[Congressional Record Volume 150, Number 41 (Monday, March 29, 2004)]
[House]
[Pages H1624-H1630]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




          THE COST OF PRESCRIPTION DRUGS IN THE UNITED STATES

  The SPEAKER pro tempore. Under the Speaker's announced policy of 
January 7, 2003, the gentleman from Minnesota (Mr. Gutknecht) is 
recognized for 60 minutes as the designee of the majority leader.


                             General Leave

  Mr. GUTKNECHT. Mr. Speaker, I ask unanimous consent that all Members 
may have 5 legislative days within which to revise and extend and 
include extraneous material on the subject of my special order.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from Minnesota?
  There was no objection.
  Mr. GUTKNECHT. Mr. Speaker, I rise and I hope to be joined by some of 
my colleagues tonight to talk about an issue that I have been coming 
down to the floor of this House for more than 5 years to talk about.

                              {time}  2030

  That is the price that Americans pay for prescription drugs relative 
to the rest of the industrialized world, and I have often said that we 
as Americans are blessed and we should be prepared and willing to 
subsidize people in developing parts of the world, like sub-Saharan 
Africa. I do not believe, however, that we should be required to 
subsidize the starving Swiss, the Germans, the French and other 
industrialized powers.
  In the last 5 years, I remember when we first started doing these 
Special Orders, and I would come down here, and it was basically just 
me and my charts and the chorus has been growing around the country and 
we have been joined by Republicans, by Democrats, by Independents and 
others.
  Another point I always try to make is that this is not an issue of 
right versus left. It is not conservatives versus liberals. As I say, 
it is not right versus left. It is right versus wrong, and the issue 
really is that Americans are being held captive here in the United 
States; and the net result, very predictable result, is that whenever 
you have a captive market, particularly for a life-saving product like 
prescription drugs, it is inevitable that we, the world's best 
customers, would wind up paying the world's highest price.
  I know there are some who believe that the answer is for the United 
States to have some kind of price controls. I am not one that shares 
that view.
  About 4 years ago or 5 years ago now I guess, and one of the reasons 
I became very involved in this issue was something that happened that 
was totally unrelated to the price of prescription drugs. The price of 
live hogs in the United States dropped from about $37 per hundred 
weight to about $7, and these were the lowest prices for our hog 
farmers in 50 years. Many of my pork producers started calling me 
saying, Congressman, can you not do something about these incredibly 
low prices for these pigs? I said I do not know what I can do, and they 
said, well, could you at least stop all these Canadian hogs from coming 
across our borders, making our supply demand situation worse?
  So, as their Congressman, I called the Secretary of Commerce, I 
called the Secretary of Agriculture, explained the situation that 
thousands of Canadian hogs were coming into our markets making the 
price of pigs in the United States even lower and can we not do 
something to at least stop all of these pigs from coming into American 
markets. The answer I got from both the Secretary of Agriculture and 
the Secretary of Commerce was essentially the same answer. They said 
that is called NAFTA. It is called free trade, and all of the sudden a 
light bulb went on over my head, and I said is it not ironic that we 
have open markets when it comes to pork bellies, not when it comes to 
Prilosec.
  Literally, at that point, I moved from what Winston Churchill said 
the difference between a fan and a fanatic is, that a fanatic cannot 
change their mind and will not change the subject. I have become almost 
a fanatic on the issue of opening up markets to allow Americans to have 
world-class access to world-class drugs at world market prices.
  I am joined by my friend from Illinois, and I would be happy to yield 
him some time; but I have a couple of charts.
  Mr. EMANUEL. Mr. Speaker, if the gentleman would yield, why do you 
not do the charts because I think it is always the most informative for 
our audience.
  Mr. GUTKNECHT. Let me talk a little bit about this particular chart. 
A year ago right now I was in Munich, Germany, with one of my staffers. 
We were on our way home and stopped at the Munich airport pharmacy. As 
a matter of fact, the name of the pharmacy, if you want to check it 
out, is the Metropolitan Pharmacy at the Munich airport. Those of us 
that travel a lot know if you want to get a bargain, the last place you 
go to get that bargain is to buy at the airport, but we were on our way 
out of town. We bought then some of the most commonly prescribed drugs 
here in the United States, and these are the prices that we paid in 
April of 2003 in Munich, Germany.

  When we returned, we went and asked here in Washington, D.C., what 
the price for those same drugs in the same dosages with the same number 
of tablets would be here in the United States, and let me show you some 
of the examples.
  Coumadin is a drug that my father takes. Here in the United States, 
100 tablets in the United States, about $92.66. In Germany, the price 
was $28.44.
  Glucophage, a very effective drug, been around for a long time for 
diabetes. Over in Germany, 30 tablets, 850

