will be paid by a very 
limited and fixed-income senior citizen.

  It is not a good deal. It is not what we ought to be providing for 
our seniors. It is not as generous as the alternative bill which our 
colleague, the Senator from Illinois, Senator Durbin, has offered as an 
alternative amendment which I am proud to work on and cosponsor. That 
is the kind of program I would want my mother or father to be on. It is 
as good a program as members of the Senate have. It would have no 
deductible and pay for 70 percent of the costs from the very first $1 
owed up

[[Page S8350]]

until $5,000 and 90 percent above that. That is a much better 
administrative feature.
  What the pharmaceutical industry wants to the death to oppose is the 
Federal Government CMS, the Medicare administrators getting involved in 
negotiating down the prices. They have free and clear now, unlike 
virtually any other country in the world, ability to just raise prices 
for prescription drugs and raise them and raise them. They are making 
huge profits. Most of their worldwide profits are made in the United 
States of America not only with our seniors but all citizens because 
this body and the House and White House will not stand up and do 
something about it. Senator Durbin's amendment would do something. I 
expect the pharmaceutical industry to oppose it to the death.
  I have a second amendment which I call the taste of our own medicine 
amendment which says if the program we pass for Medicare beneficiaries 
is less advantageous than the one we receive under the Federal 
employees health plan, the coverage for all Members of Congress, the 
Senate and the House, will be reduced to the same level as the coverage 
provided for senior citizens and others under Medicare. If it is good 
enough for the seniors of America, it is as good as we should do for 
ourselves.
  My third amendment is what I call my bureaucracy buster. Earlier I 
had bureaucracy booster to get the program operating early. This 
applies to all of Medicare. It would apply, I am told by the CEO of 
Mayo Clinic, to 130,000 pages of rules and regulations that make up the 
governance of Medicare. I was going to bring 130,000 pages over here as 
a graphic illustration, but it is a violation of Senate rules for 
decency and decorum. If anyone ever saw 130,000 pages piled up, they 
would agree. It is bigger than all the Harry Potter books, a lot bigger 
than anyone involved in Medicare had a chance to look at either to 
apply to their hospital or clinic or to enforce, and it is one piece of 
this epidemic of verbiage, duplicative regulation, multiple reporting 
requirements we have placed on doctors, hospitals, administrators, 
special education teachers, school superintendents, small business, 
large business, this plague of ever more and more and more regulations, 
more complicated, more lengthy, more time consuming. We are burying our 
society, burying our economy, burying our delivery systems to other 
people and we have to start turning that around.
  This amendment requires the Secretary of Health and Human Services to 
come back to Congress by October 1 of 2004 with a revision to the 
Medicare regulations and rules that amounts to two-thirds of all the 
words that are now being used for those purposes. It would be a two-
thirds reduction in the amount of regulation and reporting. That means 
we have to squeeze everything down into 45,000 pages. It will just have 
to be done.

  If my colleagues will join me in agreeing to this amendment, once it 
has proven to be a viable idea, it is something I would like to apply 
to other regulatory and reporting mechanisms in the Federal Government 
as well.
  I yield the floor.
  Mr. BAUCUS. Mr. President, I ask unanimous consent the pending 
amendments be temporarily set aside.
  The PRESIDING OFFICER. Is there objection? Without objection, it is 
so ordered.


                           Amendment No. 992

  Mr. BAUCUS. Mr. President, on behalf of Senator Stabenow, I send an 
amendment to the desk regarding State rebate agreements.
  The PRESIDING OFFICER. The clerk will report.
  The assistant legislative clerk read as follows:

       The Senator from Montana [Mr. Baucus], for Ms. Stabenow, 
     for herself and Ms. Snowe, proposes an amendment numbered 
     992.

  Mr. BAUCUS. I ask unanimous consent the reading of the amendment be 
dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The amendment is as follows:

  (Purpose: To clarify that the medicaid statute does not prohibit a 
   State from entering into drug rebate agreements in order to make 
 outpatient prescription drugs accessible and affordable for residents 
  of the State who are not otherwise eligible for medical assistance 
                      under the medicaid program)

       On page 158, between lines 4 and 5, insert the following:
       (f) Clarification of State Authority Relating to Medicaid 
     Drug Rebate Agreements.--Section 1927 (42 U.S.C. 1396r-8) is 
     amended by adding at the end the following:
       ``(l) Rule of Construction.--Nothing in this section shall 
     be construed as prohibiting a State from--
       ``(1) directly entering into rebate agreements (on the 
     State's own initiative or under a section 1115 waiver 
     approved by the Secretary before, on, or after the date of 
     enactment of this subsection) that are similar to a rebate 
     agreement described in subsection (b) with a manufacturer for 
     purposes of ensuring the affordability of outpatient 
     prescription drugs in order to provide access to such drugs 
     by residents of a State who are not otherwise eligible for 
     medical assistance under this title; or
       ``(2) making prior authorization (that satisfies the 
     requirements of subsection (d) and that does not violate any 
     requirements of this title that are designed to ensure access 
     to medically necessary prescribed drugs for individuals 
     enrolled in the State program under this title) a condition 
     of not participating in such a similar rebate agreement.''.


                           Amendment No. 993

  Mr. BAUCUS. Mr. President, I ask unanimous consent all pending 
amendments be temporarily set aside.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. BAUCUS. On behalf of Senator Dorgan, I offer an amendment with 
respect to coverage of cardiovascular screening tests. I send that to 
the desk.
  The PRESIDING OFFICER. The clerk will report the amendment.
  The assistant legislative clerk read as follows:

       The Senator from Montana [Mr. Baucus], for Mr. Dorgan, 
     proposes an amendment numbered 993.

  Mr. BAUCUS. I ask unanimous consent the reading of the amendment be 
dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The amendment is as follows:

 (Purpose: To amend title XVIII of the Social Security Act to provide 
   for coverage of cardiovascular screening tests under the medicare 
                                program)

       At the appropriate place in title IV, insert the following:

     SEC. __. COVERAGE OF CARDIOVASCULAR SCREENING TESTS.

