[Congressional Record Volume 150, Number 49 (Thursday, April 8, 2004)]
[Senate]
[Pages S4042-S4046]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. GRASSLEY:
  S. 2307. A bill to amend the Federal Food, Drug, and Cosmetic Act 
with respect to the importation of prescription drugs by importers, and 
by individuals for personal use, and for other purposes; to the 
Committee on Finance.
  Mr. GRASSLEY. Mr. President, I would like to pose a question to the 
Chamber today.
  What would you call it if Americans were paying up to 300 percent 
more for the same product as consumers from other countries were 
paying? Back in Iowa, we would call that ``highway robbery.'' Yet, 
highway robbery is what is happening every day in this country, and it 
is happening over prescription drugs.
  Yes, prescription drugs are being sold at prices that are 30 to 300 
percent higher in the United States than in places like Canada or 
Europe.
  Here are some examples.
  The price in Canada of Nexium which is for heart burn and ulcers, is 
about 40 percent of the price in the U.S. Nexium would cost about $120 
for 28 20-milligram capsules if you bought it here in the States. If 
you order the same Nexium from Canada, you'd pay about $51.
  Here is another example: The price in Canada for Vioxx which is for 
arthritis pain, is also about 40 percent of the price in the U.S. If 
you purchased 30 12.5-milligram tablets in Canada, you would pay about 
$36 and here in a U.S. pharmacy, you would pay about $86.
  And why is that, Mr. President? The reason is the importation of 
prescription drugs, those very same drugs that patients are using in 
Canada, and Australia, and Japan, is illegal in this country. So 
consumers in other countries get price breaks from the drug 
manufacturers and the American public doesn't.
  One way to look at this is that by paying those higher prices, the 
American public is paying more than its fair share for the cost of 
research and development for future new drugs. That is not fair.
  This means when a new drug comes on the market, the American consumer 
has paid for the research but consumers in other countries benefit from 
the new therapy.
  I have supported amendments to permit Canadian drug purchases before. 
We have had numerous votes in this Chamber on legalizing importation. 
We had a vote most recently during the Medicare debate.
  Last year, the House overwhelmingly passed a drug reimportation bill 
by a vote of 243 to 186. But, in the end, the conference report for the 
Medicare bill watered down the possibility of legal importation such 
that it was meaningless.
  I was very disappointed about that. I think it was victory by 
subterfuge for the pharmaceutical industry.
  So, I decided to roll up my sleeves and go to work on drafting my own 
bill that would address the problems surrounding importation. In fact, 
I was working very closely since the beginning of the year with my 
friend and colleague from Massachusetts, Senator Kennedy. We were 
working together until 3 weeks ago to create a bipartisan piece of 
legislation. We made a lot of progress. We still had some issues to 
work out but we were very close to having a final agreement.
  With my leadership on the Finance Committee, and Senator Kennedy's 
leadership on the HELP Committee, let alone his expertise on the Food, 
Drug, and Cosmetics Act, I figured we had a good shot at getting 
something done.
  Our discussions certainly created a lot of buzz around town. I had 
reporters and all manner of interest groups asking me and my staff 
about the bill and when we would introduce it. But those discussions 
have since evaporated. Apparently, the Democratic caucus was concerned 
that things were moving too quickly or that too much momentum was 
building behind a bipartisan effort. What I do know is that our 
bipartisan product was no longer the priority.
  I was disappointed about that too. Senator Kennedy and I work well 
together. In fact, we are joining forces even now to get the Family 
Opportunity Act to the floor and passed out of the Senate.
  You can understand why I was discouraged to learn that Senator 
Daschle had determined lowering the costs of prescription drugs through 
importation was going to be a partisan issue.
  Members can understand why I was discouraged to learn that Senator 
Daschle determined lowering the cost of prescription drugs through 
importation was going to be a partisan issue. This reminded me of what 
happened in the year 2002 with the Medicare prescription drug debate. 
There, too, Senator Daschle became concerned that the Finance 
Committee--then chaired by my friend, Senator Baucus--would report a 
bipartisan prescription drug benefit for seniors.
  Senator Daschle, in 2002, as the majority leader, bypassed the 
Finance Committee and took the prescription drug bill straight to the 
floor. That is not how we get legislation passed in the Senate, and 
everyone around here knows it. As I say so often to my colleagues, 
nothing gets done in the Senate if it is not bipartisan or at least 
somewhat bipartisan.
  In the year 2002, it resulted in a very partisan debate in the Senate 
over

