[Congressional Record Volume 150, Number 103 (Thursday, July 22, 2004)]
[Senate]
[Pages S8752-S8755]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. SPECTER:
  S. 2766. A bill to amend part D of title XVIII of the Social Security 
Act to authorize the Secretary of Health and Human Services to 
negotiate for lower prices for Medicare prescription drugs and to 
eliminate the gap in coverage of Medicare prescription drug benefits, 
to reduce medical errors and increase the use of medical technology, to 
increase services in primary and preventive care by non-physician 
providers, and for other purposes; to the Committee on Finance.
  Mr. SPECTER. Mr. President, I have sought recognition today to 
introduce the Prescription Drug and Health Improvement Act of 2004, 
which is legislation designed to reduce the high prices of prescription 
drugs. Americans, specifically senior citizens, pay the highest prices 
in the world for brand-name prescription drugs. With 43 million 
uninsured Americans and many more senior citizens without an adequate 
prescription drug benefit, filling a doctor's prescription is 
unaffordable for many people in this country. The United States has the 
greatest health care system in the world; however, too many seniors are 
forced to make difficult choices between life-sustaining prescription 
drugs and daily necessities.
  The Centers for Medicare and Medicaid Services estimate that in 2003 
per capita spending on prescription drugs rose approximately 12 
percent, with a similar rate of growth expected for this year. Much of 
the increase in drug spending is due to higher utilization and the 
shift from older, lower cost drugs to newer, higher cost drugs. 
However, rapidly increasing drug prices are a critical component.
  High drug prices, combined with the surging older population, are 
also taking a toll on State budgets and private sector health insurance 
benefits. Medicaid spending on prescription drugs increased at an 
average annual rate of nearly 20 percent between 1998 and 2001. Until 
lower priced drugs are available, pressures will continue to squeeze 
public programs at both the State and Federal level.
  To address these problems, my legislation would reduce the high 
prices of prescription drugs to seniors by: one, allowing the Secretary 
of Health and Human Services, HHS, to negotiate prescription drug 
prices with manufacturers; and two, eliminate the coverage gap in the 
Medicare Prescription Drug Program. The bill's $400 billion price tag 
over the next 10 years would be offset by, three, reducing medical 
errors, increasing the use of medical technology, and, four, increasing 
the use of non-physician providers in primary and preventive health 
care.
  Prescription Drug Negotiation: This legislation would repeal the 
prohibition against interference by the Secretary of HHS with 
negotiations between drug manufacturers, pharmacies, and prescription 
drug plan sponsors and instead authorize the Secretary to negotiate 
contracts with manufacturers of covered prescription drugs. It will 
allow the Secretary of HHS to use Medicare's large beneficiary 
population to leverage bargaining power to obtain lower prescription 
drug prices for Medicare beneficiaries.
  Price negotiations between the Secretary of HHS and prescription drug 
manufacturers would be analogous to the ability of the Secretary of 
Veterans Affairs to negotiate prescription drug prices with 
manufacturers. This bargaining power enables veterans to receive 
prescription drugs at a significant cost savings.
  In my capacity as chairman of the Veterans' Affairs Committee, I 
introduced the Veterans Prescription Drugs Assistance Act, S. 1153, 
which was reported out of committee on June 20, 2004.
  This legislation would broaden the ability of veterans to access the 
Veterans Affairs Prescription Drug Program. All Medicare-eligible 
veterans will be able to purchase medications at a tremendous price 
reduction through the Veterans Affairs' Prescription Drug Program. In 
many cases this would save veterans who are Medicare beneficiaries up 
to 90 percent on the cost of commonly prescribed medications. Similar 
savings would be available to America's seniors from the savings 
achieved using the HHS bargaining power, like the Veterans Affairs 
bargaining power for the benefit of veterans.
  Medicare Coverage Gap Elimination: The bill would eliminate the 
coverage gap, also known as the ``doughnut hole,'' for beneficiaries in 
the Medicare prescription drug program. Beginning in January 2006, 
Medicare beneficiaries with an individual income of over $13,470 and 
couples with an income over $18,180, 150 percent of the poverty level, 
will pay a monthly premium, approximately $35, a $250 deductible, and 
coinsurance of 25 percent up to an initial coverage limit of $2,250, 
but then do not receive coverage until they exceed $5,100 of total 
spending. Specifically, Medicare beneficiaries will have to make out-
of-pocket payments for prescription drug purchases from $2,250 to

[[Page S8755]]

$5,100 in total spending. After $5,100 in total spending, the 
coinsurance payment for those beneficiaries is 5 percent. Medicare 
beneficiaries below 150 percent of the poverty level do not have a gap 
in drug coverage. My legislation would eliminate the gap in coverage 
for those over 150 percent of the poverty level in the Medicare 
prescription drug program, by extending the 25 percent beneficiary 
coinsurance payment from $2,250 to $5,100 in total spending.