       (a) Coverage.--Section 1861(s)(2) of the Social Security 
     Act (42 U.S.C. 1395x(s)(2)) is amended--
       (1) in subparagraph (U), by striking ``and'' at the end;
       (2) in subparagraph (V)(iii), by inserting ``and'' at the 
     end; and
       (3) by adding at the end the following new subparagraph:
       ``(W) cardiovascular screening tests (as defined in 
     subsection (ww)(1));''.
       (b) Services Described.--Section 1861 of the Social 
     Security Act (42 U.S.C. 1395x) is amended by adding at the 
     end the following new subsection:

                    ``Cardiovascular Screening Tests

       ``(ww)(1) The term `cardiovascular screening tests' means 
     the following diagnostic tests for the early detection of 
     cardiovascular disease:
       ``(A) Tests for the determination of cholesterol levels.
       ``(B) Tests for the determination of lipid levels of the 
     blood.
       ``(C) Such other tests for cardiovascular disease as the 
     Secretary may approve.
       ``(2)(A) Subject to subparagraph (B), the Secretary shall 
     establish standards, in consultation with appropriate 
     organizations, regarding the frequency and type of 
     cardiovascular screening tests.
       ``(B) With respect to the frequency of cardiovascular 
     screening tests approved by the Secretary under subparagraph 
     (A), in no case may the frequency of such tests be more often 
     than once every 2 years.''.
       (c) Frequency.--Section 1862(a)(1) of the Social Security 
     Act (42 U.S.C. 1395y(a)(1)) is amended--
       (1) by striking ``and'' at the end of subparagraph (H);
       (2) by striking the semicolon at the end of subparagraph 
     (I) and inserting ``, and''; and
       (3) by adding at the end the following new subparagraph:
       ``(J) in the case of a cardiovascular screening test (as 
     defined in section 1861(ww)(1)), which is performed more 
     frequently than is covered under section 1861(ww)(2).''.
       (d) Effective Date.--The amendments made by this section 
     shall apply to tests furnished on or after January 1, 2004.

  Mr. BAUCUS. Mr. President, 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. GRASSLEY. Mr. President, I ask unanimous consent the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The Senator from Iowa is recognized.

[[Page S8351]]

                           Amendment No. 974

  Mr. GRASSLEY. I am going to call up my amendment numbered 974, which 
I filed on Friday. I am pleased to offer the Drug Competition Act of 
2003.
  The PRESIDING OFFICER. The clerk will report the amendment.
  The assistant legislative clerk read as follows:

       The Senator from Iowa [Mr. Grassley], for himself, Mr. 
     Leahy, Ms. Cantwell, Mr. Durbin, and Mr. Kohl, proposes an 
     amendment numbered 974.

  The amendment follows:

 (Purpose: To enhance competition for prescription drugs by increasing 
 the ability of the Department of Justice and Federal Trade Commission 
   to enforce existing antitrust laws regarding brand name drugs and 
                             generic drugs)

       At the appropriate place, insert the following:

                 TITLE __--DRUG COMPETITION ACT OF 2003

     SEC. __01. SHORT TITLE.

       This title may be cited as the ``Drug Competition Act of 
     2003''.

     SEC. __02. FINDINGS.

       Congress finds that--
       (1) prescription drug prices are increasing at an alarming 
     rate and are a major worry of many senior citizens and 
     American families;
       (2) there is a potential for companies with patent rights 
     regarding brand name drugs and companies which could 
     manufacture generic versions of such drugs to enter into 
     financial deals that could tend to restrain trade and greatly 
     reduce competition and increase prescription drug 
     expenditures for American citizens; and
       (3) enhancing competition among these companies can 
     significantly reduce prescription drug expenditures for 
     Americans.

     SEC. __03. PURPOSES.

       The purposes of this title are--
       (1) to provide timely notice to the Department of Justice 
     and the Federal Trade Commission regarding agreements between 
     companies with patent rights regarding brand name drugs and 
     companies which could manufacture generic versions of such 
     drugs; and
       (2) by providing timely notice, to enhance the 
     effectiveness and efficiency of the enforcement of the 
     antitrust and competition laws of the United States.

     SEC. __04. DEFINITIONS.

       In this title:
       (1) ANDA.--The term ``ANDA'' means an Abbreviated New Drug 
     Application, as defined under section 201(aa) of the Federal 
     Food, Drug, and Cosmetic Act (21 U.S.C. 321(aa)).
       (2) Assistant attorney general.--The term ``Assistant 
     Attorney General'' means the Assistant Attorney General in 
     charge of the Antitrust Division of the Department of 
     Justice.
       (3) Brand name drug.--The term ``brand name drug'' means a 
     drug approved under section 505(c) of the Federal Food, Drug, 
     and Cosmetic Act (21 U.S.C. 355(c)).
       (4) Brand name drug company.--The term ``brand name drug 
     company'' means the party that received Food and Drug 
     Administration approval to market a brand name drug pursuant 
     to an NDA, where that drug is the subject of an ANDA, or a 
     party owning or controlling enforcement of any patent listed 
     in the Approved Drug Products With Therapeutic Equivalence 
     Evaluations of the Food and Drug Administration for that 
     drug, under section 505(b) of the Federal Food, Drug, and 
     Cosmetic Act (21 U.S.C. 355(b)).
       (5) Commission.--The term ``Commission'' means the Federal 
     Trade Commission.
       (6) Generic drug.--The term ``generic drug'' means a 
     product that the Food and Drug Administration has approved 
     under section 505(j) of the Federal Food, Drug, and Cosmetic 
     Act (21 U.S.C. 355(j)).
       (7) Generic drug applicant.--The term ``generic drug 
     applicant'' means a person who has filed or received approval 
     for an ANDA under section 505(j) of the Federal Food, Drug, 
     and Cosmetic Act (21 U.S.C. 355(j)).
       (8) NDA.--The term ``NDA'' means a New Drug Application, as 
     defined under section 505(b) et seq. of the Federal Food, 
     Drug, and Cosmetic Act (21 U.S.C. 355(b) et seq.)

     SEC. __05. NOTIFICATION OF AGREEMENTS.