[[Page H1625]]

milligrams, back in April, $15.50 American. Here in the United States, 
$45, three times more expensive?
  Pravachol, I do not know much about that particular drug, but a 
commonly prescribed drug, $91 in Germany; $159 here in the United 
States, and the list goes on.
  One of them we have talked a lot about, and these numbers have 
changed in part because of the change in the value of the dollar, but 
Tamoxifen, those numbers now have changed, and I see we have the 
updated price on the Tamoxifen as of today. Tamoxifen has come down a 
lot in the United States, but it is still more than twice as expensive 
in the United States as it is in Germany. Part of the reason the price 
has come down in the U.S. is because there is now a new drug that is 
taking the place of Tamoxifen.
  Zestril, $39 in Germany; $75 in the United States. Zokor, $48 in 
Germany; $82 here, and I think is representative and we talk a lot 
about Canada, but what you will find is generally prices for 
prescription drugs in places like Germany are even cheaper, and 
hopefully we will talk about that as well because of parallel trading. 
And I would be happy to yield to my friend from Illinois.
  Mr. EMANUEL. Mr. Speaker, I thank my colleague from Minnesota.
  As that chart shows, basically the difference between the United 
States price for the same drugs, same name-brand products from Germany 
to Canada to England is in the United States our seniors and our 
citizens have to pay somewhere between 40 to 60 percent more for the 
same drugs they would get at their pharmacy than their G-8 or other 
members of the European Union; and you and I have done this many times, 
and the fact is we are not talking about some field somewhere in some 
mythological moment of some dream. There is parallel trading today in 
Europe.
  If you go to a pharmacy in Germany, they will price out that product 
you need, whether it is Lipitor, for whatever you need Lipitor for, the 
cholesterol, whether you need another drug for blood pressure, for 
arthritis, or for your heart. Any of those medications they will look 
at Spain, look at England, they will find the best price for you, and 
all we are talking about is having the American consumers, our senior 
citizens, link into that free market, get the competition on price. So 
rather than paying 50 to 60 percent more than what people in England 
pay for Lipitor, we would pay the price that they pay in England or in 
Canada or in Italy or in the Netherlands or in Germany or in France.
  It is ironic because all those folks from those countries come to the 
United States for our medical care. Yet Americans must go overseas for 
their medications, and what we are talking about is having a system 
where you bring real competition to the pricing of pharmaceutical 
products and allow that competition and that market to bring the prices 
down and allow that choice to exist, not so people would have to drive 
up to Canada, not so people would have to go on the Internet to get 
their pharmaceutical products; but that the prices that the people are 
now paying in Canada and in Germany and France for Tamoxifen, for 
Cipro, I am trying to look at the drugs, my eyes are not as good as 
they used to be, Zokor, those prices would come to their local 
pharmacy. They would go right down the street and get those prices, go 
to the pharmacist who would say, well, I think I can get something 
better in Toronto for you, or, we have the same price right here.
  That competition would bring the prices down here; and that is all we 
are talking about, and every product, whether that is in steel, autos, 
electronic, software, food, America has the most open markets and the 
best prices in the world. There is only one product line where we have 
a closed market, and that is the pharmaceutical products; and it is the 
only product that Americans pay 30, 40, 50, depending on the product, 
sometimes 60 percent more than our European allies and Canada.
  I would like to give you two other statistics. According to Families 
USA, of the 50 drugs most commonly used by seniors, the prices have 
increased 3\1/2\ times the rate of inflation over the past year; and 
between 2000 and 2003, seniors' expenditures on prescription drugs 
increased by 44 percent. So drug prices are going up.

  We have now got a prescription drug bill that offers seniors no 
benefit as relates to price and affordability of those drugs, and now 
they are going to continue to go up; and unless we bring something that 
brings competition and choices to the system, the seniors are going to 
continue to pay somewhere north of 15 percent increases in prices, and 
our taxpayers are going to be funding not $400 billion, but close to 
$600 billion in a prescription drug benefit when we know we can get the 
prices of these drugs much cheaper.
  I see you have the next chart. That is why I wanted to bring these 
statistics.
  Mr. GUTKNECHT. Mr. Speaker, reclaiming my time for a few minutes, 
this is a chart which appeared last week in newspapers around the 
country with an Associated Press story talking about how various groups 
are trying to save money on prescription drugs, including a lot of the 
big insurance companies and health medical plans of differing kinds. I 
think this chart tells a rather shocking story; and I do say this and I 
am sincere when I say this, unfortunately I think as we looked at the 
problem of prescription drugs, particularly for the elderly, in my 
opinion, we misdefined the problem. I think if you misdefine the 
problem, the chances of getting the right solution are not very good.
  The problem is affordability, and I think this chart illustrates part 
of the problem. Since 1997 we have seen drug prices for name-brand 
prescription drugs in the United States according to the Segal Company, 
in a report that was published, an article that was published by the 
Associated Press last week, here is what drug prices have done just in 
the last 8 years. In 1997, average drug prices went up 12.9 percent; in 
1998, 16.8 percent. They slowed down a little in 1999 to only 14.2. 
Then back up to 16.3, 16.9, 18.4; and the estimates for 2003 are 19.5 
percent, and for this year, we are projecting that drug prices will go 
up 18.1 percent.
  If I could just finish this, that means that in the last 8 years, 
when the core rate of inflation has been less than 24 percent, 
prescription drugs in the United States have gone up 133 percent. I am 
not all that good in math, but that is about six times more than the 
inflation rate. I do not have an MBA. I am not the world's smartest 
guy, but I know this: this is unsustainable. No matter how you do this, 
if you have the taxpayers pay for it, if you have our grandchildren pay 
for it, this is unsustainable. It is eating the United States up and 
this is the problem.
  When people talked about the prescription drug problem, unfortunately 
too many people here in Washington talked about it as if it was a 
problem of coverage. Well, if you went to town hall meetings, and you 
and I have done a lot of town hall meetings with seniors, they will 
tell you the problem. The problem is not coverage, because they know 
that right now in any one of these years I believe they could have 
bought prescription drug coverage from any number of insurance 
carriers, including the AARP. So they could get coverage. The problem 
is affordability, and we really only have a couple of choices.
  One of them that we use with virtually every other product, including 
products that we normally think of as being intellectual-property-type 
products, we have open markets. I mean, it costs a whole lot of money 
to develop that first chip when Intel brings a chip off the line; but 
they cannot use this differential pricing for customers in Japan get 
one price; customers in Germany get another price; oh, and by the way, 
customers in the United States get stuck with prices that are 40 or 60 
percent higher.
  I yield back to my friend from Illinois.
  Mr. EMANUEL. Mr. Speaker, I am glad you pointed that out. In each of 
those years pharmaceutical products ran higher in the sense of 
inflation by the average of 5 to 6 percent more than the core inflation 
rate.
  Mr. GUTKNECHT. Five to six times.
  Mr. EMANUEL. Thank you. Five to six times more than the core 
inflation rate, and it is what drives seniors. I have done town halls, 
but also I still do office hours at grocery stores and pharmacies where 
I just meet constituents; and seniors always tell you, I cannot afford 
the drugs I need. There is an issue of price.

