[Congressional Record Volume 150, Number 54 (Monday, April 26, 2004)]
[Senate]
[Pages S4340-S4342]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                              DRUG PRICING

  Mr. JOHNSON. Mr. President, the United States remains the only 
developed nation that does not protect its consumers from drug price 
discrimination and, as a result, American consumers continue to pay the 
highest prices in the world for prescription drugs.
  Drug spending in the United States and Canada rose by 11 percent last 
year to $230 billion, which accounts for nearly half of all the 
worldwide sales. Among seniors, total prescription drug spending rose 
an estimated 44 percent between 2000 and 2002. In 2002, a Families USA 
study found that for the 50 drugs most frequently used by seniors that 
year, prices rose 3.4 times the rate of inflation in 2002.
  The House Committee on Government Reform report released last year 
found that seniors who lack drug coverage must pay twice as much for 
the five most popular drugs as purchasers in foreign countries, those 
prices being 131 percent higher than the United Kingdom, 112 percent 
higher than Canada, and 105 percent higher than France. For some drugs, 
U.S. seniors pay well over twice the price. For example Zocor, a 
cholesterol medication, costs only $37 in France for a monthly supply, 
but in the United States that same drug costs $117--over three times as 
much. A month's supply of Prevacid, an ulcer medication, costs only $42 
in the United Kingdom compared to $118 in our country.

  Clearly, this price discrimination must be addressed. Many, including 
myself, had hoped that the Medicare drug bill would be the first step 
in tackling the skyrocketing cost of prescription drugs. Unfortunately, 
the final product did very little to address these concerns. The new 
law expressly prohibits the Secretary of the Department of Health and 
Human Services from negotiating lower prices.
  Again, this law not only does not correct the price differential, 
believe it or not, the new Medicare drug bill signed by the President 
last December actually prohibits the United States from negotiating 
lower drug prices the way every other foreign nation does. The United 
States remains alone.
  When I traveled to South Dakota earlier this year to discuss the 
Medicare bill, seniors back home found this astonishing.
  The new law also includes provisions that will allow the Secretary to 
prohibit real access to drug reimportation. Meanwhile, the cost 
estimates of the new prescription drug program continue to rise--to 
somewhere between $500 billion and $600 billion over 10 years.
  We are in need of real solutions to this problem. It is my hope a 
real discussion could occur about drug pricing. What do we do about 
that gap and about the fact that American citizens pay twice the price 
or more as citizens of other nations?
  There are several alternatives. We could allow drug reimportation 
from Canada or other countries and take advantage of their lower 
prices, and do so in a carefully monitored way that will secure the 
safety of those drugs. That would be one course. But, unfortunately, 
the White House and President Bush are opposed to that.
  Second, we could be more direct. We could join the rest of the 
industrialized world and negotiate in behalf of our own citizens lower 
prices. That is what everybody else does. That is why France, Italy, 
Germany, Scandinavia, Great Britain, Mexico, Canada, and every other 
industrialized nation have

[[Page S4341]]

prices far lower than the United States. But President Bush and the 
administration don't want to do that either.
  Do you know what their answer is? Their answer increasingly is to use 
our trade rules not to cut the price of drug costs for U.S. citizens 
but to demand that other countries raise their drug prices on their 
citizens. That almost boggles the mind--that the solution is not to 
lower the cost of drugs for U.S. citizens but to raise them for 
everybody else in the world. Maybe in this case it is the United States 
that is out of step and the rest of the world has been in step in terms 
of drug pricing. The rest of the world has figured it out and we 
haven't.
  In this country, we have done an extraordinary job of guaranteeing 
that the pharmaceutical industry has incredible levels of profits. And, 
of course, this new effort to use the trade rule would further enhance 
the profitability of the big drug companies, but it would do little or 
nothing for U.S. citizens. What good does it do U.S. citizens to know 
that the citizens of other nations have to pay higher prices? We need 
to moderate those prices and get the United States in step with the 
rest of the industrialized world.
  It is an outrageous tactic to push the U.S. Trade Representative--
USTR--to try to force other countries, through trade agreements, to up 
the price of prescription drugs in those nations. Most recently, the 
Speaker of the House and some in the Republican leadership in the 
Senate have advocated that USTR negotiate with Australia to increase 
its drug prices within its Pharmaceutical Benefits Scheme, or PBS. 
These proposals are outrageous for several reasons.