       (a) In General.--
       (1) Requirement.--A generic drug applicant that has 
     submitted an ANDA containing a certification under section 
     505(j)(2)(vii)(IV) of the Federal Food, Drug, and Cosmetic 
     Act (21 U.S.C. 355(j)(2)(vii)(IV)) and a brand name drug 
     company that enter into an agreement described in paragraph 
     (2), prior to the generic drug that is the subject of the 
     application entering the market, shall each file the 
     agreement as required by subsection (b).
       (2) Definition.--An agreement described in this paragraph 
     is an agreement regarding--
       (A) the manufacture, marketing or sale of the brand name 
     drug that is the subject of the generic drug applicant's 
     ANDA;
       (B) the manufacture, marketing or sale of the generic drug 
     that is the subject of the generic drug applicant's ANDA; or
       (C) the 180-day period referred to in section 
     505(j)(5)(B)(iv) of the Federal Food, Drug, and Cosmetic Act 
     (21 U.S.C. 355(j)(5)(B)(iv)) as it applies to such ANDA or to 
     any other ANDA based on the same brand name drug.
       (b) Filing.--
       (1) Agreement.--The generic drug applicant and the brand 
     name drug company entering into an agreement described in 
     subsection (a)(2) shall file with the Assistant Attorney 
     General and the Commission the text of any such agreement, 
     except that the generic drug applicant and the brand-name 
     drug company shall not be required to file an agreement that 
     solely concerns--
       (A) purchase orders for raw material supplies;
       (B) equipment and facility contracts;
       (C) employment or consulting contracts; or
       (D) packaging and labeling contracts.
       (2) Other agreements.--The generic drug applicant and the 
     brand name drug company entering into an agreement described 
     in subsection (a)(2) shall file with the Assistant Attorney 
     General and the Commission the text of any other agreements 
     not described in subsection (a)(2) between the generic drug 
     applicant and the brand name drug company which are 
     contingent upon, provide a contingent condition for, or are 
     otherwise related to an agreement which must be filed under 
     this title.
       (3) Description.--In the event that any agreement required 
     to be filed by paragraph (1) or (2) has not been reduced to 
     text, both the generic drug applicant and the brand name drug 
     company shall file written descriptions of the non-textual 
     agreement or agreements that must be filed sufficient to 
     reveal all of the terms of the agreement or agreements.

     SEC. __06. FILING DEADLINES.

       Any filing required under section 5 shall be filed with the 
     Assistant Attorney General and the Commission not later than 
     10 business days after the date the agreements are executed.

     SEC. __07. DISCLOSURE EXEMPTION.

       Any information or documentary material filed with the 
     Assistant Attorney General or the Commission pursuant to this 
     title shall be exempt from disclosure under section 552 of 
     title 5, and no such information or documentary material may 
     be made public, except as may be relevant to any 
     administrative or judicial action or proceeding. Nothing in 
     this section is intended to prevent disclosure to either body 
     of Congress or to any duly authorized committee or 
     subcommittee of the Congress.

     SEC. __08. ENFORCEMENT.

       (a) Civil Penalty.--Any brand name drug company or generic 
     drug applicant which fails to comply with any provision of 
     this title shall be liable for a civil penalty of not more 
     than $11,000, for each day during which such entity is in 
     violation of this title. Such penalty may be recovered in a 
     civil action brought by the United States, or brought by the 
     Commission in accordance with the procedures established in 
     section 16(a)(1) of the Federal Trade Commission Act (15 
     U.S.C. 56(a)).
       (b) Compliance and Equitable Relief.--If any brand name 
     drug company or generic drug applicant fails to comply with 
     any provision of this title, the United States district court 
     may order compliance, and may grant such other equitable 
     relief as the court in its discretion determines necessary or 
     appropriate, upon application of the Assistant Attorney 
     General or the Commission.

     SEC. __09. RULEMAKING.

       The Commission, with the concurrence of the Assistant 
     Attorney General and by rule in accordance with section 553 
     of title 5 United States Code, consistent with the purposes 
     of this title--
       (1) may define the terms used in this title;
       (2) may exempt classes of persons or agreements from the 
     requirements of this title; and
       (3) may prescribe such other rules as may be necessary and 
     appropriate to carry out the purposes of this title.

     SEC. __10. SAVINGS CLAUSE.

       Any action taken by the Assistant Attorney General or the 
     Commission, or any failure of the Assistant Attorney General 
     or the Commission to take action, under this title shall not 
     bar any proceeding or any action with respect to any 
     agreement between a brand name drug company and a generic 
     drug applicant at any time under any other provision of law, 
     nor shall any filing under this title constitute or create a 
     presumption of any violation of any antitrust or competition 
     laws.

     SEC. __11. EFFECTIVE DATE.

       This title shall--
       (1) take effect 30 days after the date of enactment of this 
     title; and
       (2) shall apply to agreements described in section __05 
     that are entered into 30 days after the date of enactment of 
     this title.

  Mr. GRASSLEY. This is the Drug Competition Act of 2003. I filed it as 
an amendment to S. 1. I do it in a bipartisan way with Senator Leahy 
and many others.
  Our amendment will help Federal regulators ensure that antitrust laws 
are not being violated and that there is full and unfettered access to 
competition for prescription drugs under the law.
  What I want to do is make sure American consumers--and in the case of 
prescription drugs for Medicare, senior citizens--are able to get the 
lifesaving drugs they need and to do it in a competitive manner with 
resulting lower prices.
  Our patent laws provide drug companies with incentives to invest in 
the research and development of new drugs,

[[Page S8352]]