[[Page S4043]]

competing Medicare drug benefit proposals. There were multiple partisan 
proposals by the Senator from Florida, Mr. Graham. I had a proposal 
supported by both Republicans and Democrats. The Democratic caucus 
fought our bill, which was dubbed the tripartisan bill because one of 
the key authors, Senator Jeffords from Vermont, sits in the body as an 
Independent.
  What happened in the final analysis in 2002? The Senate did not pass 
a Medicare drug benefit proposal that year. The debate fell apart in 
partisan bickering in the Senate. That happened because partisan 
politics intervened to prevent a bipartisan compromise.
  It looks to me that this is what is happening now on the issue of the 
importation of drugs into the United States to help our seniors. When 
we go to the pharmacist to pick up a prescription, I don't remember the 
pharmacist asking if you are a Republican or a Democrat. When you pay 
your health insurance premium, I don't think the insurance company 
looks for an ``R'' or a ``D'' by your name before they accept your 
payment.
  No, I don't see the importation of drugs as a partisan issue. Being 
forced to pay higher prescription prices because there is a lack of 
competition in the global pharmaceutical industry is not a partisan 
issue. That is why I decided to move ahead and introduce the bill I am 
introducing today.
  This bill I am introducing today in a large degree is the bill on 
which I worked very closely with Senator Kennedy when our efforts got 
superseded by the Democratic caucus. I made a few changes, but this 
bill is basically what Senator Kennedy and I were working on together 
before partisan politics got in the way. I thought what we had was a 
good proposal. We were close to having all the details worked out. I am 
going ahead and introducing that bill today by myself.
  Let me explain the bill. Quite simply, it would legalize immediately 
the importation of prescription drugs from Canada. After 2 years, 
consumers would be able to order their drugs from other countries, as 
well. It creates a practical and safe system to do it.
  Today the law prohibits the importation of prescription drugs until 
the Secretary of Health and Human Services certifies that importation 
can be done safely. Under current resources and under current 
authority, the Food and Drug Administration has not been able to 
provide such assurance on the safety of drugs coming in from other 
countries. We have had Health and Human Service Secretaries in both the 
Clinton administration and the Bush administration. This is not 
Republicans protecting pharmaceuticals, if you want to look at it this 
way. It is both Democrat Presidents and Republican Presidents making a 
decision that the certification and safety of drug importation was not 
legally permitted.
  Even though the law says you can import drugs, because of the lack of 
certification, they cannot come into the country. More and more people 
have been getting prescriptions filled in Canada, regardless of what 
the law says. Technically, that is illegal today.
  The Food and Drug Administration and our customs officials have been 
looking the other way. The Food and Drug Administration has said there 
are serious safety issues with drug importation from other countries. 
They say this because no public health authority is overseeing many of 
the prescriptions coming in from other countries. In fact, the Canadian 
Government has said it will not take responsibility for assuring the 
safety of drugs being shipped to the United States from Canada. They 
have basically told the U.S. consumer: You are on your own from the 
standpoint of safety--I suppose, as far as the Food and Drug 
Administration, efficacy as well as safety.
  Today, importation is no longer limited to organized bus trips across 
the border to pharmacies in Canada. Instead, it is becoming a booming 
mail-order pharmacy operation with customers all over the United 
States. We see press accounts on a regular basis describing Americans 
who log on to the Internet to purchase drugs from Canada and elsewhere.