[[Page H1626]]

  The second issue they said, do not harm the plan I have. I have a 
good plan from where I work; please do not harm it.
  Lastly, and in this order basically, they would then say can we not 
get a benefit under Medicare, and in the bill that was just passed here 
and the reason I opposed it is on the fundamental issue of price and 
affordability.

                              {time}  2045

  The legislation on prescription drugs was totally silent on dealing 
with price. And what we have proposed here, your legislation, deals 
with the issue of price and affordability and allowing pharmaceutical 
products and allowing Americans to get the products they need at world-
class prices, that is, at 50 percent discount, 40 percent discount, and 
what people in Germany, France, England, Canada, Italy, the 
Netherlands, or Ireland is paying. That is what we are trying to do, is 
address the issue of price and affordability that all of our seniors 
have talked about.
  Then it brings up the other issue. If we are going to have this 
benefit as part of Medicare, whether our taxpayers today or our 
children tomorrow pay for it, to me it is mind-boggling why, when you 
know that you could get prices cheaper for the same brand-name drug, 
Lipitor or Zocor, why you would get those drugs and pay 40 percent more 
when you know you can get them 40 percent cheaper. Any CEO who told 
their board, look, we have checked it out, our supplier, we can get a 
better price, 40 percent better, but we are going to take a pass on it, 
that CEO would be fired.
  We as the stewards of the taxpayers as well as our senior citizens 
have an obligation if we know we can get that same drug, that same 
product for 40 percent less, we have an obligation to do that.
  Eventually, we are going to turn our time to the issue of safety, but 
Health and Human Services is spending $80 million on a commercial to 
convince people the prescription drug bill they passed was a good bill. 
For about $80 million we could literally put in place, the Food and 
Drug Administration, a safety plan so that when people bought their 
drugs in Canada, Europe, et cetera, they could know for sure that they 
were safe.
  Today, not a single drug, in the last 10 years, has anybody ever 
gotten sick from buying drugs from Canada. We know that for a fact. But 
for the same amount of money that they are using to try to persuade 
people that what we did was good, we could put a safety program in 
place and allow the free market to operate the way it is supposed to 
operate.
  Mr. GUTKNECHT. Well, Mr. Speaker, one of the arguments we always get, 
and I want to follow up with something the gentleman just said, because 
I think it is important. Some people say, well, I do not want my 
mother-in-law buying her prescription drugs on line. You know what? 
Neither do we. What we want is parallel trading. What we want is our 
local pharmacists to be able to buy these drugs at 30 to 300 percent 
less so that our seniors and others can buy them at their local 
pharmacy and get those kinds of prices.
  The gentleman talked about this, and I do not think most people 
understand it, I know a lot of our colleagues, still, this is like 
alchemy or something, but it happens every day in Europe. I wonder if 
the gentleman would not just share the story of how many drugs we 
actually import, like Lipitor. Perhaps the gentleman would share that 
story.
  Mr. EMANUEL. Right. First of all, 2 years ago is the last year for 
which we have data, and the data shows that the United States imports 
$15 billion, just shy of $15 billion a year of pharmaceutical products 
into the country. $15 billion. We already do it.
  Lipitor used to be manufactured in western Michigan. Today, Lipitor, 
a drug that some of our colleagues use, we know the Vice President of 
the United States uses, we know the Secretary of Health and Human 
Services uses, is now manufactured in Ireland.
  Mr. GUTKNECHT. Every tablet.
  Mr. EMANUEL. Every tablet is manufactured in a facility not in the 
United States. It used to be here, but it is manufactured in Ireland. 
Then it is exported, same packaging, to the pharmacy shops in France, 
Germany, England, Ireland, United States, Canada, and around the world. 