but the law also provides that generic drug companies have the ability 
to get their own drugs on the market so there can be price competition 
and lower prices for prescription drugs. We have a legal system in 
place that provides such a balance; that is, the Hatch-Waxman law. 
Ultimately, we want consumers and seniors to have more choices and to 
get drugs at lower prices.
  So I was concerned when I heard reports that the Federal Trade 
Commission had brought enforcement actions against brand-name and 
generic drug manufacturers that had entered into anticompetitive 
agreements, resulting in the delay of the introduction of lower priced 
drugs. Our amendment targets this problem.
  I would like to explain in a little more detail the problem. Under 
the Hatch-Waxman Act, manufacturers of generic drugs are encouraged to 
challenge weak or invalid patents on brand-name drugs so that consumers 
can benefit from lower generic drug prices. Current law gives temporary 
protection from competition to the first generic drug manufacturer that 
gets exclusive permission to sell a generic drug before the patent on 
the brand-name drug expires. This gives the generic firm, then, a 180-
day head start on all other generic companies.
  However, the FTC discovered that some companies were exploiting this 
law by entering into secret deals, which allowed the generic drugmakers 
to claim a 180-day grace period, and to block, then, other generic 
drugs from entering the market, while at the same time getting paid by 
the brand-name manufacturer for withholding sales of generic versions 
of the drug. Quite a sweet deal.
  This meant, then, under this sweet deal, that consumers continued to 
pay high prices for drugs rather than benefiting from more competition 
and consequently lower prices.
  The Federal Trade Commission brought antitrust law enforcement 
actions against the brand-name and generic drug companies that had 
engaged in this anticompetitive behavior. In addition, the Federal 
Trade Commission conducted a comprehensive review of agreements that 
impacted the 180-day exclusivity period. The FTC found that there are 
competition problems with some of these agreements that potentially 
delayed generic drugs entering the market--just the opposite of what 
the FTC wanted to happen. So the FTC made this recommendation:
  Given this history, we believe that notification of such agreements 
to the Federal Trade Commission and the U.S. Department of Justice is 
warranted. We support the Drug Competition Act of 2001, introduced by 
Senator Leahy, as reported by the Committee on the Judiciary.
  As the Federal Trade Commission has indicated in its report, the 
Grassley-Leahy amendment, the Drug Competition Act of 2003, is a simple 
solution to the 180-day exclusivity period and the problems the FTC has 
identified. Our amendment would require drug companies that enter into 
agreements relating to the 180-day period to file documents, those very 
documents with the FTC and the Department of Justice. Our amendment 
would impose sanctions on companies that do not provide timely 
notification. This process would facilitate agency review of the 
agreements. It would do it to determine whether they have 
anticompetitive effects. Making sure the agreement between the generic 
and brand-name drug companies is in compliance with the law is good for 
the American consumer because it guarantees free, full, and fair 
competition.
  Both Senator Leahy and I worked with the Federal Trade Commission and 
the Department of Justice, the generic and brand-name drug companies, 
and other interested groups in crafting the language contained in this 
amendment, and I think we have a very good work product that I am 
offering the Senate. We tried to address everyone's concerns and we 
tried to limit the scope of the act. We also made every attempt to 
ensure that the notification requirement did not unnecessarily burden 
industry.
  I am not aware of any opposition to this language. In fact, the Drug 
Competition Act, passed out of the Judiciary Committee and the full 
Senate last year by unanimous consent, and the Federal Trade Commission 
report came out in full support of the Grassley-Leahy amendment as a 
way to help preserve healthy and open competition in the drug markets.
  The Grassley-Leahy amendment will ensure that consumers ultimately 
are not hurt by secret, anticompetitive contracts, so the consumer can 
get competition and lower drug prices almost immediately. I urge my 
colleagues to support the Grassley-Leahy amendment.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Illinois.
  Mr. DURBIN. Mr. President, it is my understanding a number of 
Senators have offered amendments. I assume they have been sending them 
to the desk and setting them aside. Is that correct?
  That is what I would like to do before we adjourn this evening.


                           Amendment No. 994

  Mr. President, this is an amendment I have discussed with my 
colleagues and have spoken about on the Senate floor a few times. It is 
in the nature of a substitute to the underlying bill.
  Let me say, though I have had many differences with my friend from 
Iowa about a variety of different matters we have worked on over the 
years, I congratulate both him and Senator Baucus for their leadership. 
I think what they have done is bring the Senate to this moment in our 
history where we are seriously considering a prescription drug program 
that will benefit the tens of millions of seniors across America. And 
this conversation is long overdue.
  I think what they have proposed is a worthy start for a commitment 
that needs to be made. I think there isn't a Senator who comes to this 
floor who has not been back to his or her State to hear of the tales 
and stories of families and the struggles they are going through in 
paying for prescription drugs.
  I was back in my hometown of Springfield, IL, over the weekend for a 
wedding, and out of nowhere people started coming up to me and talking 
about prescription drug costs: I know you are debating this in 
Washington.
  I think this is a timely discussion. I hope, at the end of the 
discussion, we will have a bill that really does achieve what we hope 
to achieve. I think making a national commitment to a prescription drug 
program under Medicare is the right thing to do, but I think we need to 
do it with our eyes wide open.
  There are several facts we should consider. Let me give you 
illustrations. One of them is the cost of prescription drugs is going 
to continue to rise dramatically unless we address it, and address it 
head on. They say the cost of prescription drugs goes up 10 to 20 
percent a year. You can ask any senior or family and they can tell you 
that story.
  What troubles me about the underlying bill is it does not have 
competitive forces that will bring these costs down. It provides for a 
percentage helping hand to seniors to pay for their prescription drug 
bills, but that percentage becomes less and less as the overall cost of 
prescription drugs continues to grow out of hand. The substitute 
amendment which I am offering is going to address this, I hope, in a 
meaningful way.
  Just last Friday--I guess a surprise vote to some--we decided to 
allow America's seniors to import drugs from Canada. Why did we do 
that? Because everybody knows the story: The very same American drug 
companies that make these products in America, when they turn to sell 
them in Canada, give them a deep discount. Why? Because the Canadian 
Government says to them: If you want to sell drugs in Canada, then you 
have to discount the cost to Canadian citizens.
  So here we are, in our States bordering Canada, just a few miles away 
from pharmacies in Canada selling identical drugs to those sold in 
America at a fraction of the cost. Now, of course, that is a benefit to 
Canadian citizens. And we decided last Friday we would make certain 
that benefit was there for American citizens.