  The Permanent Subcommittee on Investigations of the Senate Committee 
on Governmental Affairs conducted an investigation into drug 
importation. They found about 40,000 parcels containing prescription 
drugs come through JFK Airport every day. JFK Airport houses the 
largest international mail branch in the United States. From Miami, 
30,000 packages of drugs come into the United States; 20,000 packages 
come into Chicago each day of the year. About 28 percent of the drugs 
coming in are controlled substances. These are addictive drugs that 
require close supervision from physicians.
  From where are most of these drugs coming? I was surprised to hear it 
was not only Canada, but also Brazil, India, Pakistan, the Netherlands, 
Spain, Portugal, Mexico, and Romania.
  My bill immediately halts unsafe importation from rogue operators but 
permits individuals to obtain prescriptions from licensed Canadian 
pharmacies on an interim basis while the Food and Drug Administration 
gets a new drug importation system up and it runs well.
  The American public is tired of waiting for the Federal Government to 
take action to legalize importation and to assure the safety of 
imported drugs. Under my bill, the Food and Drug Administration is 
required to issue final regulations for the new drug importation system 
within 90 days of enactment. Under the new importation system, 
individuals and pharmacies could purchase qualified drugs for import 
into the United States from foreign exporters that register with the 
Food and Drug Administration. To be registered, the foreign exporters 
must demonstrate compliance with safety measures, must submit to the 
jurisdiction of U.S. courts, and take other steps to assure the safety 
of imported drugs.
  A user fee charged to registered exporters would provide the 
financing needed for the Food and Drug Administration to register and 
oversee foreign drug exporters and assure the state of imported drugs.
  The drugmakers do not want to see their lower priced products from 
other countries coming into the United States. That is certain because 
the present laws do not permit this competition to them. They would say 
it undermines their profits here. They will want to do everything they 
can to stop drug importation.
  Even though this bill might pass, these companies will find some way 
to keep these drugs out of the country. So I have to deal with that 
fact in this legislation.
  So under my bill, drugmakers that take steps to prevent importation 
of their products from these registered drug importers will lose their 
tax deduction for their advertising costs.
  Now, that is going to upset the trade associations that deal with 
advertising. That is going to upset TV and newspapers and magazines 
that get a lot of money from advertising. I have had a long history of 
supporting the deductibility of advertising expenses as a legitimate 
business expense. I have not changed my mind in regard to that, not at 
all. In fact, I have a history of voting against amendments that are 
offered on the floor of the Senate that would make advertising not 
deductible.
  But we are not talking about not allowing the deductibility of 
advertising costs. Only if a company tries to do something illegal and 
keep drugs from coming in from out of this country, then they will pay 
the penalty of not having their advertising costs deducted. But I 
assume, when we pass this bill, these drug companies are going to abide 
by this law. There will not be one cent of advertising that cannot be 
deducted as a legitimate expense, so I do not want the advertising 
fraternity to get upset with this legislation, when I have been a 
backer of the legitimate writeoff of advertising expenses.
  Now, this not only has the stick that I just described, but we have a 
carrot as well, to encourage companies to abide by this law and not try 
to keep imported drugs from coming into this country by some sort of 
requirement they would put on supplies outside the country not to ship 
drugs into this country; and that is, they will get a 20-percent 
benefit--a 20-percent benefit--by having an increase in their R&D tax 
credit.

  I am going to discuss that further, but going back to the advertising 
costs, I do sense, from my people in Iowa--at every town meeting some 
person complains about the advertising of

[[Page S4044]]