Yet that drug, Lipitor, we pay 50 percent more in the United States 
than they do in Canada for Lipitor. It is the number one selling drug 
for senior citizens with high cholesterol.
  Mr. GUTKNECHT. Reclaiming my time for a moment, Mr. Speaker, when 
people talk about safety, we need to understand, and I am confident 
they do everything they can to make certain as they ship these drugs 
around the countries, from one country to the next, they are as safety 
conscience as they can be, but do understand they are not shipped in 
armored cars. These are going in big containers, generally in big 
barrels with a plastic bag on the inside. And the idea that they cannot 
sit on a loading dock in New Jersey or in Illinois or Oregon or 
wherever and somehow that is completely safe, but if a consumer in the 
northern suburbs of Chicago or in southern Minnesota decides they want 
to order their drugs from a reputable pharmacy in Canada and the 
package is delivered by FedEx or UPS, that somehow that is not safe, is 
laughable.
  We have talked about this enough, but it just boggles my mind. And I 
think the gentleman's point is a good one, that here we are spending 
lots of money encouraging people to believe that the pharmaceutical 
drug plan that was passed by the Congress and signed by the President, 
this is a democracy, it is the law of the land. And I am not here 
tonight to be overly critical, but the point is, for all the money we 
are spending promoting this, we could have put in place a system that 
would be safe for American consumers.
  Frankly, if they could buy their Glucophage for 300 percent less or 
if their pharmacist could buy it for 300 percent less and pass some of 
the savings along to them, they may not need a benefit from the Federal 
Government. They may not need our grandchildren to pay for those drugs.
  If the drug companies can figure out a way to safely import and 
export drugs around the countries, then we ought to be able to. More 
importantly, if we can have parallel trading between Germany and France 
and England and Ireland and Spain, in other words, if a pharmacist in 
Germany can order their Coumadin from a pharmaceutical supply house in 
Spain and save his consumers or her consumers 75 percent, they do that.
  Here is the thing about the Europeans. They are not intrinsically 
smarter than we are. If they can figure out how to do this safely, I 
have every confidence our pharmacists and our FDA can do this safely. 
It is a bogus argument. It gets thrown in our face, but here is the 
interesting thing. No one believes it. Consumers do not believe it, and 
we have some evidence that there have not even been complaints filed.
  There is another article, and I am sending this out to all my 
colleagues in the next couple of days, again from last week's paper. It 
says, ``Pharmacy complaints slow none on Canadian imports.'' In fact, 
in the State of Minnesota over the last 5 years, there have been 473 
complaints to State regulators about pharmacies and/or pharmacists. In 
the last 5 years. Not one alleged an error by a foreign pharmacy, 
according to a review conducted by the Associated Press.
  In other words, if there is a huge problem, and literally in some 
areas of my home State half of the seniors are now getting their 
prescription drugs from Canada, so if this was a huge safety hazard, 
you would think that we would be getting lots of calls, lots of 
complaints, and yet the answer is zero.
  Mr. Speaker, I yield to my colleague.
  Mr. EMANUEL. I thank my colleague, Mr. Speaker.
  The reason I brought up the $80 million being dedicated towards 
advertising the prescription drug legislation and that for that same 
amount of money we could put in place a system at the Food and Drug 
Administration to ensure that people could buy their drugs safely is 
because President Kennedy once said, ``to govern is to choose;'' and 
that is the choice we have made.
  With that system in place, we would have, as the gentleman said, 
rather than having specifically a benefit that some do not think 
accomplishes that much, we would bring the discounted prices, the 40 
percent retail discount price, right to our pharmacies in the United 
States and to our consumers,

[[Page H1627]]