  We can reimport drugs--in other words, made in the United States, 
shipped to Canada for sale. We will now, under the amendment we adopted 
by Senator Dorgan of North Dakota, allow Americans to repurchase the 
drugs from Canadian pharmacies to bring them back into the United 
States. Isn't that an awkward, clumsy,

[[Page S8353]]

and convoluted way to provide a discount to America's seniors? It 
certainly is. But we voted for it on a pretty substantial rollcall. I 
think over 60 Senators supported it because we understand for many 
seniors that Canadian discount makes all the difference in the world.
  Unfortunately, this reimportation from Canada is temporary, and it is 
not a permanent part of what we are debating here. In fact, there are 
few, if any, elements in this underlying legislation that give seniors 
in America a fighting chance to get anywhere near the discounted prices 
being offered to families in Canada for the prescription drugs they 
need. In other words, we are offering a helping hand from the 
Government to pay for your prescription drugs, but offering no force or 
no element--certainly very little--within this bill to try to reduce 
and control prices.
  You may think: Is Canada that powerful that they can dictate to the 
American drug companies they have to discount their prices? Well, I can 
tell you, the Canadian market represents about 2 percent--2 percent--of 
the sales by American drug companies, whereas the United States market 
represents 53 percent. If we, as a nation, turned to these same drug 
companies that have bargained with Canada and said: ``We want the same 
thing for Americans,'' you can bet we would achieve it. But this bill 
does not do that. The Grassley-Baucus bill does not do this. It does 
not create this force for competition and this force for bringing down 
costs.
  Some will come to the floor and say: Durbin, this amendment is 
nothing short of socialism. You are trying, with a radical idea, to 
change the market structure in America, take away the free market 
competition, and dictate prices, and that is just unfair. We should not 
do it. And that is not American.
  Well, I would ask them to place a call to the Veterans' 
Administration because the Veterans' Administration already does the 
same thing. The Veterans' Administration bargains for our veterans so 
the prescription drugs they receive are at a reduced cost. Why, if our 
Government will stand up for our veterans to get reduced costs for 
prescription drugs, is that any different than saying, under this bill, 
we should also be bargaining to make certain we can bring down 
prescription drug costs across the board? It will mean the program is 
more affordable for seniors. It will also mean the money we dedicate to 
the program will be with us for a while, a lot longer than as proposed 
under this bill.
  So we do several things in this substitute amendment. I am not going 
to take any further time other than to just say a few words about this 
amendment, who supports it, and what it stands to achieve.
  It is being offered on my behalf, as well as Senators Corzine, 
Harkin, Boxer, Stabenow, Dayton, and Byrd. It has been endorsed, to 
this point--we think other endorsements will come--by the Alliance for 
Retired Americans as well as the National Committee to Preserve Social 
Security and Medicare.

  Here is what it does. It defines the benefits in statute. The 
underlying bill does not. It eliminates the coverage gap. The 
underlying bill has a coverage gap, where, after a senior has spent a 
certain amount of money for prescription drugs, there is no coverage 
until it reaches a catastrophic level over $5,000. It eliminates the 
deductible of $275 proposed by this bill because we found with price 
competition we can bring down the overall cost. It increases cost 
sharing. It guarantees a stable fallback. In other words, if there is 
not a private prescription benefit pharmacy manager offering 
alternatives to seniors, we allow Medicare itself to offer a 
prescription drug plan. That is a fallback always available under our 
bill. You do not have to be eliminated from the one to offer the other. 
This is always a fallback. And it allows employer coverage to count 
toward out-of-pocket spending.
  The average cost for prescription drugs for seniors in this year is 
expected to be approximately $2,300. Under this bill we are considering 
on the floor today, seniors could get back maybe one fourth of that, 
$600. Every dollar counts and I commend my leaders in the Finance 
Committee for bringing this to us, but it is $600. Under the MediSAVE 
plan, my substitute amendment, seniors will have no deductible, lower 
cost-sharing, and face no coverage gap. The average senior can save up 
to 50 percent of the cost of those $2,300 in drugs, almost double what 
is offered by the underlying bill.
  There is no guaranteed benefit for seniors in the underlying bill, 
and premiums are left up to insurance companies to decide. Under the 
MediSAVE plan, which I will offer, the Medicare-delivered benefit is 
outlined in statute so all seniors who choose to receive their benefit 
through Medicare will be guaranteed the same package, the same premium, 
no matter where they live in America.
  As I said before, we address skyrocketing drug prices whereas the 
underlying bill does not. Incidentally, the Veterans' Administration 
has saved about $943 million in the past 6 years because it has 
bargained with the drug companies on behalf of seniors.
  We also maintain choice. I see some of my Republicans friends have 
sent a letter to the President saying: We have to allow for innovation. 
We have to allow for competition. Agreed. We say: Fine, private groups 
and insurance companies can offer the prescription drug benefit as an 
option, seniors get to choose. But they always have a Medicare fallback 
they can choose.
  Some say: We don't want this Government agency running this. Why do 
we want a Government agency in charge of it? Well, because Medicare has 
no profit motive. Medicare has a low administrative cost. If the VA 
runs the program for veterans and we don't consider that socialism, 
what is wrong with the idea of having Medicare in here competing with 
these private insurance companies. Eighty-nine percent of seniors today 
stick with Medicare rather than going to some HMO choice plan and/or 
private plan under Medicare. That tells you they like Medicare better. 
Why should we deny them this chance under prescription drugs.
  MediSAVE creates a reliable fallback that is Medicare, and I think 
that is good for seniors. And MediSAVE will incentivize employers to 
maintain benefits. This is a fear we have. We don't want to do anything 
that will hurt the employers currently helping retired seniors, and we 
want to make certain we encourage their continued participation.
  Under S. 1, funds employers put toward retiree costs don't count 
toward the retiree's Medicare out-of-pocket cost. Under MediSAVE, they 
would count.
  Mr. President, I know it is late. I know a number of amendments have 
been offered. But at this point I would like to send my amendment to 
the desk and ask that it be read and then held at the desk.
  Mr. GRASSLEY. Mr. President, reserving the right to object, I assume 
he asked unanimous consent to set the amendments aside.
  Mr. DURBIN. Which I will do. I will send the amendment to the desk. I 
don't know if it should be reported at this moment, but I ask it be set 
aside.
  Mr. GRASSLEY. Could I say this: If you would allow me, rather than 
reserving the right to object, when he asks unanimous consent to set 
aside an amendment to offer his amendment, I am not going to object to 
that. But the leader has asked we have no more amendments tonight. So I 
would then be forced to object to any other amendments from either side 
that would come up.
  The PRESIDING OFFICER. Does the Senator object to this amendment at 
this time, or does anybody else object to it?
  Without objection, the clerk will report.
  The assistant legislative clerk read as follows:

       The Senator from Illinois [Mr. Durbin], for himself, Mr. 
     Corzine, Mr. Harkin, Mrs. Boxer, Ms. Stabenow, Mr. Dayton, 
     and Mr. Byrd proposes an amendment numbered 994.

