[Congressional Record Volume 150, Number 22 (Thursday, February 26, 2004)]
[Extensions of Remarks]
[Pages E251-E252]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




   INTRODUCTION OF THE PRESCRIPTION DRUG SAFETY AND AFFORDABILITY ACT

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                        HON. FORTNEY PETE STARK

                             of california

                    in the house of representatives

                      Thursday, February 26, 2004

  Mr. STARK. Mr. Speaker, I rise today to introduce the Prescription 
Drug Safety and Affordability Act. For far too long, the pharmaceutical 
industry has jeopardized patient safety and inflated prescription drug 
prices by using tax-deductible dollars to underwrite their marketing 
efforts. The Prescription Drug Safety and Affordability Act would root 
out this unethical and potentially fraudulent behavior by denying tax 
deductions to pharmaceutical companies for the gifts they lavish on 
physicians.
  Recently, Congress passed a new Medicare prescription drug benefit 
that falls far short of giving seniors the relief they need from the 
high prices of prescription drugs. In fact, the average senior will 
still pay $1660 out of pocket per year under the new drug benefit, and 
a total of $2080 out of pocket when premiums are included. 
Unfortunately, the new drug bill does nothing to lower prescription 
drug prices. In fact, it specifically prevents the government from 
using the bargaining power of 40 million beneficiaries to negotiate 
lower drug prices. At the same time, it continues to prohibit seniors 
from shopping for a better price on the global market, despite broad 
bipartisan support for allowing them to do so.
  Relief is all the more urgent because prescription drug prices are 
rising for seniors, who now pay an average of $2,322 for their drugs. 
Between 1998 and 2003, of the 50 drugs most commonly prescribed to 
seniors, nearly three-quarters of them increased in price by at least 
one and one-half times the rate of inflation, and more than half 
increased by at least three times the rate of inflation. We must do all 
that we can to lower the price of prescription drugs and to spend our 
healthcare dollars wisely.
  Yet, drug companies are spending billions of dollars on promotions to 
entice doctors to prescribe their products, and these dollars are tax 
deductible. An April 2002 survey by the Kaiser Family Foundation found 
that pharmaceutical companies spent $13 billion in 2001 on incentives 
for doctors, or more than $15,000 per doctor. Sixty-one percent of 
physicians surveyed said they had received gifts from the industry. 
Drug companies often give out free meals, tickets to the theater, 
concerts, or sporting events, gifts such as watches and jewelry, and 
pay for physicians' travel to symposiums or conferences.
  These gifts are often attempts by the pharmaceutical industry to 
induce doctors to prescribe their products even when it is not in the 
patient's best interest. For example, recently disclosed court 
documents have revealed that Warner-Lambert encouraged hundreds of 
doctors to prescribe Neurontin for unapproved uses by inviting them to 
dinners, weekend trips to resorts, and free tickets to the 1996 Summer 
Olympics in Atlanta. Just a few months ago, the U.S. Attorney's office 
filed court papers accusing the company of implementing a ``marketing 
scheme that is rife with false statements and fraudulent conduct.'' The 
U.S. Attorney concluded that the public interest can only be served 
when drug promotion is ``free of the insidious effects of kickbacks and 
related financial conflicts of interest,'' which artificially inflate 
sales and prices. These gift-giving campaigns contribute to preference 
and rapid prescribing of new drugs, and decreased prescribing of 
generics. In other words, tax-deductible dollars contribute to the 
rising prices of prescription drugs.

  These campaigns and inflated prices are particularly outrageous, 
given the level of profit the drug companies make at the expense of 
patients. The pharmaceutical industry is consistently the most 
profitable industry in America, with profit margins in 2001 more than 
five times the median for fortune 500 companies. Spending on 
prescription drugs has increased by 20% each year between 1997 and 
2001. Between January 1997 and January 2002, the average price of the 
most commonly used prescription drugs for seniors rose by 27.6%, more 
than twice the rate of inflation.
  The Pharmaceutical Research and Manufacturers of America (PhRMA) 
pretended to discourage these improper marketing ploys by issuing 
conflict-of interest guidelines in April 2002. After announcing the 
guidelines with fanfare, they then paid the American Medical 
Association to ``educate'' their members on these guidelines-that is, 
they gave doctors financial incentives to promote ethical guidelines 
that called for an end to financial incentives! It is obvious that 
PhRMA is not serious about ending the practice of giving financial 
incentives to doctors. This bill would create an incentive for drug 
companies to adhere to their own code of conduct.
  Not only are these incentives unethical, but they could even be 
illegal. The HHS Inspector General issued final guidance to 
pharmaceutical manufacturers saying that many of these gifts to doctors 
could be considered illegal kickbacks. By allowing tax deductions for 
these gifts, current tax law actually encourages this potentially 
illegal practice. This bill seeks to redress this perverse incentive.

[[Page E252]]

  The Prescription Drug Safety and Affordability Act would help ensure 
that pharmaceutical companies' behavior matched their rhetoric. This 
bill eliminates the tax-deduction that pharmaceutical companies 
currently receive for the gifts they give to physicians. Clever 
marketing ploys that influence physician prescribing habits do little 
to actually save lives, but do much to increase drug prices and 
corporate profits. By removing incentives for pharmaceutical companies 
to lavish gifts of dubious public value on physicians, I hope that 
pharmaceutical companies will either redirect those funds toward 
research and development of lifesaving drugs or reduce the prices of 
prescription drugs for seniors and all Americans. These price 
reductions will provide much needed relief to America's seniors, who 
face an ever-increasing burden when paying for their prescriptions, and 
will stretch scarce Medicare drug benefit dollars further.
  I hope that my colleagues will join with me in support of the 
Prescription Drug Safety and Affordability Act. Prohibiting industry 
gifts to physicians is a nonpartisan issue that should receive 
bipartisan support. In fact, the Republican appointed Health and Human 
Services Inspector General issued guidance restricting the practice, 
and, next door in Maryland, a Republican state representative has 
introduced a bill to prohibit these gifts. It is time to stop using 
taxpayer dollars to fund the industry's marketing campaign to doctors, 
which puts profits above patients.

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