saving billions of dollars throughout the health care system that could 
be dedicated towards the uninsured, towards whatever we wanted to 
dedicate it to. It would literally wring out an inefficiency in the 
health care system by allowing the, irony of ironies, the free market 
to work.
  Secondly, we know from the Wall Street Journal, I think about 3 
months ago, that the pharmaceutical industry thought that the best way 
to defeat this legislation was to scare people by talking about people 
getting sick, the safety risk of the pharmaceutical drugs imported from 
Canada. Yet in sworn congressional testimony, the Food and Drug 
Administration acknowledged not one person they could find has ever 
gotten sick from buying drugs from Canada and Europe, and yet 2 million 
Americans do it every year. People have gotten sick from food that has 
been imported from around the world, but not one person who bought 
their drugs from Canada has ever gotten sick, according to the Food and 
Drug Administration, and close to 2 million Americans do it a year.
  So that is number one.
  Number two, in my State, my governor conducted a study looking at the 
likelihood if they were to import medications from Canada how much they 
could save Illinois. We spend close to $350 million a year for retirees 
and State employees. The State would save its taxpayers $91 million if 
they bought their drugs competitively. In addition to that, and the New 
York Times acknowledged this about the study, the study in Illinois 
found that Canada actually had a safer system than the United States 
because less people touch the drug from manufacturing to the shelf in 
the pharmacy.
  So this whole notion of fear was literally an embellished story by 
the pharmaceutical industry as a way to defeat this legislation. And 
what I am proud of is that not only the American people have not bought 
it, but 243 Members of our colleagues here in this hall did not buy it, 
passed this legislation this year not once but twice, and, hopefully, 
the other body, the other Chamber will follow suit. This whole notion 
of safety was a red herring by the industry to intimidate people.
  I will make one last comment about safety. Six years ago, when the 
generic industry was just being started, the name-brand pharmaceutical 
industry said the problem with generics was safety. What did we 
discover? We discovered that a lot of those generic pills were being 
manufactured at the same facilities that the brand-named drugs were 
being manufactured at. Then they walked away from the safety argument, 
and generics have grown as an industry, saving tens of billions of 
dollars for our consumers.
  They left that argument on the shelf, but when it came to competitive 
pricing for pharmaceutical products, which allow the market to work, 
which the gentleman's legislation does, they brought up the safety 
issue. And, once again, we have shown in sworn testimony where the FDA 
says not a single person has ever been recorded getting sick, and the 
American consumers have not bought that argument that the industry has 
tried to scare them with. They know they can do. They do it every year.
  My colleague and I run into seniors every year, I run into them at 
some of the public housing and some of the other senior housing in my 
district, where somebody on the haul will get everybody's prescription 
and will go up to Canada, fill everybody's prescription, and come back. 
They know it is normal. They do not think anything is wrong with this. 
They just cannot understand why we cannot do it here.
  So on that issue I wanted to address those specific points on safety, 
and I yield back to my colleague.
  Mr. GUTKNECHT. Mr. Speaker, I thank the gentleman.
  As my colleague knows, people are voting with their feet; and the 
gentleman alluded to how much we are really talking about, ultimately.
  Now I am not saying this is a panacea. I do not think this is the 
silver bullet that will solve all of our problems with seniors being 
able to afford their medications. Clearly, there will still be seniors 
that fall through the cracks, and I think there legitimately is a role 
for government to play to help those people who cannot otherwise afford 
the health saving products they need. But the bottom line is, if we 
could at least guarantee them they had fairer prices, fewer and fewer 
of our seniors would need this.
  Let me also say this is not just about seniors. There are a whole lot 
of working families in my colleague's district and my district that 
have children that have very serious medical conditions that are now 
paying thousands of dollars per month for some of these medications 
where these companies are willing to sell those same drugs for a lot 
less in some of these other countries.
  Let me put a pencil on this, because an estimate done by Dr. Steve 
Schondelmeir, a professor of pharmacology at the University of 
Minnesota, his estimate is Americans will spend about $200 billion on 
prescription drugs this year. That is not just seniors, that is all 
Americans.
  Now I am not saying we are going to be able to take advantage of all 
of the differences that we see on some of these charts. I think, as 
time goes forward, we will see if we do open the markets we will see 
prices come down in the United States, and we will see prices in other 
industrialized countries start to level off. At least we will not have 
to subsidize it.
  But my estimate is that we will save at least 30 percent, and no one 
has challenged me on that number. I have had some of the pharmaceutical 
folks say, oh, no, no, no, it is not nearly that. I have said, okay, 
what is the number? Well, we do know, and some of it has to do with 
currency and some of it has to do with other problems. But, my 
colleagues, 30 percent of $200 billion is $60 billion.
  Now that is $60 billion that American consumers could spend on a lot 
of other things. They could be buying things that might improve our 
manufacturing sector. They could be taking their kids to baseball 
games. They could be paying for violin lessons for their grandchildren. 
$60 billion would amount to the largest single tax cut in the history 
of the world.

                              {time}  2100

  I, as a supply-sider, think that is a good thing. That is money that 
could be spent on other things. They say, well, if we do that, there 
will be no more research. I do have to give the pharmaceutical industry 
credit. They are turning out new products, a lot of them we see 
advertised every day, and there is some health advantage to all of 
these that help some of the older men in the United States still enjoy 
a more vigorous life. Let us say it that way for prime time here. But 
at the end of the day, many of the things that the drug companies are 
spending their research dollars on are not necessarily on the miracle 
cures that they sometimes talk about. They are on new products that are 
slight improvements over existing products. For example, they changed a 
couple of molecules in Prilosec which was going off patent and they 
call it Nexium. Prilosec can now be bought over the counter for about 
$15, but they wanted to convert all the Prilosec users to Nexium 
because that sells for about $130 a month. It is not exactly about 
improving the quality of people's lives as much as it might be about 
making certain that they can guarantee a profit stream.
  Let me just add one more point, because some people say, well, if 
this happens, it is going to really have a devastating impact on 
America and American industry and American companies. Let me just point 
out that some of the largest pharmaceutical companies in the world are 
not based in the United States. Bayer, the maker of Cipro, is a German 
company. Glaxo is actually a British company. Astro-Zeneca and Roche 
and Novartis, I believe, are all Swiss companies. So many of these 
pharmaceutical companies not only do business under the European model; 
they are based in Europe. And so the idea that somehow this is going to 
devastate America and American industry again is sort of a specious 
argument.
  So we talk about safety. We talk about research. I am proud of the 
fact that we as Americans, and this is a number that I try to share 
with people, as the vice chairman of the Committee on Science, this is 
a number we should all be proud of. Americans represent less than 6 
percent of the world's population; but between what the taxpayers pay 
for, what foundations and voluntary contributions pay for, and what