  The amendment is as follows:

 (Purpose: To deliver a meaningful benefit and lower prescription drug 
                                prices)

       Beginning on page 48, strike line 13 through page 50, line 
     2 and insert the following:
       ``(1) No deductible.--
       ``(A) In general.--The coverage provides for benefits 
     without the application of a deductible.
       ``(B) Application.--Notwithstanding the succeeding 
     provisions of this part, the Administrator shall not apply 
     section 1860D-19(a)(3)(A)(ii).

[[Page S8354]]

       ``(2) Limits on cost-sharing.--
       ``(A) In general.--The coverage has cost-sharing (for costs 
     up to the annual out-of-pocket limit under paragraph (4)) 
     that is equal to 30 percent or that is actuarially consistent 
     (using processes established under subsection (f)) with an 
     average expected payment of 30 percent of such costs.
       ``(B) Application.--Notwithstanding the succeeding 
     provisions of this part, the Administrator shall not apply 
     subsection (d)(1)(C) and paragraphs (1)(D), (2)(D), and 
     (3)(A)(iv) of section 1860D-19(a). 2
       On page 50, line 15, strike ``$3,700'' and insert 
     ``$1,500''.
       On page 51, strike lines 15 through 25 and insert the 
     following:
       ``(ii) such costs shall be treated as incurred without 
     regard to whether the individual or another person, including 
     a State program or other third-party coverage, has paid for 
     such costs.
       Beginning on page 77, strike line 10 and all that follows 
     through page 84, line 7, and insert the following:
       ``(e) Medicare Operated Plan Option.--
       ``(1) Access.--The Administrator shall establish and 
     operate a national plan to provide any eligible beneficiary 
     enrolled under this part (and not, except for an MSA plan or 
     a private fee-for-service plan that does not provide 
     qualified prescription drug coverage, enrolled in a 
     MedicareAdvantage plan) electing such plan with standard 
     prescription drug coverage. Under such plan, the 
     Administrator shall negotiate with pharmaceutical 
     manufacturers with respect to the purchase price of covered 
     drugs and shall encourage the use of more affordable 
     therapeutic equivalents to the extent such practices do not 
     override medical necessity as determined by the prescribing 
     physician. To the extent practicable and consistent with the 
     previous sentence, the Administrator shall implement 
     strategies similar to those used by other Federal purchasers 
     of prescription drugs, and other strategies, to reduce the 
     purchase cost of covered drugs. Eligible beneficiaries 
     enrolled under this part shall have the option of enrolling 
     in such plan or in a Medicare Prescription Drug plan or a 
     MedicareAdvantage plan available in the area in which the 
     beneficiary resides.
       ``(2) Monthly beneficiary obligation for enrollment.--
       ``(A) In general.--In the case of an eligible beneficiary 
     enrolled in the plan operated by the Administrator under 
     paragraph (1), the monthly beneficiary obligation of such 
     beneficiary for such enrollment shall be--
       ``(i) for months in the first year of implementation, $35; 
     and
       ``(ii) for months in a subsequent year, the lesser of--

       ``(I) the amount determined under this paragraph for months 
     in the previous year, increased by the annual percentage 
     increase described in section 1860D-6(c)(5) for the year 
     involved; or
       ``(II) in the case of months in years prior to 2014, the 
     specified amount.

       ``(B) Specified amount.--For purposes of this paragraph, 
     the term `specified amount' means--
       ``(i) for months in the second year of implementation, $37;
       ``(ii) for months in the third year of implementation, $40;
       ``(iii) for months in the fourth year of implementation, 
     $43;
       ``(iv) for months in the fifth year of implementation, $46;
       ``(v) for months in the sixth year of implementation, $51;
       ``(vi) for months in the seventh year of implementation, 
     $54; and
       ``(vii) for months in the eighth year of implementation, 
     $59.
       ``(3) No affect on access requirements.--The plan operated 
     by the Administrator under paragraph (1) shall be in addition 
     to the plans required under subsection (d)(1).
       ``(4) Requirement to prevent increased costs.--If the 
     Administrator determines that Federal payments made with 
     respect to eligible beneficiaries enrolled in the plan 
     operated by the Administrator under paragraph (1) exceed on 
     average the Federal payments made with respect to eligible 
     beneficiaries enrolled in a Medicare Prescription Drug plan 
     or a MedicareAdvantage plan (with respect to qualified 
     prescription drug coverage), the Administrator shall adjust 
     the requirements or payments under such a contract to 
     eliminate such excess.
       ``(f) Two-Year Contracts.--A contract approved under this 
     section for a Medicare Prescription Drug plan shall be for a 
     2-year period.
       ``(g) Implementation of Part D.--Notwithstanding any other 
     provision of this part or part C, the Secretary shall 
     implement, and make benefits available under, this part as 
     soon as practicable after the date of enactment of the 
     Prescription Drug and Medicare Improvement Act of 2003, but 
     in no case later than January 1, 2006. The Secretary shall 
     carry out this part until the Administrator is appointed and 
     able to carry out this part.
       On page 134, strike line 9 and insert the following:
     under paragraph (1).
       ``(d) Special Rules for State Pharmaceutical Assistance 
     Programs.--
       ``(1) In general.--Notwithstanding any other provision of 
     this part, in the case of the sponsor of a State 
     pharmaceutical assistance program that seeks to offer a 
     Medicare Prescription Drug plan under this part, the 
     following special rules apply:
       ``(A) Waiver of licensure.--Section 1860D-7(a)(1) shall not 
     apply.
       ``(B) Permitting limitation on enrollment.--The sponsor may 
     restrict eligibility to enroll in the plan to those low-
     income individuals who qualify (or meet the standards for 
     qualification) for the State pharmaceutical assistance 
     program.
       ``(C) Other requirements.--The Administrator may waive such 
     other requirements of this part as the Administrator finds 
     appropriate to promote the role of State pharmaceutical 
     assistance programs under this part.
       ``(2) Definition.--For purposes of this part, the term 
     `State pharmaceutical assistance program' means a program, in 
     operation as of the date of enactment of this title, that is 
     sponsored or underwritten by a State, that was established 
     pursuant to a waiver under section 1115 or otherwise, and 
     that provides financial assistance with out-of-pocket 
     expenses with respect to covered outpatient drugs for 
     individuals in the State who meet income-related 
     qualifications specified under such program.
       ``(3) Construction.--Nothing in this subsection shall 
     affect the provisions of subsection (b).''.
       At the end of title VI, add the following:

     SEC. __. NEED FOR RENEWAL.