drugs on TV. I defend the advertising of drugs on TV because that is 
commercial free speech. I think our citizenry ought to be as educated 
about drugs as they can be, so they are not beholden to their own 
doctor or doctors for what might be applied. I think we ought to have 
an educated patient group, so this advertising is very good. But I 
still have to say that my Iowa constituents are pretty fed up with all 
those drug ads they see on TV, and how they are probably adding to the 
cost of prescription drugs.
  I am fully in favor of this free speech, and I do not, in any way, 
want to prohibit companies from running the ads they want to run. But 
if drug companies are not going to allow U.S. consumers to have access 
to these lower prices in other countries, then, under this legislation, 
they would lose the tax deduction for the cost of those advertisements.
  Now, on the other hand, I said there is a carrot out there. The 
drugmakers complain to us that these lower prices might take money from 
research and development. They would rightly say: Where are we going to 
get the money to have the next generation of ``magic'' drugs that we 
have? We want that to happen, because when I buy a drug today, my 
mother or grandmother, when they bought pills, paid for that research 
for the generation of drugs I take. I want my children and 
grandchildren to have a new generation of drugs for the future. So we 
do not want to hurt research and development.
  So my bill, then, creates an incentive for drug companies that do not 
fight this importation of drugs. Companies that do not prevent 
importation from registered exporters will get a 20-percent increase in 
their R&D tax credit. I hope everybody will think that is very fair.
  I have a more detailed summary of this bill that I am going to put in 
the Record. I ask unanimous consent that this summary and a question 
and answer document be printed in the Record following my statement.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  (See exhibit 1.)
  Mr. GRASSLEY. I believe that free trade principles argue in favor of 
permitting the importation from Canada and perhaps from other developed 
countries as long as we can implement a system for safe importation.
  Today, there is no assurance of safety--no one is watching the 
store--and products are coming in from all over the world.
  My legislation has two objectives. First, it will put an immediate 
end to the unregulated and unsafe situations of drug imports that we 
have today by default. This is key because the situation today 
threatens the safety of our Nation's drug supply and puts patients who 
obtain these drugs at risk of harm.
  Second, the legislation will provide the Food and Drug Administration 
with the resources and authority to ensure the safety of imported 
drugs, and importation will only be permitted by registered exporters 
who submit to the Food and Drug Administration authority.
  Now, this bill will get referred to the Finance Committee because it 
has tax provisions in it, but the bulk of my bill falls under the 
jurisdiction of the HELP Committee, and my friend, Senator Gregg, as 
chairman of that committee, has announced he will hold a markup this 
year on a drug importation bill.
  I do not intend to assert jurisdiction over this proposal, and I 
believe we should rely upon that regular committee process to work. 
That is how we get legislation passed in the Senate. Because that is 
where bipartisanship is formulated, at the committee level.
  I hope my colleagues will look at this bill. I wanted to get these 
ideas out here for discussion. I hope some of my colleagues will want 
to cosponsor this bill. It is time we got this done, and this is the 
year to get it done, particularly following upon the vote that was in 
the House of Representatives last year.
  We must not let partisan politics get in the way, and I think it is 
getting a little bit in the way right now. I hope we overcome that. I 
hope I am able to develop a relationship with Democrats, once again, to 
work on this bill in a bipartisan way. If we do not do this, I think 
there is going to be a penalty paid at the ballot box in November.
  The American consumers are waiting. Let's get the job done.
  I ask unanimous consent that a summary be printed in the Record.
  There being no objection, the summary was ordered to be printed in 
the Record, as follows:

                               Exhibit 1

                        Overview of Key Elements

       Legalizes reimportation (or importation) of prescription 
     drugs from FDA approved exporters. To be approved, registered 
     exporters must agree to meet safety requirements and to 
     permit FDA inspectors on their premises full time to ensure 
     compliance.
       Creates a ``fast-track'' regulatory process for FDA to 
     implement the importation system quickly.
       Importation of qualified prescription drugs from Canada is 
     immediately legalized while the new importation system is 
     developed and implemented by FDA.
       Under the new system, individuals, pharmacies, and drug 
     wholesalers are permitted to legally import prescription 
     drugs from registered foreign exporters:
       Individuals may order drugs from a registered exporter 
     pursuant to a valid prescription issued by a U.S. doctor and 
     filled by a pharmacist whose licensing requirements are 
     equivalent to those required in the U.S. or by a dispensing 
     pharmacist duly licensed by a state.
       Commercial shipments are permitted only to licensed 
     pharmacists for resale directly to consumers and by drug 
     wholesalers who can sell to pharmacies as they do today.
       Drugs imported to U.S. pharmacies and drug wholesalers must 
     be FDA approved drugs produced in the United States or in FDA 
     inspected manufacturing facilities in other counties. FDA is 
     required to provide the proper labeling for drugs for 
     importation.
       The FDA through its inspectors is responsible for tracing 
     all drugs exported to the U.S. back to their original 
     manufacturing plant and ensuring that they have been stored 
     and transported safely from that plant.
       Individuals may also purchase drugs that are bioequivalent 
     to FDA-approved brand name drugs that are produced by the 
     same brand-name manufacturer.
       These drugs are drugs not technically approved by the FDA 
     but the foreign government has approved the drug and that 
     drug has the same active ingredient or ingredients as the 
     FDA-approved drug and the same route of administration, 
     dosage form, and strength.
       If a drug manufacturer believes, however, that the non-FDA 
     approved drug is not bioequivalent to the FDA approved drug, 
     then it must submit a petition to the FDA to show that (a) 
     the differences result in a product that is not bioequivalent 
     to the drug approved in the U.S., and (b) that such 
     differences are due to scientifically and legally valid 
     differences in the regulatory requirements of the U.S. and 
     the country(ies) in which the apparently similar drug is 
     marketed. The manufacturer is required to pay a user fee 
     sufficient to cover the cost of the FDA's review of the 
     petition and supporting documentation.
       A User Fee charged to registered exporters provides the 
     financing to provide the resources to FDA to ensure the 
     safety of imported drugs.
       User fees charged to registered exporters would be 
     sufficient to cover all costs including those incurred for 
     inspection and verification within the United States, at the 
     exporter's premises and any other location where the drugs 
     have been stored prior to entry into the U.S.
       The FDA would be required to verify the source and inspect 
     the intermediate handlers of all drugs intended for export 
     into the United States.
       FDA would also be required to determine by a statistically 
     significant sample that the recipients held valid 
     prescriptions (individuals ordering 90-day supply or less) or 
     verify that recipient was a licensed pharmacy that only 
     dispensed drugs to individuals.
       The FDA would also be required to supply valid U.S. 
     labeling upon request of the registered exporter and affix or 
     supervise the affixing of seals, markings or tracking 
     technology that would inform border personnel that such 
     imports were lawful to be entered as labeled.
       Drugs not permitted for importation include controlled 
     substances and certain other drugs not appropriate for 
     importation because of storage, significant safety concerns, 
     or drugs that are more likely to be counterfeited.
     Provisions to Protect Safety of the Public
       Unauthorized imports would be treated as contraband and 
     would be seized and destroyed upon entry without notice.
       For the first two years, importation would be limited to 
     Canada. The Department of Health and Human Services would 
     submit a report to Congress in the second year, and unless 
     Congress changed the law, countries from which importation is 
     permitted would be expanded to include, the European Union, 
     the European Free Trade Association, Japan, Australia, and 
     New Zealand. Other countries meeting statutory criteria could 
     also be added to the list by the Secretary.
       The legislation continues to prohibit the import or 
     reimport of drugs supplied free or at nominal cost to 
     charitable or humanitarian organizations including the United

[[Page S4045]]

     Nations or a government of a foreign country.
       Requires pedigrees from the manufacturer to the dispensing 
     pharmacist for all prescription drugs sold within the U.S. or 
     to an exporter authorized to export drugs into the U.S.
       Requires the automatic suspension of an exporter's 
     registration for any attempted entry of non-qualified or 
     unsafe drugs with restricted ability to seek re-instatement 
     in the future.
       Requires that registered exporters submit to the 
     jurisdiction of the U.S. federal court system and provides a 
     mechanism for civil actions against the property of persons 
     that import non-qualified drugs.
       Repeals the provision in the Controlled Substances Act that 
     permits the personal import of scheduled drugs, which is a 
     significant source of illegal drug trade in the U.S.
     Tax Incentives for Manufacturers to Facilitate Reimportation
       Incentive To Not Prevent Reimportation: Manufacturers that 
     do not take any action, directly or indirectly, to prevent 
     reimportation receive a 20% increase in R&D tax credit for 
     that year.
       Penalty For Preventing Reimportation: Manufacturers that 
     take any action, directly or indirectly, to prevent 
     authorized reimportation lose the business expense deduction 
     for advertising expenses.