  This provision comes at an expected cost of $400 billion over 10 
years, which will be paid for through savings from reducing medical 
errors, increasing the use of medical technology, and increasing the 
use of non-physician providers in primary and preventive health care.
  Reducing Medical Errors and Increasing the Use of Medical Technology: 
The bill provides grants for demonstration programs to test best 
practices for reducing errors, testing the use of appropriate 
technologies to reduce medical errors, such as electronic medication 
systems, and research in geographically diverse locations to determine 
the causes of medical errors. The implementation of automated 
prescription drug dispensers will prevent adverse drug reactions, which 
in turn can cause further illness resulting in increased care needed to 
correct the error. The utilization of electronic records will reduce 
the incidence of repeat medical tests, which will result in significant 
cost savings.
  On November 29, 1999, the Institute of Medicine, IOM, issued a report 
entitled ``To Err is Human: Building a Safer Health System.'' The IOM 
report estimated that anywhere between 44,000 and 98,000 hospitalized 
Americans die each year due to avoidable medical mistakes. However, 
only a fraction of these deaths and injuries are due to negligence. 
Most errors are caused by system failures. The IOM issued a 
comprehensive set of recommendations, including the establishment of a 
nationwide, mandatory reporting system; incorporation of patient safety 
standards in regulatory and accreditation programs; and the development 
of a non-punitive ``culture of safety'' in health care organizations. 
The report called for a 50-percent reduction in medical errors over 5 
years.
  After the report was issued, I held a series of three Labor, Health 
and Human Services Appropriations Subcommittee hearings on medical 
errors: Dec. 13, 1999--to discuss the findings of the Institute of 
Medicine's report on medical errors; Jan. 25, 2000--a joint hearing 
with the Committee on Veterans' Affairs to discuss a national error 
reporting system and the VA's national patient safety program; Feb. 22, 
2000--a joint hearing with the Health, Education, Labor and Pensions 
Committee to discuss the administration's strategy to reduce medical 
errors.
  After hearing from Government witnesses and experts in the field on 
medical errors, I included $50 million in the fiscal year 2001 Senate 
Labor, Health and Human Services and Education for a patient safety 
initiative. In the Senate report, I also directed the Agency for 
Healthcare Research and Quality, AHRQ, to: one, develop guidelines on 
the collection of uniform error data; two, establish a competitive 
demonstration program to test ``best practices''; and three, research 
ways to improve provider training.
  The committee also directed AHRQ to prepare an interim report to 
Congress concerning the results of the demonstration program within 2 
years of the beginning of the projects. The fiscal year 2002 Senate 
report directed AHRQ to submit a report detailing the results of its 
initiative to reduce medical errors. HHS combined both reports into 
one, which it submitted to me earlier this year.
  Since fiscal year 2001, the Labor/HHS Subcommittee has included 
within the Agency for Healthcare Research and Quality funding for 
research into ways to reduce medical errors. The fiscal year 2002 
appropriation was $55 million, in fiscal year 2003 another $55 million 
was provided, and in fiscal year 2004 the appropriation was increased 
to $79.5 million.
  The bill seeks to assist development of private sector technology 
standards to reduce medical errors by examining information technology, 
providing grants, and coordinating implementation by private sector 
entities. This would help ensure that this Federal investment will help 
further the national health information infrastructure by sharing the 
information collected through these demonstration projects with other 
health facilities nationally. These efforts would help reduce medical 
errors and bring the Nation's health systems into the 21st century with 
a projected cost savings of $150 billion over 10 years.
  Primary and Preventive Care Services: The bill includes provisions 
for the use of nonphysician providers such as nurse practitioners, 
physician assistants, and clinical nurse specialists by increasing 
direct reimbursement under Medicare and Medicaid without regard to the 
setting where services are provided. The services provided by non-
physician providers would insure that patients would receive benefits 
and services to which they are entitled without compromising the high 
standards of medical care. The use of these health care professionals 
would provide a significant cost savings to health care systems.
  The bill creates a medical student tutorial program providing grants 
to encourage students early on in their medical training to pursue a 
career in primary care and provides grant assistance to medical 
training programs to recruit such students. This program is 
advantageous for medical students by providing valuable primary care 
experience, while offering services at a lower cost to primary care 
facilities. The savings from this provision is estimated at $250 
billion over a 10-year period.
  I believe this bill can provide desperately needed access to 
inexpensive, effective prescription drugs for America's seniors. The 
time has come for concerted action in this arena. I urge my colleagues 
to move this legislation forward promptly.
                                 ______