[[Page H1628]]

we pay for in the high prices for our prescription drugs in the United 
States, Americans pay for over half of the basic research that is done 
in the world. We are 6 percent of the world's population, and over half 
of the basic research is done by and paid for by Americans.
  Mr. EMANUEL. The gentleman and I have talked about this. What galls 
me a little about this whole subject is that not only are we paying the 
most expensive prices in the world but all the research that the 
pharmaceutical industry does is subsidized by the taxpayers. They write 
it off fully, 100 percent. The taxpayers are literally funding the 
research. Not only do we fund the research for this new medication, we 
have the dubious honor to pay the most expensive prices in the world. 
Second, is through the National Institute of Health, which is an annual 
budget here in the Federal Government of $27 billion, not all of it 
going to research for new medications, yet all the primary research 
that they do, I think it is about half of it, literally is subsidized 
by the taxpayers. One cannot think of a cancer drug or an AIDS drug, 
just to name two, that the taxpayers did not do the primary research. 
The pharmaceutical industry took that research, took it to market, took 
it through stages one and two, but the primary research was paid for by 
the taxpayers directly through the National Institutes of Health and 
then the follow-on research was subsidized through the tax credit 
research and development.
  All the R&D that the companies do is tax free, the taxpayers 
subsidize it; and then we pay the highest prices at our pharmacies for 
those same drugs that a lot of these companies sell on the shelf in 
Canada, in England, in France, in Germany for 40 percent to 60 percent 
less.
  So we paid for the research and then we pay the highest prices in the 
world. The gentleman noted that. That to me is what is most galling 
here. I do not fault really the pharmaceutical industry. I fault us 
here in the political system who have a job to represent our taxpayers, 
our middle-class families, our seniors, for allowing them to get away 
with a system that manipulates the patent laws, deals with tax 
subsidies through the NIH or through the tax credit R&D, and then 
passes legislation that literally gets away without dealing with the 
fundamental issue that all of us have constantly heard about at our 
town halls, at our grocery stores and at our pharmacies and, that is, 
we cannot afford the medication we need. It is not that they needed a 
benefit, not that a benefit was a bad thing to do, but they wanted the 
medications they needed at the prices they can afford.
  I give the pharmaceutical industry credit for two things: one, they 
played the system perfectly, and I do not fault them; second is that 
they do good work. I was once in the hospital for 7\1/2\ weeks. I would 
not be here if it were not for some of the products that they had 
developed. I have no problem with that. But the prices I paid at the 
hospitals were a lot cheaper than what we pay at the pharmacies.
  All we are asking for is that same competition to get those prices. 
We are prevented from doing it. This legislation that was recently 
passed specifically outlaws it; and I do believe, as I do in free 
markets, that if you allow that competition and you allow the consumer 
that freedom, you are going to get choice. Once that choice gets into 
the market, prices will come down here. Let me say, they will go up in 
Europe. But you will have an equilibrium, and you will not have a 50 
percent disparity where we end up subsidizing those folks in Europe. 
When I say ``we,'' hardworking middle-class families, taxpayers and the 
senior citizens.
  I say pay for the research, I want us to own that research, but we 
need not have to pay the highest prices in the world. That is the 
mistake. The prices on the shelf at the pharmacies, that is the error 
here. We can do something about it. We have done it here in the House. 
Hopefully, our colleagues in the other body will also follow suit.
  Mr. GUTKNECHT. I want to thank the gentleman for joining me tonight 
in this Special Order because I think this is an issue that is just 
simply not going to go away. I think a lot of folks here in Washington 
and some of the folks who represent the pharmaceutical industry 
thought, now that we have passed the prescription drug benefit, this 
issue about affordability and competition and open markets will just go 
away. We are here tonight to report that the issue is not going to go 
away and that Americans are still concerned.
  As I say, it is not a matter of right versus left. It is right versus 
wrong. It is simply wrong to hold American consumers captive so that we 
pay the highest prices in the industrialized world. As the gentleman 
just said, we subsidize the pharmaceutical industry and the research in 
three separate ways. First of all in the Tax Code. Not only do they 
write off every dollar that they spend on research; in some cases they 
actually get a research and development tax credit. So the costs to the 
company are very negligible. In addition to that, we subsidize them 
through the NIH, the CDC, and even through the VA and the Defense 
Department. So I think the real number that we spend on basic research 
that ultimately benefits the pharmaceutical companies actually is 
closer to 27 billion taxpayer dollars per year.
  Again, in some respects I am very proud of that. When we talk about 
some of these miracle drugs like Tamoxifen, that was developed by the 
NIH, the National Cancer Institute. It was taken through phase-2 
trials. Then they licensed it to the pharmaceutical company and our 
reward, at least until just the last several months, is American 
consumers were paying six times more for that drug than consumers were 
paying in Germany and in England and in the industrialized West. And I 
agree with the gentleman. It is not so much shame on the pharmaceutical 
industry. Essentially they have been given a market opportunity here in 
the United States with a captive market, and they have taken advantage 
of it. I do not say shame on the pharmaceutical industry as much as I 
say shame on us. Because we create the rules, and the rules here are 
heavily stacked against American consumers.
  We are not asking them to give away their drugs. I would not say to 
Intel, and they deal in intellectual property, we understand that first 
chip off an Intel line may cost them $500 million. The next chip may 
cost 5 cents. We do not tell them what they should sell their chips 
for, but we do not stand idly by if they want to take advantage of 
American consumers or American users of their products while they sell 
them for much lower prices in other parts of the world.
  All we are really asking for is basic fairness. I think at the end of 
the day, the American people understand this. This is an issue the 
American people get. Part of the reason the gentleman and I have been 
traveling around the country and speaking to various groups and at 
least raising the attention and elevating the debate about this issue 
is because it is such an important issue to so many people. I was in 
Oklahoma City, and I had a lady come up to me at the end of the meeting 
there. I spoke at a senior expo down there. A lady came up, she was 
probably in her thirties. She said, I work for the local bank. I said, 
really. You could tell she had something more she wanted to tell me. 
She said, Congressman, what I do is reverse mortgages at the bank. You 
would not believe the number of seniors who come in and get a reverse 
mortgage on their house because they cannot afford their prescription 
drugs.
  I say, shame on us. That kind of thing, we could do something about. 
In fact, I am proud of the fact that we in the House have done 
something about it. When people call me and say, well, what can we do? 
What can we do, Congressman, to make certain that something like this 
happens this year? I always say, the House has done its work. If people 
would like more information about what they can do to make this a 
reality, to allow Americans to have access to world-class drugs at 
world market prices, they can leave me an e-mail, just go to my Web 
site at gil.house.gov and I can give them more information, we can give 
them more charts, we can show them what we have learned.
  We know, for example, in terms of the safety, and the gentleman 
alluded to it in his remarks, the CDC and others all keep records, we 
know that not a single American has died as a result of taking a drug 
from another country. We also know that, on average, 6,000 Americans 
die in hospitals in the