                  Questions and Answers about the Bill

       Question. What are the goals of the legislation?
       Answer. The legislation has two objectives. First, it would 
     put an immediate end to the unregulated and unsafe situation 
     with drug imports that exists today. Second, the legislation 
     would provide the Food and Drug Administration (FDA) with the 
     resources and authority to ensure the safety of imported 
     drugs.
       Question. How does the bill work?
       Answer. Current law prohibits the importation of 
     prescription drugs until the Secretary of Health and Human 
     Services (HHS) certifies that importation can be done safely. 
     Using current resources and authority, the FDA has not been 
     able to provide an assurance of safety of imported drugs.
       The bill immediately halts unsafe importation but permits 
     individuals to obtain prescriptions from Canadian pharmacies 
     on an interim basis while FDA gets the new drug importation 
     system up and running.
       Under the bill, the FDA is required to issue final 
     regulations for the new system within 90 days of enactment. 
     Under the new importation system, individuals, pharmacies, 
     and drug wholesalers could purchase qualified drugs for 
     import into the U.S. from foreign exporters that register 
     with the FDA. To obtain a registration, a foreign exporter 
     must demonstrate compliance with safety measures, must submit 
     to jurisdiction of U.S. courts, and take others steps to 
     assure safety of imported drugs. A user fee charged to 
     registered exporters would provide the financing needed for 
     FDA to register and oversee foreign drug exporters and ensure 
     the safety of imported drugs.
       Question. How will patients get their prescriptions filled 
     at an overseas drug exporter?
       Answer. First of all, consumers that want to have their 
     prescriptions filled at an overseas prescription drug 
     exporter will be able to go to the FDA website and find a 
     list of companies that have passed FDA's requirements to 
     become a registered exporter. Just as for filling a 
     prescription in the U.S. today, the patient must have a valid 
     prescription written by a health care professional licensed 
     in a state to prescribe drugs. The patient will then compare 
     drug prices at the different registered exporters to find the 
     best price available. To get the prescription filled, the 
     patient will have to contact that exporter and either mail or 
     fax the prescription to them.
       Alternatively, the registered exporter could call the 
     patient's prescriber and get the prescription over the phone. 
     This is the same process as mail order pharmacies in the U.S. 
     use today.
       A pharmacist at the registered exporter would fill the 
     prescription according to the prescriber's instructions. The 
     registered exporter may only fill the prescription with 
     brand-name drugs, meaning these are the same drugs as those 
     approved by the FDA and manufactured by the same company as 
     approved by the FDA for sale in the U.S.
       Individuals can also have a prescription filled that is 
     technically not an FDA-approved drug, but the drug has the 
     same active ingredients, dosage form, strength, and route of 
     administration as the FDA-approved drug and is made by the 
     same manufacturer as the FDA-approved drug. These drugs are 
     manufactured by the same brand-name manufacturer and are made 
     for sale in the market of the approved country.
       The registered exporter is required to verify that the drug 
     can be traced back to the original manufacturer and the drug 
     must have been stored and handled properly. The FDA, through 
     its on-site inspectors, will also be verifying that the 
     prescription drugs being dispensed to patients meet FDA's 
     criteria.
       Once the prescription is filled, the registered exporter 
     will place a label or other markings on the package for 
     shipping that identify the shipment as being in compliance 
     with FDA's safety requirements and all registration 
     conditions. These markings will be designed by FDA and may 
     include track-and-trace technologies and anti-counterfeiting 
     measures. When the package enters the U.S., that marking will 
     signify to Customs officials that the product was dispensed 
     from a registered exporter and can therefore be permitted to 
     enter the country. Packages with drugs that lack this marking 
     will be seized by Customs and destroyed.
       Question. Can the importation of prescription drugs from 
     other countries be expanded?
       Answer. Yes. In the second year of the importation program, 
     HHS would be required to submit a report to Congress on the 
     safety of the program and its impact on trade. Unless 
     Congress acted, the program would be expanded in year three 
     to include importation from the European Union, the European 
     Free Trade Association, Japan, Australia and New Zealand. 
     Other countries that meet specific statutory criteria may 
     also be added to the list.
       Question. What is the complete list of countries that would 
     be permitted in the third year of the program?
       Answer. There are currently 15 members of the European 
     Union: Austria, Belgium, Denmark, Finland, France, Germany, 
     Greece, Ireland, Italy, Luxembourg, Portugal, Spain, Sweden, 
     The Netherlands, and the United Kingdom. Beginning on May 1, 