  First, our Government should not be telling other nations how to run 
their health care system. How would we feel if Australia asked us to 
develop a universal health care program and do so in a way that would 
cost our citizens more than was necessary? Many of my colleagues and I 
do not believe anybody would believe it is appropriate for another 
country to tell us how we should run our health care system in America. 
Additionally, I find it inappropriate that some in Congress and the 
administration find it appropriate to ask other countries to increase 
their drug prices, but we certainly wouldn't do the same for our 
citizens at their request.
  Would we be willing to increase drug prices under the VA program 
because Australia asked us to? I doubt it. I hope not.
  Some of our colleagues will say other countries need to share the 
burden of research and development and that in so doing we will 
indirectly help to reduce prices in the United States. We should be 
very clear. Any trade agreement proposal that would require another 
country to increase its prescription drug prices provides no guarantee 
that prices will go down for U.S. consumers.
  Does anyone really believe the pharmaceutical industry, which is 
reaping the highest profits of any sector of the Fortune 500, wouldn't 
pocket these as additional profits and say, Thank you, very much? Why 
would they lower costs to U.S. citizens? There is no data available to 
indicate that our prices would go down. In my mind, if this argument is 
the underlying justification for promoting these types of policies, the 
Trade Representative and members of Congress supporting these plans and 
the President owe it to our trade partners and American consumers to 
provide them the data--the proof that American consumers would benefit 
from increasing drug prices for everybody else around the world.
  I also think we need to be very careful when making these 
assumptions--the unspoken assumption here--that research and 
development is the cause of our higher prices in this Nation. Isn't it 
the reality--that the lion's share of the prices paid by American 
consumers is not going into R&D but is going into the pockets of the 
pharmaceutical industry and its stockholders rather than research and 
development. There are very few industries that can boast the type of 
sales claimed by the drug industry, which has enjoyed average annual 
sale increases of 15 percent in recent years.
  A Public Citizen June 2003 report found that in 2002 the top 10 drug 
companies netted profits of $36 billion, or more than one-half of all 
the profits of all the Fortune 500 companies.
  While some may argue this increased spending is justified because it 
reduces other costs of health care spending, the overall rate of health 
care inflation continues to soar with no end in sight.
  Beyond straight profits, the pharmaceutical industry continues to 
increase their spending on direct consumer advertising and lobbying. 
One study found that eight major American pharmaceutical companies 
spent more than twice as much on marketing and administrative costs as 
they did on R&D. For all the talk about research and development, in 
fact, more than twice of that is being spent on marketing and 
administrative costs.
  The Security and Exchange Commission's 2002 financial data finds that 
for the fiscal year ending in December of 2002, the average profits of 
Pfizer, Merck, Bristol-Myers Squibb, Abbott and Wyeth was $5.1 billion, 
marketing and administration were $5.2 billion and R&D was much less at 
$2.3 billion. And let's not forget the campaign spending habits of the 
drug industry. During the 2000 election cycle, the drug industry gave 
disproportionate support to President George W. Bush and seventy 
percent of the industry's unprecedented $24.4 million in campaign 
contributions was spent on Republicans.

  With all this in mind, I find it very hard to believe that American 
consumers are carrying the research and development burden, rather than 
the stockholder profit burden. And given that drug companies spend more 
on TV ads, marketing and administration than they do on drug research, 
perhaps we should first ask why the domestic pharmaceutical industry 
won't spend more of its money on developing new drugs, before we start 
asking our trading partners to pay higher prices for drugs.
  The outcome of the Australia trade agreement included requirements 
that the PBS program in that country provide more transparency in how 
decisions are made about covered drugs. The PBS system seems to me to 
be a very good system. Before a medicine can be subsidized by the 
Australian government, the Pharmaceutical Benefits Advisory Committee 
or PBAC must recommend that a drug be listed on the PBS. When deciding 
what drugs make the list, the PBAC takes into account the medical 
conditions for which the medicine has been approved for use, its 
clinical effectiveness, safety and cost-effectiveness compared to other 
treatments. A drug providing new benefits receives a higher price 
reflecting that advantage. This system rewards true innovation by the 
pharmaceutical industry while ensuring value for the taxpayer dollar.
  This is a well thought out and scientific process and I think the 
U.S. should at least explore similar steps in order to reduce drug 
prices under the Medicare program. I also think that the clinical 
comparative effectiveness analyses that the PBAC conducts are something 
that we should be making a priority in our country. The U.S. should 
also establish an independent source of this type of information. Right 
now, one of the reasons drug costs are so high in the U.S. is because 
consumers, doctors and purchasers do not have access to objective, 
unbiased, reliable data to compare how drugs measure up to one another. 
This type of information would force drug companies to truly compete 
with one another based on the value of their products. Australia is on 
the right track here and we should follow suit.
  With the help of Senator Conrad, I am pleased we were able to obtain 
support during the Fiscal Year 2005 budget markup for a sense-of-the-
Senate resolution supporting $75 million for the Agency for Health Care 
Research and Quality for getting these types of studies--drug 
comparative effectiveness studies--that are needed to find out what the 
real facts are. Having such information available and accessible to 
physicians and their patients has the potential to reduce our nation's 
prescription drug expenditures, by enabling doctors to make better 
informed prescribing decisions. I hope that my colleagues will support 
funding this year for these fund, which in the long run will mean lower 
drug prices for all Americans.
  The very notion that the response from the Bush administration is not 
to allow cheaper drugs into the United States and not to negotiate 
lower

[[Page S4342]]

prices for our citizens the way every other nation does but to try to 
demand that other countries raise the prices for their drugs indicates 
that the administration is out of touch and out of tune with the real 
needs and real priorities of American citizens. I urge my colleagues to 
join me in rejecting these proposals and ask that all members of this 
body work together to achieve real solutions to address the 
skyrocketing costs of prescription drugs.
  I yield the floor and I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The assistant legislative clerk proceeded to call the roll.
  Mr. DORGAN. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. DORGAN. Mr. President, while we are waiting for someone from our 
side who will manage the issue dealing with the Internet tax, I ask 
unanimous consent to speak in morning business for as much time as I 
may consume.
  The PRESIDING OFFICER. Without objection, it is so ordered.

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