[[Page H1629]]

United States from getting the wrong prescription drug, the wrong 
dosage, or they get a reaction to a prescription drug. That is 
happening now. We know, for example, you are much more likely to get 
sick and die from eating onions from Mexico. In Pittsburgh alone, we 
had 500 Americans who got seriously ill, three died, from onions from 
Mexico. Nobody has died from taking Coumadin from Germany.
  Mr. EMANUEL. Before I leave, I wanted to add one other point. I think 
the gentleman explained this, and I had not even known this, but on 
Tuesday night, the pharmacies across America get the new prices coming 
in over their fax machines. Going to that other chart, this year we are 
expecting pharmaceutical products will go up 18 percent. Inflation will 
be at 2 percent. So if you go to your pharmacy, to all the people who 
may be watching, and you go to fill your prescription, then you wonder 
why the same prescription that 3 months ago if you get a 3-month supply 
or a month ago cost 21 bucks or 50 bucks and this month, the same drug, 
nothing changed, nothing, but it is up $12, it is all because of that 
chart.

  You can go ask your pharmacist if you have time on your hands on 
Wednesday how much they priced up all the products. Unfortunately, what 
the pharmaceutical companies have done, we just talked about it, they 
game the tax laws. Again, no criticism, but they have gamed the patent 
laws in this country, they are gaming the legislation on prescription 
drugs, and what they decided to do was price up the pharmaceutical 
products right before this discount card is introduced. So what it is 
going to look like is a sale at Neiman Marcus around America, which is 
rather than paying and getting, quote-unquote, this 25 percent 
discount, which I am not really sure will ever materialize, what you 
are really going to see is a run-up in prices right before this summer, 
and you are seeing it today at your pharmacy. So if your prices are 
going up, you know what is going on, and when this big balloon, big 
announcement is going to happen, you are going to see a big sale at 
Neiman Marcus right here in America. You are not going to get a sale 
price. They are just plussing it up before the big discount card. Our 
American senior citizens are going to be running around in a cul-de-sac 
chasing themselves, and there is going to be no discount, the taxpayers 
are going to be saddled with a big bill, they are going to pay $35 a 
month for this card, and they are going to see no discount.
  Yet we literally have in front of us the opportunity, and the 
gentleman noted a figure, I think it is an accurate figure, at a 
minimum, to save $60 billion this year if we had competition in the 
free market. That could go toward other things in our system, a college 
education, buying things for kids' education, other type of health care 
needs; but it just could be so much more productive than what we are 
doing with it. I think it is so important that we pass this legislation 
so that the legislation we do pass finally deals with the central issue 
our constituents tell us about, price and affordability, and so we do 
not have to hear the story about a mortgage consultant doing reverse 
mortgages for our senior citizens so they can literally take the equity 
out of their homes so they can buy their medications that they need.
  This is the greatest country in the world. We are all fortunate to 
live here. We can do better than what we have just seen in front of us. 
I thank the gentleman for taking this time to organize this.