     2004, there will be 10 new member states in the European 
     Union: Cyprus, Czech Republic, Estonia, Hungary, Latvia, 
     Lithuania, Malta, Poland, Slovakia, and Slovenia. There are 4 
     member countries in the European Free Trade Association: 
     Iceland, Liechtenstein, Norway, and Switzerland.
       Question. How much does this program cost?
       Answer. The infrastructure needed to guarantee the safety 
     of the imported prescriptions would be financed through user 
     fees. User fees would be paid by registered exporters, which 
     could be the overseas pharmacies or prescription drug 
     wholesalers, for example. Congressional Budget Office has not 
     yet officially scored the bill.
       Question. Now that the bill is introduced, what comes next?
       Answer. Because the bill contains tax provisions, it has 
     been referred to the Finance Committee. Senate leadership has 
     expressed an interest in developing legislation this year to 
     allow the importation of prescription drugs. Because the bulk 
     of the legislation falls within the jurisdiction of the 
     Health, Education, Labor & Pensions (HELP) Committee, it is 
     expected that HELP will take the lead in reporting any 
     legislation.
       Question. How is this bill different than other legislation 
     on importation?
       Answer. While the idea of importation of prescription drugs 
     from foreign countries enjoys broad bipartisan support, the 
     issue of safety continues to remain a major barrier to 
     allowing importation to move forward. Secretaries of HHS from 
     both the Clinton and Bush Administrations have determined 
     that safe importation of prescription drugs cannot be 
     guaranteed with the authority and resources the FDA has 
     today. Many bills presume that importation is safe and that 
     FDA and the public should not be overly alarmed. However, 
     there is a legitimate concern about unsafe pharmaceuticals 
     entering the U.S. every day. Hundreds of thousands of 
     packages enter our country on a daily basis, with little or 
     no ability for the U.S. Customs Service or the FDA to 
     guarantee these drugs are safe and effective. Rather than 
     ignore the safety issue, this bill responds to the concerns 
     raised by FDA and others and creates a way to ensure safe 
     access to lower cost prescriptions.
       Question. How does this bill lower the costs of 
     prescription drugs Americans have to pay?
       Answer. United States consumers pay 30 to 300 percent more 
     for their prescriptions drugs than those in other countries. 
     Drug manufacturers are forced to sell their products at lower 
     prices in other countries and try to re-coup their profits by 
     making Americans pay higher prices for the same products. 
     This bill recognizes that competition in the global 
     marketplace can work to lower prescription drug costs. If 
     lower cost pharmaceuticals are made available to Americans, 
     drug companies will be forced to re-think their pricing 
     strategy and won't be able to gouge consumers in the United 
     States.
       Question. What mechanisms does the bill propose to 
     guarantee safety?
       Answer. The bill would allow importation of qualified drugs 
     only from registered exporters, whose actions will be held 
     accountable in U.S. Federal courts.
       Registered exporters must have an FDA-approved compliance 
     plan that demonstrates they are meeting the safety 
     requirements established in the bill or by FDA. Exporters 
     must permit FDA inspectors to be present onsite on a 
     continuous day-to-day basis and FDA is required to have 
     assigned inspectors to that exporter. FDA will conduct day-
     to-day onsite monitoring of the exporter at the place of 
     business for the exporter including any warehouses owned or 
     operated by the exporter and FDA will have access to inspect 
     the exporters records to ensure compliance. Only where an 
     exporter has demonstrated a track record of compliance will 
     FDA be permitted to perform periodic inspections. The FDA 
     must verify the chain of custody for each qualifying drug 
     from the manufacturer of the drug to the exporter.
       Only licensed pharmacists at the registered exporter will 
     be allowed to dispense prescriptions with a valid U.S. 
     prescription from a U.S. physician. Commercial shipments can 
     only be received and resold by licensed pharmacists. 
     Unauthorized imports

[[Page S4046]]

     would be treated as contraband and would be seized and 
     destroyed upon entry without notice. Under the bill, an 
     exporter's registration would automatically be suspended for 
     any attempted entry of non-qualified or unsafe drugs and 
     these exporters can be barred from seeking re-instatement in 
     the future. The bill would allow for importation first from 
     Canada in order to test the safety of the system and 
     determine whether additional controls are needed before 
     expansion to additional counties.
       Question. How does the bill prevent drug manufacturers from 
     gaming the system?
       Answer. Drug manufacturers that take any action, directly 
     or indirectly, to prevent authorized importation will see a 
     loss of their tax deduction for advertising expenses. Drug 
     manufacturers that do NOT take action, directly or 
     indirectly, to prevent importation will see a 20 percent 
     increase in their research and development tax credit for 
     that year.
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