       (a) In General.--Notwithstanding any other provision of 
     law, the provisions of, and amendments made by, this Act 
     shall remain in effect but shall be superseded by the 
     Director of the Office of Management and Budget on the date 
     that the total of the increased Federal expenditures by 
     reason of such amendments and provisions has reached 
     $400,000,000,000.
       (b) Application.--Any provision of law amended or effected 
     by this Act shall be applied and administered after the date 
     described in subsection (a) as if the provisions of, and 
     amendments made by, this Act had never been enacted.
       (c) Notification.--The Director of the Office of Management 
     and Budget shall notify Congress 6 months prior to the date 
     that the provisions of, and amendments made by, this Act will 
     be superseded pursuant to subsection (a).
  Mr. DURBIN. I thank the Senator from Iowa and my colleagues.
  Mr. REID. Before the Senator yields the floor, would the Senator 
yield for a question?
  Mr. DURBIN. Yes.
  Mr. REID. This is a little off point, but we are talking about jobs. 
Is the Senator from Illinois aware that the Bureau of Labor Statistics 
issued its latest unemployment figures today?
  Mr. DURBIN. I did not see those.
  Mr. REID. Would the Senator be surprised that under this 
administration, which is always talking about what a great job they are 
doing with the economy, we now have the highest unemployment rate in 
106 months; it has jumped up now to over 6 percent? Is the Senator 
surprised at that number?
  Mr. DURBIN. I wish I was, but we have lost 2 million jobs under this 
administration already. So it is no surprise we continue to lose jobs 
in America. I am sure it is tough in Nevada. It is tough in Illinois. 
We have lost good paying jobs. I run into a lot of people who, frankly, 
have no place to turn in this economy.
  Mr. REID. Highest unemployment in 106 months.
  Mr. DURBIN. I would just suggest to the Senator from Nevada, it is 
curious to me that the President, with his tax cut program for 
stimulating the economy, had his first chance at it. The Senator can 
refresh my memory. Two years ago didn't we cut taxes, as the President 
suggested, primarily for the higher income individuals?
  Mr. REID. For job creation.
  Mr. DURBIN. Wasn't that about $1 trillion or more in tax cuts we were 
proposing for job creation?
  Mr. REID. I would respond to my friend, if the last tax cut we had 
creates as many jobs as the first tax cut, we are in big trouble.
  Mr. DURBIN. I would say there is that old adage that once you are in 
a hole, the first thing you do is stop digging. If I am not mistaken, 
didn't this administration come back and want to dig that tax cut hole 
deeper within the last few months, and still we see these job 
statistics telling us this is a failed economic policy?
  Mr. REID. My friend is right. The Bureau of Labor Statistics found 
that national unemployment had increased in April to more than 6 
percent, highest unemployment in 106 months.
  Mr. DURBIN. I would like to ask the Senator from Nevada, was he aware 
of the fact we are now proposing the creation of jobs in Iraq, and some 
people have said we are going to create jobs where frankly we will give 
money to the people of Iraq, but they don't to have show up for work 
for a while? That might go over pretty well in my State if we would 
like to create a program like that. But I would like to ask

[[Page S8355]]

the Senator, we are talking about the fact that this President took 
over after the economy had grown at a record pace for 7 or 8 years 
under first his father and then under President Clinton.
  Mr. REID. I respond to my friend there is some dispute as to what the 
10-year surplus was when he took office. Some say $7.1 trillion. Some 
say 6.2. But trillions of dollars over 10 years. And in fact, the last 
3 years of the Clinton administration we had been spending less money 
than we were taking in. We were retiring the debt. But we are not 
worried about that anymore. We will have this year, some say, a debt as 
much as $600 billion, of course, not counting the Social Security 
surpluses which are used to disguise this. So I don't know where all 
this great economy is. It is not in Nevada.