                              {time}  2115

  Mr. GUTKNECHT. Mr. Speaker, I thank the gentleman for joining me 
tonight. I think it would be fair to say we do not agree on every 
issue, but we agree on this, and that is Americans should not be held 
captive. The House has done its work, and I was never prouder than when 
this bill passed the House Chambers here against a withering attack by 
the pharmaceutical industry and sometimes by our own FDA. But this is 
the people's House, and that night the people finally ruled.
  I am not asking for the pharmaceutical companies to give away their 
companies. I am not asking them to change the way they do research. It 
may well be they have to adjust how much they spend on advertising and 
marketing, because there is growing evidence they are now spending more 
money on advertising than they are on research. I do not know if those 
numbers are true, but I think perhaps we can have some hearings here in 
the House and find out.
  But, at the end of the day, all we are asking for is basic fairness. 
It is not right versus left. It is simply right versus wrong. It is 
wrong to hold Americans captive.
  We are not going to go away. This issue is not going to go away. I 
believe that before this Congress adjourns the chances are very good 
that our friends on the other side of this Capitol will follow the lead 
of the U.S. House of Representatives. They will pass a bill that will 
allow Americans to have access to world-class drugs at world-market 
prices.
  Ms. DeLAURO. Mr. Speaker, I rise to discuss an issue that touches the 
lives of every senior in this country and want to thank my colleague 
from Minnesota, Mr. Gutknecht, for his leadership in the fight to lower 
the cost of prescription drugs.
  The single greatest failure in the Medicare prescription drug bill 
that passed this Congress last fall--and there were many--was its 
refusal to do anything about the one issue that affects seniors most--
price. With the cost of the 50 most frequently used medicines by 
seniors rising by nearly three-and-a-half times the rate of inflation, 
how any prescription drug bill could fail to address this concern is, 
frankly, beyond me. High health care prices are eroding the living 
standards of our middle-class families.
  In the last few weeks, we have learned who the real losers were in 
this Medicare bill: the American people--current and future retirees. 
First, we learned that the true cost of the legislation was fully a 
third higher than Members of Congress and the public had been told--
that it would cost the taxpayers $535 billion instead of the $395 bill 
previously reported.
  I say ``reported'' because we also recently learned that the Medicare 
actuary Richard Foster, a 31-year career public servant, was threatened 
with dismissal by his superiors in the Administration last year when he 
discovered that the cost of the bill far exceeded what had been 
publicly acknowledged. And this was before the 3-hour vote held here on 
this floor.
  And last week, we learned that the program will be bankrupt sooner 
than previously estimated. According to the Medicare trustees' report, 
Medicare's finances have, quote, ``taken a major turn for the worse.'' 
The report predicted the program will be bankrupt by 2019, instead of 
2026, as had been previously estimated. According to last Tuesday's 
Washington Post, since the program was created in the 1960s, never 
before has Medicare lurched seven years closer to insolvency in one 
year.
  All this flies in the face of what the Republican leadership and 
President Bush himself said as the bill was being debated by Congress. 
The President said that any Medicare prescription drug legislation that 
came to his desk must, quote, ``strengthen the program's long-term 
financial security.'' And the Speaker of this body said that the final 
bill, quote, ``made Medicare more sustainable'' and would ``change the 
paradigm of health care in this country.''
  Well, Mr. Speaker, the Medicare law may have changed the paradigm of 
health care in this country, but it was decidedly not for the better. 
As a point of fact, the trustees report tells us that the law was the 
primary reason that Medicare--and the health care of our senior 
propulation--will be less secure.
  Combined with an advertising campaign promoting the law that even the 
nonpartisan General Accounting Office found to have ``notable 
weaknesses and other omissions,'' it is fair to say these recent 
developments have seriously undermined public trust in the Medicare 
program and its ability to provide care for our seniors.
  This Congress has a moral responsibility to honor our contract with 
the seniors of this country--a contract that says after a lifetime of 
hard work, raising families, and doing the right thing, that seniors 
deserve the dignity of a secure retirement. That begins with restoring 
public confidence in the Medicare program--one of the twin pillars of 
our retirement security safety net and the embodiment of our country's 
shared values. That begins with improving the program's financial 
health for real.
  The first step would be a simple one--giving ordinary Americans the 
opportunity to reimport drugs from some countries, a choice millions 
are already making on their own, out of desperation. Legalizing 
reimportation is something Congress ought to have included in the bill 
last fall. This one provision would save Americans $600 billion in the 
next decade--savings passed directly onto the consumer.
  We know reimportation is a safe and feasible option. In 2001, U.S. 
drug companies themselves reimported $14.7 billion worth of brand-name 
medications from their overseas plants. In fact, according to incoming 
FDA

[[Page H1630]]

Commissioner Lester Crawford, for less money than the administration is 
spending on its advertisements to spin the truth about the recently 
passed Medicare bill, the FDA could set up a program to safely reimport 
drugs from Canada. With that knowledge, this body overwhelmingly passed 
legislation by a vote of 243 to 186 that would allow for the safe 
importation of drugs.
  But instead of adopting our legislation, the final bill that passed 
the House and Senate contained no provisions to hold down the cost of 
drugs at all. And by tying the premium seniors will pay to cost, 
seniors' out of pocket costs will continue to rise.
  Mr. Speaker, with the baby boom generation set to retire at the end 
of the decade, it is critical that Congress act now to protect the 
quality and the solvency of the Medicare system. That starts with 
bringing down costs, including giving the Secretary of HHS the power to 
negotiate lower prices with the pharmaceutical industry, just like they 
do at the VA. But legalizing reimportation and giving seniors access to 
international markets is something this body supports, and it should be 
the first step. It should be law.
  Again, I want to thank my colleague from Minnesota for this 
opportunity. Let's do the right thing.

                          ____________________