  Mr. DURBIN. I ask the Senator, would that $600 billion debt, if that 
is what we end up with, would that break the record under the Reagan 
administration which I believe was in the hundred billion dollar range?
  Mr. REID. The debt this year will be the largest in the history of 
the world, not only the United States.
  Mr. DURBIN. I would like to ask the Senator from Nevada, a lot of the 
fiscal conservative Republicans used to say you had to have fiscal 
discipline, get your house in order. Is he hearing the same thing I am 
hearing from those same fiscal conservative Republicans now, that 
deficits don't count, debt doesn't count?
  Mr. REID. We not only have statements that would fill volumes about 
how bad the deficit was. And, in fact, I can remember Alan Greenspan 
telling us the most important thing we could do--he appeared before the 
Appropriations Committee--was get rid of the annual deficits. We 
followed his advice and did that. He is still chairman of the Federal 
Reserve. I wonder why he is not talking now along those same lines.
  Mr. DURBIN. It is a curious thing. I recall when President Clinton 
was preparing to take office, that same Chairman Greenspan came to 
Little Rock in the transition and said: The most important thing you 
can do for the long-term economy is to reduce the long-term interest 
rates which means get serious about the deficit. President Clinton took 
that to heart. I think the Senator, was in the Senate, and I was in the 
House when President Clinton came in with his budget, which didn't get 
a single Republican vote in the House or the Senate. It passed in the 
Senate with the tie-breaking vote by Vice President Gore and then, 
because the Democrats stood up and did what was right for the economy, 
we saw this dramatic period of economic growth where people's savings 
were growing, retirement plans were growing, where we created some 22 
million new jobs, inflation was under control, new housing starts, new 
businesses. And we are not talking about the deep dark recesses of 
American history. This was just a few years ago.
  Now in 2\1/2\ years, it is amazing what this President has achieved. 
He has managed to lose jobs at a faster pace than any President in 
history and create the largest deficit in the history of the United 
States, all in the name of fiscal conservatism. It is really hard to 
imagine anyone can say with a straight face that is a conservative, 
disciplined approach to dealing with the budget.
  I am sure in Nevada and Illinois the people don't like this economic 
policy and what it has meant.
  Mr. REID. This is something I can't understand, why there is so much 
silence on the other side of the aisle about these huge annual deficits 
he has created, especially since when he took office we were spending 
less money than we were taking in. To think that the country is in such 
deep trouble. Does the Senator realize parts of our national parks are 
actually closing because of a state of disrepair, our great national 
parks? We have money in our highway trust fund that people pay when 
they go to the gas pump, but this money is not being used for highways. 
We are trying to come up with a highway bill, but the President is not 
allowing us to spend the money on highways. He wants to spend it on 
jobs in Iraq. I don't know what he wants to spend it on.
  I didn't answer the one question the Senator asked about Iraq. Not 
only are they trying to create jobs in Iraq, they are now talking about 
paying Saddam Hussein's army for back pay while they were fighting 
Americans. Is the Senator aware of that?
  Mr. DURBIN. I was not aware of that. I certainly want to see 
stability in Iraq. We all do, because otherwise it could disintegrate 
into another vacuum, a terrorist training ground. We don't want that to 
happen.
  But it is curious to me, when it comes to the military cost of that 
war and the cost of reconstruction, there is no end in sight. It 
doesn't seem to bother people from the administration to continue to 
call for billions of dollars for this purpose.
  But I would like to ask the Senator from Nevada this. He was serving 
here, as I was, when this President came in with something called No 
Child Left Behind, where we were going to send money to the schools 
across America for accountability and testing and upgrading of teacher 
skills. If I am not mistaken, this President had a White House bill 
signing ceremony, with Democrats and Republicans all applauding his No 
Child Left Behind. Yet when we look at the budget that was sent to us 
by this President, he is not providing the resources that we know will 
be needed for these schools. The Senator's State, I think, may be 
leading the Nation in the growth of school enrollment. In my State, we 
are struggling with our own deficit and cutbacks of State assistance to 
school districts.
  So here we have President Bush's new mandates in No Child Left 
Behind, with no money to pay for them, while the local sources of 
revenue, from State sources and local property taxes, cannot keep up 
with demand. So what the President has done by saying we are going to 
focus this money on other things and tax cuts is shortchange education.
  Mr. REID. Mr. President, I spoke to our State legislature and I said 
the President's No Child Left Behind Act is leaving lots of children 
behind. There was a little criticism for my having said that. But I was 
right.
  In the State of Nevada, as we speak, the Clark County School 
District, which is the fifth largest school district in America, is 
talking about cutting back the school week to 4 days. Some of the good 
programs, such as the athletic programs, which I believe in, and 
programs dealing with the band and drama they are talking about 
eliminating, and they are talking about doing away with the programs 
for the academically talented. In fact, unless the legislature can get 
some resources from the State of Nevada--they don't expect anything 
from the Federal Government--the Clark County School District is 
talking about stopping all-year-around school. We have a year-round 
school district. They have been talking about closing schools. Well, 
talk about leaving some kids behind; that is it.
  Mr. DURBIN. I don't think many Americans would argue that our 
children are overeducated. I know the State of Oregon closed their 
schools earlier this year, and the idea that we would eliminate part of 
the school year, afterschool programs, and summer school programs, to 
me, means these young people are not going to be given the chance they 
need to improve themselves.
  I know the Senator from Nevada, probably more than anybody in this 
Chamber, has focused on the dropout issue. If we don't really have a 
sensitivity to the number of kids dropping out, we should not be 
surprised at what is happening to them. They end up with lives that are 
not as productive as they could be, and sometimes they end up in 
tragedy. If you are going to cut back on the school year, a child who 
really needs a helping hand to be a good student is more likely to be 
discouraged and less likely to be educated. How can that be good for 
our Nation? I know the Senator has focused on the dropout rate in the 
past.
  Mr. REID. Senator Bingaman and I worked for a number of years to try 
to create within the Department of Education an education czar because 
children who drop out of school are never what they could be. We have 
so many students dropping out of school, and it is a shame. Those 
children who drop out of school will be relegated to menial work for 
the rest of their lives--if they are fortunate to be able to have any 
kind of work.

  So the afterschool programs, which the Senator from Illinois and 
Senator

[[Page S8356]]

Boxer have worked on for years, are programs that, in most States, they 
are not even considering anymore.
  Mr. DURBIN. Is it unfair, then, to bring this together and say if we 
are going to see this President continue to put unfunded mandates on 
schools and not put the Federal dollars into education, and we are 
going to see education cut back at the State and local level, that is 
going to lessen the opportunity for children to pick up the skills and 
education they want? This is no way to deal with an unemployment 
problem. Frankly, it is a way to guarantee that that problem is going 
to become chronic and long term because we are not investing in making 
young people productive and educated.
  So the No Child Left Behind program and the unfunded mandate by the 
Bush White House really was lost to this whole argument about tax cuts. 
The President says we need tax cuts for jobs and growth. It just hasn't 
worked. As the Senator from Nevada reported today--I forget the 
number--it has been over 100 months since we have had such high 
unemployment.
  Mr. REID. It has been 106 months.
  Mr. DURBIN. So that is somewhere a little less than 9 years to go 
back to a period of time with the unemployment that high. It doesn't 
appear that the President's first tax cut has kicked in. If it has, it 
kicked a lot of people out of work. We ought to think long and hard 
about whether we continue down this path.
  Mr. REID. Mr. President, I suggest the absence of a quorum.
  The PRESIDING OFFICER (Mr. Fitzgerald). The clerk will call the roll.
  The assistant legislative clerk proceeded to call the roll.
  Mr. GRASSLEY. Mr. President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. GRASSLEY. Mr. President, I ask unanimous consent that at 11 a.m. 
on Tuesday, June 24, the Senate proceed to a vote in relation to the 
Rockefeller amendment No. 976, provided that immediately following that 
vote and 2 minutes of debate equally divided, the Senate then proceed 
to vote in relation to the Bingaman amendment No. 984; further, at 2:15 
there be 10 minutes equally divided prior to the vote in relation to 
the Dodd amendment No. 969, with no second-degree amendments in order 
to the above mentioned amendments prior to the vote.
  The PRESIDING OFFICER. Without objection, it is so ordered.

                          ____________________